Here's a report
published in 1988 by the prestigious Economist Foreign Report published weekly
by the Economist magazine.
A THIRD-WORLD MESS
FOREIGN REPORT has
obtained a copy, of the audit of government accounts dated December 1988 for
the Seychelles in the early 1980s. Although it is not marked secret, it has not
been distributed; It is not difficult to guess why. The report describes some extraordinary
accounting practices. In the cold language of auditors, it gives an unusual
insight into what happens when a third-world country is mismanaged.
The report speaks of inadequacies within government in the
management of capital project and in the monitoring, verification and
certification of the related expenditure. It adds that in some large
development projects "claims submitted by contractors were sometimes not
sufficiently authenticated before 'being approved for payment. Because of poor
monitoring, capital expenditure could not be compared with projected costs. As
for the Treasury's accounts, the auditor complained of "numerous errors,
some fundamental in nature”. He also grumbled about "delays, and sometimes
complete failure to detect errors”. The auditor rebuked the government for
writing off a number of advances that it had made. As for the size of the
advances, the auditor wrote that “because of lack of proper documentation it
has not been possible to make a realistic estimate of the extent to which these
advances are recoverable".
Looking in more detail at the government's dealings, the
auditor said the government owned L'Union Estate company obtained advances of
20m rupees ($3.6m) but the auditor was unable to find out, "in the absence
of the company's published accounts", what had happened to these advances.
The Seychelles Agricultural Company, which was subsequently dosed down,
"did not produce audited statements ‘of account during the, whole period
of its operations".
The Seychelles Electricity Corporation, set up in1982, was
wound up in 1985 but the auditor could say nothing about the government’s
position in it "in the absence of a disposal or liquidation
statement". The Seychelles Marketing Board absorbed several loss-making
state enterprises but the auditor could not work out their value in the absence
of the board's accounts from 1984 to 1987.
It was the same story with the Seychelles National Commodity
Co, set up in 1981 and wound up in 1984, which had not produced any audited accounts".
The auditor stated that the government had contributed 90.8m rupees to the
company. He thought it was mostly irrecoverable.
As for the Seychelles National Investment Corporation, the
auditor could not establish its equity share capital. "My department has
not been able to obtain any published report on the financial operation and
results of the corporation for the years from inception [1979] to 31 December
1987".
The arrangements for the Seychelles Philatelic Bureau, which
issued stamps, came in for a particularly explicit rebuke. Various reports from
audits about these arrangements pointed out, the auditor said, that they were
"wholly deficient and fraught with opportunities for the perpetration of
high-scale fraudulent abuses". The auditor did not suggest that any actual
fraud had been committed.
Nothing in writing
The Public Transport
Corporation, like other parastatal agencies, received various advances from the
government and these, were "not subject to any written agreement as to the
terms of repayment" and the “amount is unverifiable" in the absence
of the corporation's audited statements. The prospect of these advances being
repaid seems remote."
Similar problems existed for the Seychelles Tea and Coffee
Company, wholly purchased by the government in 1988. "In the course of my
audit I was barred access to the file of the Department of Finance on the
subject of this acquisition," the auditor complained. "This, coupled
with the unavailability of records the auditor complained. "This, coupled
with the unavailability of records including the company's audited financial
statements, has inhibited my effort to assess the net worth, … I have also been
unable to check the authority for the acquisition agreement."
The auditor used stronger language in commenting on the
Seychelles Tourist Board. He said he was unable to confirm that it had
received and used subventions of 72m rupees ($12.9m), as it appeared. He,
added that a public organization has been allowed to spend such huge amounts of
public funds without accountability constitutes in my opinion 'a serious breach
of the concept of public accountability and make nonsense of the concept of
control requirements of the Seychelles Tourist Board Act.''
Another big source of
funding has been the Agricultural Loans Fund whose assets in the form of bank
loans "cannot be realistically quantified in the absence of records".
It was disconcerting, the auditor wrote, that all my efforts from as far back
as 1977 in drawing attention of those concerned to the consequences of the
existing lack of effective monitoring and collection procedures seem, in the
end, to have been in vain.
