By Mwenya Mofya,
SECRETARY to the Treasury Felix Nkulukusa says punitive action will be taken against officers from the Disaster Management and Mitigation Unit (DMMU) and the Ministry of Defence if they fail to produce documents which allowed various payments.
Appearing before the Public Accounts Committee, Tuesday, Nkulukusa wondered how payments would be made in the absence of vouchers.
“There are two payments that were observed. One was going to DMMU and the other one was going to the Ministry of Defence. We wish to state that the Ministry of Finance through head 21 processed funding amounting to 5 million to DMMU and 20 million to the Ministry of Defence. Further, the treasury wishes to submit that the expenditure pertaining to the amounts funded to the two institutions were made from DMMU and the Ministry of Defence.
The Ministry of Finance collected the expenditure returns from the two institutions as guided by the financial regulations number 10 of the Public Financial Management Act. Management advised the auditors that since the payments were made from these respective institutions, contracts, interim payments, certificates, invoices, statements of accounts and delivery notes and goods received vouchers were domiciled with these institutions,” Nkulukusa said.
“I only took office yesterday and I had discussions with my colleagues and I requested that I may have a sight of the original copies of these documents but they are still getting these documents. I am very sure that probably when we go back I should be able to get these documents. I have got the powers under the Public Finance Management Act to discipline anyone who does not do this.
I am now the chief controlling officer, I think my colleagues should be able to make sure that all those simple things like vouchers not being found at the time of payment, I am asking how do you make a payment if the voucher is not there? For this particular case, I will make sure that even myself I am satisfied with the fact that the documents were there and the payments were made in order. If they were not made in order I will make sure that I invoke the provisions and the powers that I have according to the Public Financial Management Act and take punitive measures.”
Nkulukusa said government was paying penalties to Advanced African Solution for delaying a loan payment in the agreement where the company built 98 food reserve shades.
“The contracts between the Food Reserve Agency and the Advanced African Solution. Unfortunately, these are some of the areas where we have got some leakages and we note that the initial contract in 2013 had a sum of $70 million to do 98 food reserve shades. This was then revised and due to the delays and the escalation costs, it was revised to $73 million. The contracting was then changed from being financed from a loan to being financed from government resources.
The contractor, knowing that government had challenges in paying, went and put a clause that should the date for payment for this loan come and government fails to pay, every shade that we have, they will charge $2,000 per day. So it meant $2,000 per day by 98 shades that we had was the penalty that government would pay everyday that we did not pay what we committed to pay from the date that we were supposed to pay,” he said.
“Knowing the challenges that government has had, we normally look at the trend analysis. If government was always current in payment, this would have been a straightforward contract. We know these challenges of arrears started not just now but it has got a history in public finance management. The challenge is that we agree with the Auditor General that we had wasteful expenditure because we had to negotiate to bring down the penalties for failure to pay them in advance.
The penalties initially were in the sum of $115,498,000 and we then negotiated and we agreed that they reduce to $52,000,000. Even that became a bit worrisome for us and we have since engaged the company so that we can go further and re-amend the contract and if they do not want that we relook the contract and ensure that we do not have wasteful expenditure as observed by the Auditor General.”
Nkulukusa said government would be issuing directives to public bodies to appoint specific contract managers.
“We will be issuing some directions to public bodies to appoint specific contract managers for each of the contracts that are there. We have a contract from FRA and we are hoping that going forward with the amendments that we are proposing to the contract, we will be able not to incur any wasteful expenditure.
The government through the Ministry of Justice has started deploying legal officers to Ministries, provinces and spending agencies. Initially, we have concentrated on Ministries with high value procurement,” he said.
“The legal officers will ensure that when these contracts are being done, the legal provisions can give advice and ensure government is informed when signing contracts. We will make sure that we tighten up and make sure everything is done in accordance with the standard prescribed provisions of the law.
Those that fail to do that we will not fail to instigate immediate corrective measures that will send a signal to others. As we come to appear for the 2022 budget, we will make sure that all documents will never miss because it will be a prerequisite that whoever is being signed all documents must be there.”
Meanwhile, Nkulukusa said the government’s failure to pay contributions to international organisations was due to resource constraints.
“The major issue of why we are here is with regards to the failure to pay subscription and contributions to international organisations. We needed to pay subscriptions and contributions to international organisations but because of the resource constraint, we could not be able to execute the budget as planned.
When constitutional obligations call for a demand on government resources we have to fulfill those before we fulfill anything else, instead of what we put in the budget. This is why it is important that every time we should make sure that the budget provision, especially for those constitutional obligations like debt service, are provisions that are adequately provided for so that you do not disturb the funding of other programmes,” said Nkulukusa.