Recent disclosures to Parliament have led us to conclude that the State’s financial accounting is seriously flawed. The books have been rendered defective through suspect accounting practices, gaps in oversight of revenue, and the use of tactics that have the effect of masking shortfalls. The result? A distorted picture. A Budget statement every year, yet no true accountability.
According to Auditor General Majeed Ali, the State has been placing its $33 billion overdraft under assets in its books. “Generally accepted accounting principles require that an overdraft of this nature be shown as a liability,” says Ali in his Report on the Public Accounts of Trinidad and Tobago for the year ended September 2015. The document was tabled in Parliament last month. While the overdraft dates back to 2003, there is no doubt that the People’s Partnership (PP) administration at the very least failed to address this anomaly. Would shifting $33 billion not have a substantial effect on the overall balance sheet? There have also been subtle moves at State enterprises. A Joint Select Committee of Parliament on Tuesday heard of the National Gas Company (NGC) paying out a massive $6.8 billion dividend to its shareholder — the State — even as profits dropped to $605 million.
“Extraordinary,” said Independent Senator David Small. The sum came out of retained earnings.
Perhaps the State was able to draw upon revenues from an initial public offering involving the NGC, but did that comprise the full extent of the $6.8 billion? Whatever the case, the use of IPOs as a means of ostensibly bolstering revenue in the annual accounts has hidden implications.
IPOs represent the sale of State assets.
They turn long-term resources into short-term gains. While private ownership is encouraged, the State’s leverage is diminished over time. Its ability to use assets to seek financing is reduced. The books might appear more flush, but closer and closer we inch towards agencies like the International Monetary Fund.
Add to this the lax oversight of regulatory bodies and the picture is one of downright subterfuge. On Wednesday, Ministry of Energy officials sheepishly laid bare a litany of problems. This country has depended on the petrochemical industry for decades to fund everything we’ve got. Yet you would not be able to tell this based on what is going on at the ministry.
Parliament’s Public Accounts Committee heard that: 1) the ministry relies on measuring valves controlled by oil companies; 2) there are backlogs — going back years — in relation to the lab work needed to assign values; 3) there is a cosy relationship between the ministry and the same companies it is supposed to regulate; and 4) there are major gaps in the training of inspectors who do not sign-off on inspection reports.
At the same time, there are 5) poor remuneration and human resource arrangements (including in relation to pensions and leave) for ministry employees who are supposed to be the regulators; 6) and there are time limits to the oversight of the Auditor General. Despairingly, Housing Minister Randall Mitchell and Caroni Central MP Dr Bhoe Tewarie — the former Minister of Planning — had to point out to the ministry officials that these circumstances raised a disturbing prospect.
“Is it conceivable that the people of Trinidad and Tobago have been cheated?” Mitchell asked, almost rhetorically. With poor checking arrangements, there is no way to tell whether the revenues recorded were really what was due.
And let’s not even talk about $10 billion leaking, unaudited, at WASA, as well as Auditor General reports tabled years late.
All of these matters may well have predated the PP administration.
That does not absolve them. It now falls on the present PNM administration to raise the standard.
Given the global economic situation, we need to know. Otherwise, crapaud smoke we pipe.