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Audit shows group MD, human resources manager unaware of honorariums paid to senior executives
Monday, April 19, 2010
AUDITORS probing the operations of the Petroleum Corporation of Jamaica (PCJ) said they found that honorarium payments, totalling just under $2 million, were made to two senior executives and an executive assistant between December 2006 and June 2007.
However, neither the group managing director nor the manager of the Human Resources Unit knew of the payments which, the auditors said, were made contrary to the practice in the public sector.
But even more startling is the auditors' discovery that the two senior executives who received the honorariums signed the cheques paying themselves.
The forensic audit, a copy of which was obtained by the Observer, was commissioned by the Government after it was informed of irregularities at the State-run PCJ during the tenure of the previous administration.
According to the audit, which examined the fiscal year April 1, 2006 - March 31, 2007, the former director of administration, his executive assistant and the former financial controller each received a retroactive honorarium payment in December 2006, followed by a monthly honorarium payment to June 2007.
The total sums paid saw the former director of administration receiving $1,062,500; the former financial controller getting $540,000; and the executive assistant receiving $340,000.
However, the auditors said they were unable to find any documentation in the PCJ's expenditure files or in the Accounts Unit showing who approved and authorised the honorariums, how the amounts were calculated and the basis for the payments.
They also said that there was no record of the honorariums in the Human Resource records or in the personnel files of the three individuals who received the payments.
However, when the audit team -- comprising the Canadian firm Papineau Consulting Inc, internal auditors from the Ministry of Energy and Mining and the Auditor General's Department -- pressed for information, they said the former director of administration showed them a memo dated December 7, 2006 that originated from him and was addressed to the then former chairman requesting the honorarium.
According to the auditors, the reason given for the request was that the three individuals had successfully managed the PetroCaribe Funds since February 2006.
"The then former chairman's signature appears on the memo approving the honorariums," the auditors said.
But according to the auditors, the practice in the public sector is for honorariums to be paid to staff who are assigned special duties which are extraneous to their normal duties and which necessitate the performance of official duties beyond normal working hours, usually for at least 10 hours in excess of the 40-hour work week.
"No evidence was seen to suggest that these individuals carried out additional duties in relation to the management of the PetroCaribe Funds beyond normal working hours," said the auditors.
They said, too, that they interviewed the executive assistant who received the payments and she confirmed that she had not worked supplementary hours beyond the normal work week.
"Statutory deductions were not made from these honorarium payments as is required by government guidelines," the auditors said. "The expenditure approval forms for the honorariums were handled and approved by the former director of administration and the former financial controller who both signed the cheques paying themselves.
"This is highly abnormal and not prudent that persons receiving any type of payment from their employer would be approving the payment expenditure forms, processing the accounting records and signing the cheques paying themselves," said the auditors.
http://www.jamaicaobserver.com/news/PCJ-mystery_7535141
Monday, April 19, 2010
AUDITORS probing the operations of the Petroleum Corporation of Jamaica (PCJ) said they found that honorarium payments, totalling just under $2 million, were made to two senior executives and an executive assistant between December 2006 and June 2007.
However, neither the group managing director nor the manager of the Human Resources Unit knew of the payments which, the auditors said, were made contrary to the practice in the public sector.
But even more startling is the auditors' discovery that the two senior executives who received the honorariums signed the cheques paying themselves.
The forensic audit, a copy of which was obtained by the Observer, was commissioned by the Government after it was informed of irregularities at the State-run PCJ during the tenure of the previous administration.
According to the audit, which examined the fiscal year April 1, 2006 - March 31, 2007, the former director of administration, his executive assistant and the former financial controller each received a retroactive honorarium payment in December 2006, followed by a monthly honorarium payment to June 2007.
The total sums paid saw the former director of administration receiving $1,062,500; the former financial controller getting $540,000; and the executive assistant receiving $340,000.
However, the auditors said they were unable to find any documentation in the PCJ's expenditure files or in the Accounts Unit showing who approved and authorised the honorariums, how the amounts were calculated and the basis for the payments.
They also said that there was no record of the honorariums in the Human Resource records or in the personnel files of the three individuals who received the payments.
However, when the audit team -- comprising the Canadian firm Papineau Consulting Inc, internal auditors from the Ministry of Energy and Mining and the Auditor General's Department -- pressed for information, they said the former director of administration showed them a memo dated December 7, 2006 that originated from him and was addressed to the then former chairman requesting the honorarium.
According to the auditors, the reason given for the request was that the three individuals had successfully managed the PetroCaribe Funds since February 2006.
"The then former chairman's signature appears on the memo approving the honorariums," the auditors said.
But according to the auditors, the practice in the public sector is for honorariums to be paid to staff who are assigned special duties which are extraneous to their normal duties and which necessitate the performance of official duties beyond normal working hours, usually for at least 10 hours in excess of the 40-hour work week.
"No evidence was seen to suggest that these individuals carried out additional duties in relation to the management of the PetroCaribe Funds beyond normal working hours," said the auditors.
They said, too, that they interviewed the executive assistant who received the payments and she confirmed that she had not worked supplementary hours beyond the normal work week.
"Statutory deductions were not made from these honorarium payments as is required by government guidelines," the auditors said. "The expenditure approval forms for the honorariums were handled and approved by the former director of administration and the former financial controller who both signed the cheques paying themselves.
"This is highly abnormal and not prudent that persons receiving any type of payment from their employer would be approving the payment expenditure forms, processing the accounting records and signing the cheques paying themselves," said the auditors.
http://www.jamaicaobserver.com/news/PCJ-mystery_7535141
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