The beleaguered Water and Sewerage Authority (WASA) has launched a full-scale investigation into the dereliction of duty by two managers which has resulted in the authority purchasing some $7.7 million worth of chemicals, some of which WASA no longer uses to treat its water. The unnecessary purchase of large quantities of chemicals has also left the authority with hundreds of thousands of dollars in expired products on its hands.
A report compiled by WASA’s Internal Audit and Compliance Department (IACD) advised that WASA obtain explanations and relevant supporting documentation from the managers for 36,287 kilograms of the chemical sequestrant ordered at a cost of $980,837.61 for sites no longer utilising the chemical and correspondence used to execute orders for 32,619 kilograms of chemicals valued at $881,691.57 which was received after the expiration of the contract.
IACD also recommended that based on explanations received the managers are “held accountable for failing to implement controls,” as well as “ordering the sequestrant after the contract extension period of April 8, 2020 and obtaining Tender Committee approval to ratify the delivery” after the contract extension date.
A sequestering agent, which offers scale and corrosion control, is added to WASA’s water before distribution.
WASA listed on its website: aluminium sulphate, chlorine, chlorine gas, calcium hydroxide, lime (calcium oxide) and poly aluminium chloride as some of the chemicals used to treat its water.
The managers are being probed for failing to manage the authority’s procurement process and inventory system.
The report compiled by IACD found that the managers allegedly misled the authority’s Tender Committee and its board by providing erroneous information which led to WASA incurring millions of dollars in losses.
WASA’s chairman Ravindra Nanga questioned about the managers allegedly misleading WASA’s board and tender committee which led the authority to purchase $7.7 million in chemicals, said “the board would have been told that we require these chemicals and when we looked, we may not have required that amount.
“And they would have done that on seven occasions, when in fact we had chemicals in stock and there was no need to buy these chemicals to the value of $7.7 million.
“We simply did not know how much (chemicals) we had.”
Based on preliminary information, Nanga said, it appeared that all the chemicals ordered were not needed.
“That is what the audit picked up. Had there been proper controls, you would not have had chemicals expiring.”
He said “At this stage, we are looking to see whether we recover from any source. That $7.7 million we have not verified that figure…whether or not that is the figure that was eventually lost.”
WASA is currently conducting an audit of chemicals purchased.
Recommendations of the report
A copy of the June 25, 2021, IACD’s report, signed by the then executive director of WASA Dr Lennox Sealy, unearthed significant losses suffered by WASA due to poor management, lack of procedures and oversight.
Contained in the report were over two dozen recommendations WASA was asked to implement by the audit committee to avoid a repeat of this situation.
One of the recommendations was that WASA ensures staff and managers be held accountable “for being negligent and not acting with due professional care resulting in erroneous information being provided and utilised by the Tenders Committee and the board resulting in the unnecessary approval of extension of contract (number given) of cost totalling $7, 744,000 on seven separate occasions.”
One manager, the report found, “failed to exercise due care and skill in the performance of his duties for the administration of the contract which resulted in the Tenders Committee and board being misled as erroneous information being used for decision making and the authority incurring financial losses at $1,431,395.47.”
The report stated that the control over the administration of one particular contract for the supply and delivery of sequestering/corrosion inhibitions/scale control of chemicals were “extremely weak” and IACD believes that “executive management, namely the managers, both failed to implement the appropriate controls to safeguard the authority.”
The report advised that WASA and the audit committee be handed two reports–one with regards to the justification for non-compliance with the World Health Organisation (WHO) standards and what measures were implemented following their recommendations.
Another recommendation put forward was that relevant staff and the managers are asked to explain the reason for not ensuring that the sequestrant is stored in a manner that facilitates the extension of shelf life, “resulting in preventable losses totalling $809,315.70 arising from expired sequestrant.”
The recommended that based on the explanation and consultation with Industrial Relations, “ensure relevant staff are held accountable for negligence of duty.”
In the report, WASA was also guided to ensure that 22 totes of expired sequestrant stored at the Caroni Area Water Treatment Plant (CAWTP) are tested for effectiveness and usability of the manufacturer’s confirmation of the sequestrant having a shelf life of 540 days.
“If it is confirmed to be viable, ensure it is immediately utilised at prescribed locations. In the event it cannot be utilised, ensure it is disposed of properly,” the report stated.
The report also directed WASA to perform an assessment of its unsecured sites by fencing their property and securing its gates to limit unauthorised access to avoid “potential exposure of the water supply being contaminated.”
Another recommendation was that the supplier (contractor) be contacted to determine the circumstances as it relates to the delivery of 1,179 kilograms of KemGuard 5825 to Mayaro Waterworks and Stonebright well #1 on May 5 and May 15, 2020, respectively.
“A determination should then be made whether the sequestrant was sourced from the CAWTP stockpile or from the supplier and payments processed accordingly.”
One recommendation was that the contractor “provide bill of lading or any documentation from the manufacturers Kemira Chemicals to support the quantities of sequestrants delivered against invoices listed to confirm the authority was accurately invoiced and paid for sequestrants delivered.”
The report further guided WASA to ensure explanations are obtained from the contractor for anomalies identified and based on the reasonableness of explanation received, complete a supplier appraisal form and submit to procurement to ensure that performance and lack of integrity of this supplier are noted and considered for all future procurement.
Another directive was that WASA transfer the responsibilities for the procurement and management of chemicals including liquid aluminium sulphate to the inventory and control department.
The report recommended that a standard operating procedure be developed to guide the functions of the contracts administration department.
To prevent overstocking and exposing WASA to financial risks, WASA was advised to assess the adequacy of the administration and management of liquid aluminium sulphate to ensure adequate control exists.
WASA’s chairman: The investigation is still ongoing
Confirming the managers are being investigated for dereliction of duty, WASA’s chairman Nanga said they do not have solid and sufficient evidence as yet to institute disciplinary proceedings. But he assured that if the authority comes up with sufficient evidence involving any wrongdoing action will be taken.
“The investigation is still ongoing. As of this stage in the investigation, we do not have sufficient (evidence) with which to institute disciplinary proceedings. But rest assured, once the investigation is completed and we have all the information before us, if there are grounds to take action against both our employees and outside that will be pursued.”
Nanga said while “the managers were perhaps negligent,” there was a “lack of processes” at WASA. “Because we did not have proper processes in place it would be difficult to formulate a charge of misconduct and negligence on the part of the employees,” Nanga told Sunday Guardian on Thursday.
Nanga said the managers are under investigation for “failing to manage the procurement process and WASA’s inventory system. It is along the lines of dereliction of duty.”
Had WASA instituted disciplinary measures against the managers, Nanga said, the authority would have been on shaky ground.
Questioned if the managers were issued warning letters, Nanga said WASA did not want to do anything prematurely during an investigation.
“If we send out a warning letter now and we subsequently found further information we do not want to be accused of punishing you twice for the same crime. So, we prefer to have a comprehensive investigation done.
“What we did instead, we have implemented the proper procedures and moving forward, if we should have a repeat of that type of behaviour then we would have sufficient information and material with which to take the necessary steps.”
He said WASA had no systems in place to ensure an efficient ordering, delivery, storage and inventory of chemicals which has since been rectified by the board. Several departments in WASA had to undergo an overhaul to ensure a better and efficient inventory system.
Chemicals, Nanga said, were ordered without any formal process.
Nanga readily accepted this was another case of mismanagement and dysfunction at WASA.
“Whatever shortcomings are brought to this board’s attention we are vigorously pursuing it.”
If during the investigations more things are unearthed “because that is a lot of money we are talking about, definitely people will be held to account,” Nanga said.
While the public may view some of the managers at WASA as negligent, Nanga said if there was culpability higher up, how can one discipline two managers?
“As you can see, those higher up…the directors have now been replaced. We found that when we went in with the existing board, we were not getting the type of responses that we required as a new board.”
In July, WASA had a managerial shake-up and replaced its entire executive team which is now led by acting CEO Sherland Sheppard.
Under the new board, Nanga said they have been trying to stem bad spending at WASA.
“I am still discovering things that are shocking us. So, it is extremely troubling. It is simply obscene what has been going on at WASA. It is extremely concerning to us with what we have seen and the amount of wastage that was taking place at WASA. I will not sit by and say it is business as usual. I know there are widespread problems.”
Asked if WASA had purchased expired chemicals in this $7.7 million batch, Nanga could not say.
“Again, because of how the system is we don’t know which is which because there was no proper inventory system. They can’t tell me, well, this was ordered yesterday and this is what we had sitting there for five years. Everything was in a mess.”
He said at the end of the probe WASA will be able to verify how much losses the authority actually suffered which they will try to recover.
Nanga said one area the board has been trying to curb is the approval for the extension of contracts.
The managers were accused of providing erroneous information to WASA resulting in the unnecessary approval of the extension of the contract and the authority purchasing millions in chemicals.
“Yes, the contract would have come to an end and what they do is they ask for extensions.”
He said after a supplier’s three-year contract comes to an end, instead of going back out to tender, they would come to the board for the contract to be extended.
“Although the contract would have been at an end…the contract would have been extended because before a purchase can take place you must have board approval and the board would have been satisfied that there would have been the proper paperwork. So, what the board would have done is that they would have extended the contract and they would have agreed to this supply being made.”
Nanga said the board was not in favour of extending contracts.
“This is something we met in WASA…the consistent extension of contracts. There are a number of extensions they came to us for that we did not approve.”
WASA has now implemented a system where every month they ask the Tender Committee for a listing of WASA’s emergency contracts.
When he assumed office, Nanga said the board also observed that contractors were not following proper procedures when submitting invoices.
A directive was sent to contractors that the failure to follow proper procedures will result in their invoices not being paid.
“That was the issue as a new board coming in…being unable to verify invoices. When we got into WASA as a board we realised we had unmanned plants and persons would say they are delivering chemicals there and we would not be in any position to verify whether those chemicals were in fact delivered.”
All contractors have since been advised to drop off chemicals at specific WASA sites with delivery notes signed by a WASA employee.
Nanga said WASA has explored the option of buying chemicals directly from the manufacturer to cut out the middle man.
He said this was how WASA was managed in the past and no one was held accountable.
“It was a free-for-all. Once we pick up any evidence of fraud…in terms of double invoicing WASA…if we pick up that type of fraudulent conduct the file will be sent to the relevant authorities.”