JCC wants sanctions for breaches of governance framework for public bodies

Thursday, December 06, 2018

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KINGSTON, Jamaica — The Jamaica Chamber of Commerce (JCC) is recommending that the Corporate Governance Framework for Public Bodies be embodied in law with appropriate sanctions for breaches, following Tuesday's release of a damning report from the Auditor General's Department (AGD) on the operations of the Petroleum Corporation of Jamaica (PCJ) and its affiliate, the state-owned oil refinery Petrojam.

“We further hold that persons responsible for the flagrant misuse of public funds should never again be deemed fit to take up any future office where they will have similar responsibility for the expenditure of public funds,” JCC said in a statement yesterday.

See auditor general's full report on Petrojam:

The AGD's report found that Petrojam could not account for more than 600,000 barrels of oil estimated at just over $5 billion over a five-year period; that the company obtained no value from $17.4 million paid to a consultant to undertake financial and market assessment and financial and future sustainability assessment of Petrojam; and the company financed two “surprise” parties at a cost of $2.6 million which had nothing to do with its operations.

It also revealed a number of deficiencies to include a number of corrupt practices and several instances of nepotism at the oil refinery, inconsistent recruitment and employment practices, instances of management overriding procurement guidelines, poor management of capital investment projects and consultancy arrangements, and inadequate oversight and monitoring.

The JCC said that the clinically detailed report would seem to indicate that the problem with Petrojam goes far beyond the actions of a few individuals but represents massive systemic failures both within the institution itself and in those organs of the state with oversight responsibilities.

See JCC's full statement below:

The Compendium Audit Report: A Review of Aspects of PCJ and a Comprehensive Audit of Petrojam Limited submitted by the Auditor General's Department on Tuesday December 4 makes disquieting reading.

While public disclosures in Parliament had already alerted the nation to incidents of alleged nepotism, improper HR practises, and procurement standards violations among other things, this clinically detailed report would seem to indicate that the problem with Petrojam goes far beyond the actions of a few individuals but represents massive systemic failures both within the institution itself and in those organs of the state with oversight responsibilities.

As worryingly, it is clear that there are no shortages of rules and guidelines that mandate how certain procedures are to be carried out. The AGD report painstakingly indexes the occasions where the stipulations of the GOJ's Accountability Framework and the Public Bodies Management & Accountability (PBMA) Act - or even the organization's own policies - have been ignored or bypassed without any evident sanctions over the course of years and over different political administrations.

In this respect, we are supportive of the GOJ's intent to define and implement Policy Guidelines for the Nomination, Selection and Appointment of the Boards of Public Bodies that it signalled earlier this year, as good governance starts at the top of the organization with the Board having the responsibility to set the tone by strong ethical conduct and holding to account any within the organization who act in a corrupt or unethical manner.

A fundamental principle of good governance is that there must be an approved budget that management is held accountable to deliver. In the case of Petrojam there was an abject failure on the part of both the Ministry and the Board to exercise oversight and to hold management accountable for the flagrant over-expenditure as well as the severe under-performance on the revenue side. The accountability mechanisms at the level of the institution must be such that individuals know that the misuse and wanton waste of public resources are sanctionable offences.

The Corporate Governance Framework for Public Bodies and the PBMA Act also clearly identify the reporting requirements of the boards and officers of public bodies and the oversight mandates of senior establishment officers such as Permanent Secretaries and the political heads of Ministries, Departments & Agencies.

In this regard we call for the Corporate Governance Framework for Public Bodies to be embodied in law with the appropriate sanctions for breach. We further hold that persons responsible for the flagrant mis-use of public funds should never again be deemed fit to take up any future office where they will have similar responsibility for the expenditure of public funds.

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