an edited version appeared in Island Business, Nov. 2014
Fiji tax-payers have received an absolute bombshell regarding the use of their money by the Bainimarama Regime, with the simultaneous release of the Auditor General Reports for the years 2007 to 2013, all 28 volumes of them (very much in keeping with the Diwali fireworks and in anticipation of the now forgotten Guy Fawkes night).
These reports are detailed audits of government incomes, expenditures and borrowings, usually tabled annually in Parliament by the Minister of Finance, as a “report on the performance of the government” for the previous year.
All taxpayers must understand what is in these reports, given that annually at least 25% (or more than a billion dollars) of their total incomes is forcibly taken from them by the government as taxes, hundreds of millions further are borrowed by the same government to be paid by the current and future tax payers, and the entire revenue is then spent allegedly on tax-payers’ behalf.
The Auditor General Reports try to verify whether the taxes are being collected according to the law, whether loans are being borrowed responsibly and as planned, and whether the revenues are being spent the way that parliament approved or as stated in the Annual Budget documents, or whether there are deficiencies in the above.
Upon tabling in parliament and with the elected parliamentarians, the Auditor General Reports are usually released to the media, and hence to the public to monitor and act if they see fit.
That is what used to happen annually for forty six years after independence in 1970.
Then the cycle was broken by Commodore Bainimarama who seized power through a coup in December 2006.
Principles of a sound audit
It is useful to first outline the basic principles which the owners of all organizations, private or public, expect from a good audit whether in accounting, economics or management:
- The Auditor General must be totally independent of the Fiji Government (reasonably so) and must be adequately resourced (not so, according to his reports);
- The government ministries must give the Auditor General every information that they ask for (they refused in a number of cases);
- The audit must clearly point out the major faults (done pretty well), as well as the remedies to the owners, the people of Fiji (not so good);
- The owners must be able to make the organizational changes that are necessary to eliminate the faults pointed out (little chance of that);
- The next audit must check to see if the faults pointed out the previous year have been rectified (often not rectified) and the public notified of these failures (not done).
Despite the Auditor General’s best efforts, some of these principles have been significantly compromised by the Bainimarama Government (as given in the brackets above), the most obvious being the complete failure to report annually.
No AG Reports from 2007 to 2013
For seven years, the Auditor General Reports have been prepared and submitted to the Bainimarama Cabinet by a very brave group of civil servants in the Auditor General’s Office (read here my appreciation of them).
But the Bainimarama Government and Minister of Finance refused to release any of the AG Reports, despite the many requests from the public and international condemnation. Read here one of my last critical articles to appear in The Fiji Times, 28 October 2008.
The flimsy excuse was that the law required Bainimarama to table the reports in Parliament and because there was no parliament (which he himself had removed), he did not have to table the reports, totally ignoring that the fundamental objective was for the Bainimarama Government to report to the people, not some empty hall in the Parliamentary complex at Veiuto or Government buildings.
For eight years, the unelected illegal Bainimarama Government completely controlled the raising of taxes and loans, and the spending of all revenues, without any accountability whatsoever to the people.
Then, after becoming an elected Prime Minister in September 2014 (promising “equality for all” and “if you don’t want another coup, vote for me”), he released all seven sets of Auditor General Reports, totaling 28 reports altogether.
They are now being read by the curious media and the public, many understandably searching for evidence of abuse and misuse of tax-payers’ funds.
The revelations in the reports
Professor Biman Prasad, the Chairman of the Public Accounts Committee which is charged with examining the AG Reports, has already stated that “it has become abundantly clear there has been widespread abuse of public funds and blatant disregard of fundamental financial procedures (as well as) … pilferage, wastage and abuse of public funds”.
Professor Prasad noted that there had been “continuous disregard of recommendations by the Auditor-General” indicating that the Bainimarama Government carried on “business as usual” year after year for eight years, making no attempt at correcting the mistakes being pointed out by the Auditor General.
These conclusions are quite damming of Bainimarama’s performance as Prime Minister and Minister of Finance, and also of the two most important Permanent Secretaries – of Finance and Public Service.
They also explain why Bainimarama and Khaiyum were adamant in not releasing the reports before the September 2014 elections, given that they would have inevitably influenced the outcome and certainly Bainimarama’s support.
With Bainimarama’s Fiji First Party campaign claiming great honesty, transparency, accountability and opposition to corruption, the Opposition parliamentarians can now legitimately state that the evidence in the Auditor General’s Reports suggest that the 2014 elections were won by Bainimarama and Khaiyum using lies and deceit.
Of relevance to this claim is the personal integrity of Prime Minister and Finance Minister Bainimarama and Attorney General Khaiyum, with respect to the salaries that they paid themselves during 2010 and 2013, and the blatant abuse of process of payment.
While the Public Accounts Committee will no doubt investigate the many revelations of costly abuse of public funds and lack of transparency and accountability, the public will be especially interested in the revelations about ministerial salaries between 2010 and 2013, and what is still not being revealed.
The public already know that in November 2011, Regime supporters John Samy and the late Archbishop Mataca (Co-Chairman of the National Council for Building a Better Fiji) wrote a letter to Bainimarama, complaining about the increasing lack of transparency and accountability of his Government.
Samy and Mataca noted that there were rumors that Bainimarama and Khaiyum “both were being paid exorbitant salaries, not through the Ministry of Finance but a close relative of the AG, through a high-fees based contractual arrangement”.
The leader of the Fiji Labour Party (Mahendra Chaudhry) who had also been the Minister of Finance in the Bainimarama Government in 2007, is also on record accusing Bainimarama and Khaiyum of paying themselves multiple salaries from 2010 to 2012, before reverting them to the lower ones revealed after the elections.
Sure enough, the AG Report for 2010 (Vol. 2, Section 4, p11) reveals that as a result of a Cabinet instruction of 4 Jan 2010, the Prime Minister’s Office issued invoices to the Ministry of Finance to pay salaries through Alizpacific, (an accounting firm associated with Dr Nur Bano Ali, an aunt of Attorney General Aiyaz Khaiyum).
The Report noted that the $1.8 million paid (listed on a monthly basis) had no supporting documents, and was intended to “alter the terms and conditions of engagement of all Ministers”. The AG Report stated that this “compromises the transparency of payments being made”.
But the Public Accounts Committee must investigate serious breach of process that the AG’s Report did not raise. First, why should Ministers’ salaries be increased by the Ministers themselves, when there have always been proper independent avenues available to do so?
Second, why should Ministers’ salaries be paid through a private accounting firm when that has always been the prerogative of the Ministry of Finance?
Third, what were individual Ministers being paid in totality in 2010?
Fourth, why was the Prime Minister’s Office refusing to reveal the information to both the Auditor General and the Ministry of Finance?
That is still not the whole story.
The public should note that the AG Report for 2010 and for other years, had complained that there is a Head 50 under which many undocumented payroll expenditures in other Ministries were partly paid, and whose own payroll expenditures were being understated.
For example, Table 4.9 in Volume 2 of the 2010 Report, noted that there was an unexplained $247,200 in emoluments paid to the Prime Minister’s Office, as well as $1,253,625 paid to the Royal Fiji Military Forces. Who exactly received these payments?
Fast forward to the AG Report for 2013, Vol. 2. Section O4, pp.13 and 14. The Report stated their review of the Head 50 Expenditure revealed that the Ministry paid a total of $1,860,947 as Cabinet Ministers’ salaries in 2013, based on the amounts provided by Alizpacific Chartered Accountants & Business Advisers) associated with the same Nur Bano Ali.
This time, individual payments vouchers (but not the names of the Cabinet Ministers) were documented including one for $278,750 (presumably paid to Prime Minister Bainimarama, and which was still way above what had been paid previously to Prime Ministers).
In addition it was noted that Bainimarama received a “gratuity” payment of $57,500 from a different vote, bringing his total recorded salary for 2013 to $366,250 which is way above what Prime Ministers had been paid before 2006.
Again, there were large undocumented payments for emoluments from the Head 50.
Despite repeated requests for the associated documents from both the Auditor General’s Office and Ministry of Finance, the Prime Minister’s Office refused to make the details available, according to the Auditor General.
What an extraordinary and serious breach of PSC rules by the PS in the Prime Minister’s Office (now an elected Minister in parliament) and the Prime Minister himself. Did the PSC take any action?
The 2013 AG Report on Ministers’ salaries also documented that there was another unexplained “additional Ministers payroll expenditure” of $137,150. Did this item include the “commission” charged by Alizpacific as had been questioned by John Samy, Archbishop Mataca and Mahendra Chaudhry?
The Public Accounts Committee will no doubt investigate further the Bainimarama Government’s practice of paying ministers’ undeclared salaries through a private accounting company, if necessary subpoenaing the AlizPacific, Ministry of Finance, FRCA and Fiji National Provident Fund officials.
The Public Accounts Committee will no doubt also want to investigate the back pay of $185 thousands that Bainimarama was paid in 2008, supposedly for accumulated leave from 1978, completely against all PSC regulations.
They might also want to investigate the irregular massive increase of some Permanent Secretaries’ salaries just before the 2014 Budget, supposedly recommended by another private accounting company.
I personally believe that salaries of $300,000 or so for a Minister of Finance or a Permanent Secretary of Finance can be justified IF they are qualified and competent, given that they effectively manage “a billion dollar enterprise” with potentially massive benefits or costs because of their decisions.
But the sad evidence before Fiji is that in 2011, an incompetent Minister of Finance and Permanent Secretary of Finance, and the Attorney General (why him?) with the avaricious assistance of ANZ Bank, borrowed $500 million internationally at 9% interest, when IMF was willing to lend the same sum at 2% interest, thereby costing Fiji taxpayers an unnecessary interest repayment of $40 million annually (which we are still paying) (read about that sorry saga here).
More reports to come
The public should note that these 28 Auditor General Reports are only for the Central Government accounts.
They do not cover the dozens of public enterprises and semi-commercial organizations which Government either wholly or partly owns, or for which government and taxpayers have contingent liability for. The Auditor General is also required to audit them and he apparently has already done so for a number of them.
Some of these public enterprises, such as Fiji Roads Authority, Ports Authority, AFL and others spend hundreds of millions of dollars of tax-payers money, with an equally great capacity to misuse large amounts of tax-payer funds.
Some, such as Fiji National Provident Fund, have already written down $300 million in members funds at its investments in Natadola and Momi, and their associated audit reports have been suppressed as well.
We can therefore expect that there will be perhaps another hundred reports coming out of the Auditor General’s Office in the next year or so, to be also examined by the Public Accounts Committee, parliament, the media and the general public. Academics will have a field day.
While today Rear Admiral (ret) Voreqe Bainimarama is reminding Fiji that the terrible National Bank of Fiji disaster that cost taxpayers a massive $220 million should never be forgotten or repeated, the next generation will be crying about the Bainimarama/Khaiyum disaster which has already cost Fiji more than a billion dollars over the last eight years, and they have another four more years to add to that.
Consequences of eight year delay
The purpose of issuing the AG reports annually is that the elected representatives of the people can call on wrong-doers to be suitably disciplined and surcharged if necessary.
The public can then see whether there is any improvement taking place at all in the way government is managing tax payers’ money.
Not issuing the report for eight years is therefore a horrendous indictment of the unelected illegal Bainimarama Government’s arrogant refusal to account for tax payers’ money, especially when every year, the Auditor General has refused to give unqualified audits to most of the financial agencies they have audited.
It is as if a school refuses to give the annual report on a student for Forms 1, 2, 3, 4, 5, and 6.
Then it gives all the reports together with the Form 7 Report, which tells the student (and the parents) that he has been failing every year, and is now ineligible to enter university. What remedial action can the parents and the student take now?
That is exactly the daunting situation faced by the Public Accounts Committee, whose scope for disciplinary action will be totally undermined for two reasons. First, the guilty civil servants or Ministers will have moved on (except for a prominent few).
Secondly, the Bainimarama Government has supposedly given itself “immunity” in the 2013 Constitution, for undefined actions between 2000 and 2014, although this ought to be tested in the courts, using the wonderful 2001 judgment by Justice Anthony Gates, that no tyrant has the power to change a constitution, regardless of how long he rules and how popular he may be.
Who should the Auditor General report to?
It is surely ridiculous that the Auditor General reports to the very Government Ministers whose financial performance is being audited, and who allegedly become responsible for making it available to Parliament or the public.
It is equivalent to an examinations report for a student being given to the student himself, who can then decide whether to give the report to his parents or not.
Parliament needs to consider placing the Auditor General’s Office under the Secretary to Parliament, rather than the Ministry of Finance, who has a vested interest or conflict of interest, in the audit.
Better still, given our coup culture and the continuing possibility of lawful governments being removed and parliament being closed down, the Public Accounts Committee ought to consider changing the legislation (what legislation, you might well ask?) to ensure that the Auditor General’s Reports are launched publicly and put on their website, without having to go through any Minister or Parliament.
That is the least that tax-payers can expect for the use of their money by elected or unelected government ministers.
Lessons for parliament and the Public Accounts Committee
For seven years, Bainimarama and Khaiyum have repeated over and over that they did the coup to remove corruption and give the people of Fiji a government that was more transparent and accountable.
The evidence in the Auditor General Reports indicates that the people and voters of Fiji have been grossly and deliberately misled by the current elected Prime Minister and Minister of Finance, through their suppression of the damaging Auditor General Reports, and their refusal to provide the Auditor General and the Ministry of Finance with the information that they asked for and were entitled to receive.
The evidence of the Auditor General Reports clearly indicates that these two government ministers obtained significant personal financial advantage by paying themselves large increases in salary, decided by themselves.
These irregular salaries were then improperly paid through a private sector company associated with a relative of the former Attorney General and current Minister of Finance. The Auditor General Reports also revealed that this same company has received extremely favorable treatment on business consultancies awarded without tender, and this will no doubt be another focal point for the Public Accounts Committee.
In civilized countries, government ministers and even Prime Ministers resign over improper benefits of a few thousand dollars or allegations of vote buying, as happens regularly in Australia or Japan or NZ.
Here we are talking of hundreds of thousands of dollars obtained from the taxpayers of a much poorer country through irregular processes.
It would be perfectly legitimate for the Opposition in Fiji Parliament, following the debate on the Auditor General Reports, to file a motion calling on Bainimarama and Khaiyum to resign, if they genuinely believed that all are equal before the law.
The Opposition could call on other Fiji First Party parliamentarians to support their motion if they believed in the principles of good governance, or to at least abstain on the vote.
Lessons for the media
For several years now, some journalists at the Fiji Sun, Fiji Broadcasting Corporation and Communications Fiji Ltd, have waged blatant propaganda campaigns on behalf of Bainimarama and Khaiyum.
During the elections campaigns, they have been viciously unfair towards Opposition candidates and parties who questioned the Bainimarama Government’s record on issues revealed by the Auditor General Reports to have substance after all.
If these journalists had any ethics at all, they would apologize to the public and now present the public with critical analyses based on the unpleasant facts which have been revealed by the Auditor General’s Reports.
What they do or not do over the next few weeks will reveal whether they were simply misguided naive ignorant journalists or they were and continue to be media prostitutes for their employers, whose financial interests, biases and objectives are well known.
Whatever they do, the media coverage of the Auditor General’s Reports will be visible to the world, and will give journalism students and academics excellent material for case studies on the role of the media and journalists in subverting or defending good governance and accountability in Fiji.
The public and the media might want to seek statements from the Fiji Institute of Accountants and Auditors, the Law Society , Transparency International Fiji or the several departments and professors of governance and law at USP, FNU and FU, but I suggest that given their record over the last eight years,the public would be well advised not to hold their breath waiting for a response.
The record of the Bainimarama Regime on accountability
Readers may wish to read the following earlier articles on the Bainimarama Government budgets:
- https://narseyonfiji.wordpress.com/2013/11/13/2690/ (“The 2014 Budget: selling the farm assets”)