Audit finds other areas of concern including vacancies filled without being advertised
Durrant Pate/Contributor
The Financial Services Commission (FSC) has been cleared by Auditor General (AuG) Pamela Monroe-Ellis of widespread malpractices in its human resource management and procurement practices.
This came after the AuG commissioned a special audit to determine the veracity of allegations of malpractices and procurement breaches executed between March 2015 and September 2022, whereby posts were created without the approval of the Ministry of Finance and the Public Service (MoFPS) and vacancies were filled without being advertised.
It was also alleged that friends and related persons were being placed in positions for which they were not qualified, J$150 million loss on International Organization of Securities Commissions (IOSCO) conference, J$160 million spent on training over four years including overseas trips which were unauthorised by the MoFPS, payment to a contractor without evidence of the work that was done and faulty disciplinary procedures to victimise unfavoured persons.
No evidence
However, in her 25-page report, which was finally tabled in Parliament yesterday after earlier attempts in January this year, Monroe-Ellis “found no evidence of widespread malpractices in FSC’s human resource management. However, there are issues related to the entity’s establishment that need to be finalised with the Ministry of Finance and the Public Service”.
She observed that the FSC made payments of US$28,000 and J$4.8 million, which did not meet the policies and guidelines that govern them. As such, she is urging the FSC to consider the recommendations contained in this report to enhance the level of transparency in its human resource management practices.
Regarding allegations of malpractice in human resource management, the AuG said “while the FSC generally acted in accordance with government guidelines, several matters were unsettled with the Ministry of Finance and the Public Service. Further, we saw no evidence to substantiate the allegation of faulty disciplinary procedures”.
AuG findings
1. Regarding posts being created without the approval of the MoFPS
Whereas 71 positions costing J$363.3 million per annum (including emoluments and allowances) at the FSC were not on the ministry’s “List of Established Posts”, the AuG found no evidence of intention to circumvent Government policy. In a letter dated January 5, 2021, following a post audit conducted by the MoFPS, the FSC was requested to prepare a detailed justification to enable the ministry’s approval to regularise the positions.
However, the FSC, in responding to the MoFPS indicated that Section 4(3) and Section 7 of the FSC Act, authorise the FSC to take such actions. In response to our query regarding any follow-up action, the MoFPS indicated that no further action has been taken since receipt of the FSC’s response to the post-audit, and that the matter will be further reviewed as the contents are quite legal and are not confined to the FSC.
2. Regarding vacancies filled without being advertised
The AuG observed instances where officers were either employed or promoted without the positions being advertised or being interviewed. Although this practice accorded with the Public Service Regulations (3.1.16), it was not explicitly stated in FSC’s Human Resource Management manual.
The FSC indicated that steps will be taken “to amend its HR policy to address any ambiguities that may apply with respect to the role of interviews in the recruitment process… and… that since 2021, the commission has advertised and conducted interviews for all vacant positions”.
Regarding the allegation that friends and related persons were being placed in positions for which they are not qualified: we saw no evidence to substantiate this allegation.
3. Regarding allegations of excessive expenditures:
Allegation: J$160 million spent on training and overseas travel in 4 years:
I. Among the allegations levied against the FSC were the frequent overseas trips by senior officials disguised as official FSC business. Further, the overseas trips were undertaken without the permission or knowledge of the Ministry of Finance and the Public Service in contravention of Circular No. 16, File No. 27/026.
The AuG sought to verify the authenticity of the information in the allegation from documentation provided by the FSC. Based on information gleaned from the invitations received and other correspondence related to the events, the AG was able to determine the purpose (seminar, conference, training) locations, and individuals who travelled overseas.
Accordingly, the AuG saw no instance where the travel was not related to the respective officer’s work at the FSC and further, email correspondence corroborated that the travels related to the official business of the FSC.
Allegation: J$150 million loss on IOSC conference in 2017
II. FSC’s audited financial statements for 2017/18, revealed that total revenue earned for the conference was J$155.40 million while expenses amounted to J$319.04 million resulting in a loss of J$163.64 million.
Board minutes for July 2017 indicated that matters relating to the IOSCO Conference were discussed and the board agreed that there were missteps in the management of the contracting and other arrangements relating to the conference but that in the interest of maintaining Jamaica’s reputation, efforts will be made to make the conference a success.
FSC did not recover J$4.76 million paid in statutory obligations for former ED
III. In another instance, FSC did not demonstrate proper fiduciary responsibility when it accepted liability for the payment of J$4.76 million in the statutory obligations of a former executive director.
This was in a context where FSC did not withhold statutory payments of J$4.76 million from separation payments of J$11.1 million to the former executive director but as instructed by the board chairman, opted to classify the J$4.76 million as ex-gratia payments.
The FSC also paid the ED an amount of US$1,000 on the instruction of the chairman for which there was no evidence that both payments were brought to the attention of the Board.
Consultant paid US$28,000 without TOR and approved contract
IV. The former executive director (ED) of the FSC, referred to in paragraph 3(III) above, engaged a consultant for the period February 2015 through September 2015. FSC paid the consultant US$28,000. FSC did not have any terms of reference in place to govern payments to the consultant.
Recommendation
The FSC should seek to resolve with the MoFPS outstanding matters related to its establishment and recruitment practices and improve transparency in its HR processes. In addition, the FSC should seek to recover the overpayment of J$4.76 million in statutory obligations.
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