NDIA purchased $M in machinery for GuySuCo

Forensic audit

– $1.8B spent on unjustifiable repairs

The National Drainage and Irrigation Authority (NDIA) has been spending millions of dollars over the years to buy machinery for the Guyana Sugar Corporation (GuySuCo) without any clearance from the Board of Directors or cabinet, according to the forensic audit conducted last year.
The audit report was published on Friday by the Ministry of Finance and was done by Nigel Hinds and Clement DeNobrega, covering the period November 1, 2011 to May 31, 2015. hymac 1
In the report, Hinds pointed out that NDIA purchased 10 Hyundai R220 LC excavators valued $295 million and tractors with harrows costing some $198 million for GuySuCo in 2013, amounting to $493 million. According to the auditor, the excavators were on the Asset listing provided by finance staff but they were not described as NDIA property and were registered in the name of GuySuCo.
He further noted that the registrations for the tractors and harrows were not available as those were still with the supplier and were not even on the listing provided. Those tractors were supplied directly to GuySuCo for drainage and tillage.
In addition, he disclosed that one excavator was purchased and registered in the name of Ministry of Public Works at a cost of $27 million but was shown on NDIA Asset Listing.
“There has to be a clear Policy Guideline to inform Finance Staff as to what items of machinery and equipment should be included on its asset listing and reasons why items purchased with NDIA Funds are excluded; instead of having NDIA appearing as a banker for GuySuCo,” Hinds outlined.
According to Hinds, when NDIA was de-linked from the Ministry of Agriculture (MoA) in 2004, it received capital assets upon its establishment as a separate entity. The analysis of the registration documents of machinery revealed that ownership of the machinery NDIA acquired from the ministry was never vested in the authority.
This practice, the auditor said, continued well into 2014 when some 25 excavators procured for NDIA were registered in the name of MoA. He noted that while there were some units that were correctly registered to NDIA, some other machines are described as owned by “MOA & NDIA”.
It was further observed that the 10 excavators that were bought for GuySuCo, are registered as owned by the MoA and are listed as “MOA NDIA Property”. These excavators are listed as located at GuySuCo and the transaction would be dealt with under capital expenditure since it appears as though NDIA acted as a bank to the Sugar Corporation.
The auditor noted that management could not provide any explanation for this irregular practice.
Moreover, it was disclosed that a letter was written by then Deputy Chief Executive Officer (DCEO), R.Singh, to NDIA CEO, Lionel Wordsworth, in June 2013 for the authority to provide short-term financing for 10 Holland Tractors to the tune of $161.9 million. The auditor explained that while this money was repaid on January 3, 2014, NDIA had used funds from its own budget to fund that request and this would have impacted on its plans for the 2013 fiscal year.
In addition to these purchases, Hinds said NDIA also constructed pumping stations valued $146 million based on figures seen in its Capital Expenditure Plan.
“It is still not clear why tractors with harrows used primarily for tillage by GuySuCo would have been purchased by NDIA.
More importantly there was no evidence from the Board Minutes reviewed that this matter was discussed at the Board level. Even the letter written by Mr. R.Singh, DCEO of GuySuCo was not presented to the Board,” the auditor posited.

On the other hand, Hinds revealed too that NDiA expended over $1.8 billion from both its capital and current budgets during the period 2011 to 2014 on repairs and rehabilitation of machinery without any proper justification as to what the monies were spent on specifically. “No one from management could provide any justification for the level of expenditures on repair works, which was done by contractors… Minutes of the Board Meeting showed members were not told at any point of the massive repair costs or provided with cost reports for discussion and decision making as to the level of expenditures,” the auditor stated.
Hinds noted that in some cases, vague descriptions were written on work orders about the repairs but the invoice values attached were huge. Furthermore, the auditor said Head of the authority’s Mechanical Division, Avinash Singh, had revealed that he was aware of the high costs of repair works on machinery and equipment and agreed that the sums spent did not make financial sense, thus, should be halted immediately
“There were several memos exchanged between the CEO, Mr Lionel Wordsworth and Mr Avinash Singh on this matter but little or no action has been taken to date to address the high repairs costs,” the auditor found.
Furthermore, he outlined that based on contracts examined for the years 2012 to June 2015, which amounted to some $587 million out of $896 million, it was revealed that 93 per cent of the amount spent was on repairs and rehabilitation of machinery and equipment, and the remaining seven per cent on spares and supplies.
According to Hinds, this suggested a preference for external repairs rather than for repairs to be done in house. However, he noted Singh had argued that NDIA was not equipped to handle its own repairs because of the absence of mechanics and other resources.
To this end, contracts to the tune of $547 million were awarded to 52 contractors for repairs and maintenance out of which 72 per cent or $392 million were awarded to eight contractors.