|State Enterprise Accounts
Published Thursday August 11th, 2011
In the next few
weeks, this column will cover some of the issues which are likely to
have a bearing on the 2012 Budget.
In my view the
State and its Agencies must perform in an exemplary fashion if we are to
progress. A good example is worth a thousand words.
At page 22 of the
2010-2011 budget statement, the Minister of Finance said -
Speaker, no coherent, co-ordinated planning or strategy for state
enterprises exists. As a result we have begun to rationalise the state
enterprises, including the special purpose companies, which will
incorporate a new accountability system that goes beyond the presently
operating company ordinances. It is these loopholes in public
accountability that resulted in the UdeCOTT scandal. This must never
again happen in Trinidad and Tobago. ..”
The Ministry of
Finance has now published a new State Enterprises Performance Monitoring
Manual 2011, it is over three times longer than the previous edition, so
it will be something to consider in weeks to come.
are stricter requirements in relation to the filing of accounts - at pg
30 of the 2011 guidelines -
AUDITED FINANCIAL STATEMENTS
Enterprises are required to submit the following:
Audited Financial Statements (2 originals and 120 copies) to the
Minister of Finance within four (4) months of their financial year end.
These reports are to be laid in Parliament and subsequently submitted
to the Public Accounts and Enterprises Committee for consideration;
Copies of their Management letters issued by Statutory Auditors. ..”
At pg 16 of the
2008 edition -
Publishing of Financial Statements by State Enterprises
agreed that State Enterprises be required to publish in at least one
(1) major daily newspaper a summary of the audited financial
statements within four (4) months to the end of their financial year and
a summary of the unaudited half-yearly statements within two (2) months
of the mid-year date.
statements must be in accordance with the requirements of the
Securities Industry Act, 1995. ..”
guidelines appear to be stricter, but the requirement to publish to the
press seems to have been removed.
swirling issues on this -
No accounts for years – As I have pointed out before, some of the
the largest State Enterprises have published no accounts for years.
UDECOTT and NHA/HDC are just two examples of this flagrant breach of the
shareholders' instructions as set out above. In the case of HDC, there
is a greater concern in my view, since sections 18, 19 and 20 of the HDC
Act require the audited accounts to be produced and published. Anyhow
you try to spin it, those are terrible signs. For a private company to
have no accounts, for even a few months, is indicative of poor
performance at the very least. No accounts for years is unacceptable.
One can only wonder how clearly could anyone plan if basic information
is being obscured in this fashion. We expect better from the chiefs of
these State Enterprises and certainly we expect better from the Peoples'
Partnership. In his preamble to the 2010-2011 budget, Minister Dookeran
“...We must at all times remember who we work for. We must make
Government work for the people. As our Prime Minister always says:
serve the people, serve the people, serve the people. ..”
Serious debts outstanding – There are continuing reports, despite
some efforts, that contractors, consultants and suppliers are owed
substantial monies by State Enterprises for extended periods. That has
a disastrous effect on our local economy both on an immediate tangible
level and in terms of the more subjective element of confidence.
Ambitious new projects continue to be announced, even as the
basic accounts are incomplete and substantial bills remain unpaid.
Apart from the
evident confusion, at the very highest levels of the State and
Government, the unacceptable part is that there is not even an attempt
to explain what is the hold-up or what areas of the accounts remain
unresolved. The few times anyone in authority has attempted to explain
the delays in those accounts, it has been a model of vagueness and
ambiguity. That uncommunicative behaviour does not augur well. These
State Enterprises are not building a wartime bunker or a new spy
satellite, only new homes and offices.
But there is
more, according to S. 99 (1) of the Companies Act 1995
(a) every Director of a company
shall in exercising his powers and discharging his duties act
honestly and in good faith with a view to the best interests of the
(b) exercise the care, diligence
and skill that a reasonably prudent person would exercise in
Those provisions make mismanagement of a
company an offence. It is literally impossible to manage or direct the
affairs of a multi-billion dollar company in the absence of audited
accounts. So there must be serious concerns as to how the Directors of
those State Enterprises without accounts could have properly discharged
their obligations under S. 99 (1).
Apart from these
points, there is now the fact that the SEC has made Orders in respect of
Contraventions of the Securities Industry Act 1995 and the Securities
Industry Bye-Laws 1997. Those Orders are in relation to the failure of
these huge State-owned Enterprises to publish their accts -
19th March 2010 against HDC, with fines totalling $121,000 - see
15th June 2011 against UDECOTT, with fines totalling $120,000 -
25th July 2011 against HDC, with fines totalling $400,000 - see
I was pleased to
see the SEC taking this firm action against these offending State
Enterprises, it is an important and necessary intervention. I am not at
all sure what, if any, ongoing penalties are being applied. If there
are no ongoing punishments or fines, this important regulator needs to
take a tougher stand. It is simply not good enough in my view for the
regulator to levy these fines and allow the companies to carry on with
'business as usual'. That would be like a dutiful policeman ticketing a
motorist for smooth tires, no seatbelt and no headlights – issuing the
ticket and letting that motorst drive off. The SEC needs to consider
heavy daily fines and banning orders against Directors of these
companies in breach of the law, if such do not already exist.
The era of
irresponsibility in high office needs to be brought to a close. The
role of the Treasury in supporting this grossly irresponsible behaviour
is questionable. The silence on the missing accounts is intolerable.
The chapter of getting away with it needs to be ended.
Expenditure of Public money – Accountability – Transparency =
Afra Raymond is
President of the Joint Consultative Council for the Construction
Industry (JCC) and Managing Director of Raymond & Pierre Limited.