JUTC fails to report hundreds of accidents

• $614m in outstanding claims

BY ALICIA DUNKLEY Observer senior reporter dunkleya@jamaicaobserver.com

Thursday, January 26, 2012

THE Jamaica Urban Transit Company (JUTC) has been rapped by Auditor General Pamela Monroe Ellis for not reporting 1,231 accidents involving its buses and another three involving fleet vehicles between April 2009 and August 2010, a violation of the Financial Administration and Audit Act (FAA).

The auditor general, in her report for the fiscal year ending March 31, 2011 tabled in Parliament on Tuesday, said the cash-strapped entity, as at March 31 last year, had outstanding accident claims of an estimated $614.3 million.

These, the auditor general said, involved claims made by employees and passengers arising from major bus accidents and claims submitted by insurance brokers and companies.

"We found that the JUTC did not have a robust system in place to record all accident claims," the report said.

Monroe Ellis said the bus company's management was advised to "properly record and track all accident claims and institute steps to reduce the high incidence of vehicular accidents by the bus operators".

The auditor general said, too, that the company did not maintain a history of the repairs or maintenance and fuel transactions for its fleet vehicles.

"This is in direct contravention of the Ministry of Finance's policy which requires that an operational efficiency record is maintained for all fleet vehicles. In the absence of this, the JUTC has compromised its ability to readily determine whether a vehicle is operating economically," Monroe Ellis pointed out.

She also said the relevant officers at the bus company did not submit receipts to allow for verification that fuel-related payments totalling $624,308 were bona fide.

Meanwhile, the beleaguered company has incurred legal fees totalling $2.7 million arising from its failure to adhere to the provisions of the Labour Relations and Industrial Dispute Act and the company's Personnel Policies and Procedural Manual when terminating employment contracts.

Further, in the series of black marks against the entity, the auditor general's assessment found that for the 2009/10 fiscal year the company recorded losses of $2.2 billion, resulting in an accumulated deficit of $8.3 billion as at March 31 in 2010.

According to the report, the JUTC has not been able to make a profit due to a number of factors including "an uneconomical fare structure, inadequate government subvention and a preponderance of illegal transport operation within the Kingston Metropolitan Transport Region (KMTR)".

In the meantime, the company did not pay over $4.9 billion in statutory deductions to the relevant authorities as at August last year. Of that sum $1.2 billion should have gone to the National Housing Trust and the National Insurance Scheme. The auditor general said the company was advised that failure to pay over the amounts was not only a breach but would deprive employees of their benefits.

The JUTC, in its defence, said it "continues to grapple with insufficient fare revenue from operations and an unrealistic subvention to cover the gaps in its operating costs".