Lead Editor, Investigative Desk
The misuse of monies deposited into the Mayor’s Fund was another serious breach uncovered in the May 2019 in the Ministry of Finance Central Audit Committee report into the financial runnings of the Port-of-Spain City Corporation.
The Mayor’s Fund, under the Municipal Corporations Act, is solely for the use of donations and other contributions that are given to the Port of Spain City Corporation from time to time.
The audit found that during the period 2015-2016 and 2017-2018 the total revenue deposited into the Mayor’s Fund was approximately $4.56 million.
The report discovered that Government-generated revenue for wrecking, vending and the use of parks and squares was being placed into the mayor’s fund- contrary to the practices aligned with the Ministry of Rural Development and Local Government who had written to the corporation in November 2017 and March 2018 seeking clarification on sources of revenue for the Mayor’s Fund.
In reviewing a period between May 2016 and August 2018 the report found what they termed “misappropriation of transfers” to the Mayor’s Fund amounting to nearly $1 million. Most of the monies that were misappropriated emanated from the wrecking services.
In most cases, the audit could not find the Finance Planning Resource and Allocation Committee’s minutes connected to the wrecking sums in question.
The Central Audit also found that no ministerial approval had been sought for the transfer of these Government-generated funds into the Mayor’s Fund.
Serious concerns were also raised under the Mayor’s Fund-where donations in the sum of $3,000 each were given to the corporation by paid contractors who handled wrecking in and around Port of Spain for the corporation.
Central Audit said, “No reason or justification was given for such donations and there was the strong possibility that conflict of interest could arise between the corporation and these paid contractors.”
The report recommended a donation policy be developed to mitigate corruption and fraudulent activities.
Questions were also raised about why service providers were being paid from the Mayor’s Fund without the council’s approval. Amounts totalling $700,000 were paid out to these service providers between October 2015 and September 2016.
The report stated, “Central Audit was not provided with the resolution authorising payments to service providers from the Mayor’s Fund.”
The audit authority recommended that the corporation implement strict controls in the disbursement of the Mayor’s Fund compliant with the Municipal Corporations Act.
Mayor Joel Martinez told Guardian Media in an interview in late January that they attempted to ensure the Mayor’s Fund was used in the appropriate manner.
He said, “When I came in the Mayor’s Fund did not have any restrictions as such we as a council decided to put restrictions on the Mayor’s Fund in 2017. What we would do is is we had to use it for a hardship situation or any case the person or persons would be a burgess or a citizen of the city or a case may be a hardship situation in the council or corporation. We at the council level would look at it and make a decision.”
But despite the mayor’s assurances, the audit report also found further transgressions related to the mayor’s fund in mid-2017 in which a councilor was granted a loan to fund a zonal football league.
While it was approved by the council, Central Audit said they “did not obtain any documentary evidence on the repayment of the loan.”
In a document obtained by Guardian Media during its month-long investigation of the Port-of- Spain City Corporation, CEO Annette Stapleton-Seaforth, in responding to the issues raised in the Central Audit report about service providers in 2018, instructed, “Directed that all service providers be paid by the corporation, all net revenue has been suspended from transfer to the Mayor’s Fund pending the approval from the Minister of Finance.”
A total of $4200 was spent in July 2018 by the mayor on business lunches, the report revealed.
The audit authority said they saw no approvals by the Finance Planning Allocation and Resource Committee (FPARC) in accordance with section 110 (3) of the Municipal Corporations Act which states, “ all monies to be expended out of the Mayor’s Fund shall be authorised by resolution of the council.”
The CEO and city treasurer were later advised to guide the mayor on items expended from the Mayor’s Fund and this practice was later discontinued after their advice.
Central Audit recommended that the corporation develop and enforce a strict policy for the utilisation of the Mayor’s Fund to ensure compliance.
The Ministry of Rural Development and Local Government also responded to Guardian Media about this issue stating, “The ministry is aware that the Central Audit report raised several issues with the administration of the Mayor’s Fund. This challenge arose because of conflicting interpretations of the then section 110(2) (b) of the Municipal Corporations Act which provided that revenue from the Mayor’s Fund would be derived from’such monies as the council may, by resolution, authorize be paid into the fund.’
The ministry said, “This issue has since been rectified by section 14 of the Finance Act no.19 of 2018 and the minister’s circular dated June 13, 2019, outlining the procedures governing the administration and operations of the Mayor’s Fund.”
Another troubling issue brought to the forefront by the audit dealt with the award of a contract to One by One Investments (sic) done by sole selection-which did not adhere to the Central Tenders Board Act and the procurement practice of the corporation, as there was not any contract register or prequalification listing.
The report said, “The contractor’s quotation submitted to the corporation was not submitted to Central Audit for review, therefore the validity of the submission could not be determined.”
Central Audit added further that another incident had cropped up with the same contractor in 2017. There was no bid document or copy of the contract in relation to the restoration of four statues at Memorial Park in Port-of-Spain amounting to $80,000.
The report revealed, “As no strategic plan or programme of work schedules were seen it was difficult to assess whether this restoration project was a priority of the corporation.”
Martinez justified giving the relevant contracts to the company, citing it was a specialist project.
“The corporation would have issued that contract to One and One and they would have done it through the council. It was because it was a specialist project. It was not really a One and One contract because I think they had gotten quotes from other people and that is where they realise the specialist of the person was able to do it and that was actually to remove paint that was on the cenotaph for 60 plus years and also to bring out the granite on the steps and also the bronze of the cenotaph that was there for approximately 100 years.”
There were further questions raised about this job after a supplemental invoice for extra work amounting to $45,000 was approved by the council, which sent the additional contract value over the CEO’s limit.
The audit authority suspected this was done to avoid having to obtain the Central Tenders Board’s approval.
Martinez told Guardian Media when we spoke to him that “It was originally under the CEO’s limit from what I understand.”
Stapleton-Seaforth in her response to the Central Audit Committee said was far as she was aware, the council granted the approval for the work on September 5th, 2018, and the entire cost of the restoration of the cenotaph at Memorial Park was approximately $297,113.00.
“Sites visits were made to certify completion of the job for this particular project. The job was completed satisfactorily and within reasonable time for the Memorial Day celebrations. It is to be noted that the job completion certificate was signed off based on the capability and regular site visits by the CEO. However, the comments of the Central Audit team are noted.”
To prevent further such occurrences in the future, Central Audit recommended that all works undertaken in the future first pass through the engineering department for an estimation to ensure that the tender was value for money.