AUDITOR-GENERAL'S REPORT - · PDF fileAUDITOR-GENERAL'S REPORT ON ... 6.6 Duty allowances...

34
REPUBLIC OF VANUATU OFFICE OF THE AUDITOR-GENERAL AUDITOR-GENERAL'S REPORT ON THE INVESTIGATION OF VANUATU BROADCASTING & TELEVISION CORPORATION (VBTC) FOR THE YEARS 2005 TO 2011 Submitted to Prime Minister Date 7 June 2011

Transcript of AUDITOR-GENERAL'S REPORT - · PDF fileAUDITOR-GENERAL'S REPORT ON ... 6.6 Duty allowances...

Page 1: AUDITOR-GENERAL'S REPORT -   · PDF fileAUDITOR-GENERAL'S REPORT ON ... 6.6 Duty allowances paid to board members ... 6.10 Daily allowances paid to general manager & board members

REPUBLIC OF VANUATU

OFFICE OF THE AUDITOR-GENERAL

AUDITOR-GENERAL'S REPORT

ON

THE INVESTIGATION

OF

V ANUATU BROADCASTING & TELEVISION CORPORATION (VBTC)

FOR THE YEARS 2005 TO 2011

Submitted to Prime Minister

Date 7 June 2011

Page 2: AUDITOR-GENERAL'S REPORT -   · PDF fileAUDITOR-GENERAL'S REPORT ON ... 6.6 Duty allowances paid to board members ... 6.10 Daily allowances paid to general manager & board members

Contents

1. Executive summary

2. Background

3. Mandate

4. Objective

5. Scope and methodology

6. Allegations and findings 6.1 Appointment of board members 6.2 Sitting allowances for board members 6.3 Advances to Board members 6.4 Bonus payments to board members 6.5 Goodwill payments to board members 6.6 Duty allowances paid to board members 6.7 Severance payment to Mr Bruno Leingkone 6.8 Advances by general manger 6.9 Legal Services paid with no proper contract 6.10 Daily allowances paid to general manager & board members

6.11 Staff advances & bonus 6.12 Reinstatement of former Officer, Mr Antoine Malsungai 6.13 Resignation of Finance Controller 6.14 Unapproved board minutes, missing Board Minutes & inadequate

Filing system

7. Summary 8. Acknowledgement 9. Appendices

1-2

2

2

2-3

3

3-29

29-32 32

Page 3: AUDITOR-GENERAL'S REPORT -   · PDF fileAUDITOR-GENERAL'S REPORT ON ... 6.6 Duty allowances paid to board members ... 6.10 Daily allowances paid to general manager & board members

1. Executive summary

The Vanuatu Broadcasting and Television Corporation (VBTC) is a Government corporate

institution established under section 2 of the Broadcasting and Television Act [CAP 214]. VBTC

is run on behalf of the Government of the people of Vanuatu by a seven-member board of

directors. A General Manager is responsible for the running of the Corporation.

Under section 10 (1) (2) VBTC Act the major functions of the Corporation shall be:

(a) To provide television and sound broadcasting services within Vanuatu, for disseminating

information, education and entertainment;

{b) To secure proper standards of television and sound broadcasting with regard to both

program content and technical performance of broadcasts;

(c) To exercise licensing and regulatory functions in respect of the sale and use of television

receivers and broadcasting receiving apparatus;

(d) To act internationally as the national authority or representative of Vanuatu in respect

of matters relating to broadcasting;

(e) To advise the Minister in respect of matters relating to broadcasting;

(f) To exercise and perform such functions and duties in relation to broadcasting as are

conferred or imposed under this Act.

The Corporation has two roles including providing services to the public and as well as

operating as a commercial entity.

VBTC has a Staff Manual and a Strategic Plan for 2010-2015 with a vision to lead media

institution in Vanuatu, independent politically and financially, serving people's development

needs through educational, informative and cultural programs and accessible to all on a range

of national, provincial and local platforms.

Most VBTC staffs are members of the Vanuatu National Workers Union.

VBTC has an organizational structure which was modified in April 2009 and later approved by

the Board to reflect the required paradigm shift needed for VBTC to function more efficiently.

VBTC is under the portfolio of the Ministry of the Prime Minister's Office. Under section 3{1) of

the VBTC Act, the Prime Minister appoints board members upon the recommendation of the

Council of Ministers and thereafter instruments of appointments are prepared and published in

the gazettes.

Under section 8 of the VBTC Act, the Minister responsible shall determine the rate of such

allowances payable to board members with the approval of the Minister responsible for

Finance.

1

Page 4: AUDITOR-GENERAL'S REPORT -   · PDF fileAUDITOR-GENERAL'S REPORT ON ... 6.6 Duty allowances paid to board members ... 6.10 Daily allowances paid to general manager & board members

The Minister responsible must approve the appointment of the General Manager under section

12 {1) of the VBTC Act.

2. Background

Annually Vanuatu Government provides a budget grant of Vt 45 million to VBTC. Donor

partners also provide institutional strengthening support to VBTC.

The Ministry of Finance & Economic Management has requested the Auditor-General to

conduct an investigation into certain allegations against board members and management of

VBTC in connection with the following:

• The appointment of Board members of VBTC.

• The payment of Board members' sitting allowances, advances, bonus, goodwill

payment, duty allowances and daily allowances.

• Ongoing salary payment for a staff member, Mr Bruno Leingkone who had ceased

employment at VBTC.

• The General Manager approving personal advances for himself.

• The Board approving large bonuses for themselves in 2009.

• Payment to a Lawyer {Ronald Warsal) for legal services without invoices or proper

record of services rendered.

• The General Manager and certain Board Members going on fully funded international

trips also claiming additional daily allowance from VBTC.

• Staff advances and bonus payment

• The reinstatement of a former employee Mr Antoine Malsungai

• The resignation of the Financial Controller from VBTC

• The re-appointment of the General Manager.

• Inadequate books and records maintained by management

3. Mandate

The Auditor-General is mandated under the Expenditure Review and Audit Act [CAP. 241] 1998

to carry out audits and investigations together with the Vanuatu Broadcasting and Television

Act [CAP. 214] 2006.

4. Objective

The primary objective of the investigation is to shed some light on accusations of

mismanagement made against the board of directors and management of VBTC. The following

allegations were made:

2

Page 5: AUDITOR-GENERAL'S REPORT -   · PDF fileAUDITOR-GENERAL'S REPORT ON ... 6.6 Duty allowances paid to board members ... 6.10 Daily allowances paid to general manager & board members

• The appointment of Board members did not comply with VBTC Act;

• The payment of Board members' sitting allowances, bonus, goodwill, daily allowances,

duty allowances and advances given was not approved by the Minister responsible for

finance;

• The overpayment of severance pay for a staff member who ceased employment;

• The General Manager's personal advances exceeding the required limit;

• The Board members approving large bonuses for themselves in 2009 is proper;

• Payment to a Lawyer for legal services rendered is not proper;

• The General Manager and certain board members going on fully funded international

trips claiming additional daily allowance from VBTC;

• Other matters.

5. Scope and methodology

The investigation covered the period from 2005 to 2011.

Our investigative procedures involved:Conducting interviews and discussions with responsible

officers of VBTC and other relevant officers in Port Vi la.

• Examination of evidence in substantiating the allegations.

6. Allegations and Findings:

6.1 Appointments of VBTC Board members

Findings Section 3{1) of the Broadcasting and Television Act [CAP 214], "The Corporation shall consist of members not less than 5 and not more than 7 appointed by the Minister, on the recommendation of the Council of Ministers, from amongst persons appearing to him to be qualified by reasons of experiences in broadcasting, television, engineering (especially telecommunications, electronics or computer technology), journalism, public relations, communications, administration, finance, law, accountancy or other related subject''.

Section 3(4) of the Broadcasting and Television Act [CAP 214], "Every member of the

Corporation unless he vacates office under subsection {7) shall hold office for such period not

exceeding 3 years as is specified by the Minister and shall be eligible for reappointment''.

The official gazette instrument dated 25 March 2009 removed two former board members as

follows (Refer to Appendix A):

1. Mr. Leonard Carlot

2. Mr. Ruatau Abel

3

Page 6: AUDITOR-GENERAL'S REPORT -   · PDF fileAUDITOR-GENERAL'S REPORT ON ... 6.6 Duty allowances paid to board members ... 6.10 Daily allowances paid to general manager & board members

The official gazette dated 25 March 2009 had the following board members appointed for a

period of 3 years (Refer to Appendix A):

1. Mr. David Tevi Chairman 2. Mr. Wilson Aru

3. Mr. Atis Kala 4. Mr. Sau Allan 5. Philip Telarey 6. Tom Lorry[Lovi]

The required number of board members in accordance with section 3(1) of the VBTC Act states that members shall consist of not less than 5 and not more than 7 appointed to the board.

The 3 year tenure of these members should end on 25 March 2012. However, because Minister responsible has the power under section 3(7) of the VBTC Act to remove a member, which states, "The Minister may remove the Chairman, Deputy Chairman and any member of the Corporation if he or she:

(a) Is incapacitated by physical and mental illness; ar (b) Has perform unsatisfactorily for a significant period of time; or (c) Is convicted of an offence involving dishonesty or fraud; or (d) Is absent from 4 consecutive meetings of the Corporation unless the member is excused

by the Corporation for having been absent from those meetings; or (e) Becomes bankrupt; or (f) Is otherwise unfit or unable to discharge the functions of a member.

On 14 January 2011 that the Minister responsible removed the following board members

according to section 3(7) (b) ofVBTC Act (Refer to Appendix B):

1. Mr. David Tevi Chairman

2. Mr. Wilson Aru

3. Mr. Atis Kala

4. Mr. Sau Allan

5. Mr. Christian Bihu

6. Mr. Richard Leo

We noted that an error was made in including Mr Christian Bihu and Mr Richard Leo in the

removal list as the two were never part of the board members appointed on 25 March 2009.

However the new board members in the gazette dated 14 January 2011 also included Mr

Christian Bihu and Mr Richard Leo as follows (Refer to Appendix B):

1. Christian Bihu Chairman

4

Page 7: AUDITOR-GENERAL'S REPORT -   · PDF fileAUDITOR-GENERAL'S REPORT ON ... 6.6 Duty allowances paid to board members ... 6.10 Daily allowances paid to general manager & board members

2. Leonard Carlot 3. Oraka Keliu 4. Bruno Leingkone 5. Richard Leo

Also the Minister responsible for appointment of board members did not fully comply with section 3(1) of the VBTC Act in terms of the procedures followed in the appointment of board members. As the proposed names of board members should be firstly discussed and endorsed by the Council of Minister and thereafter the Minister may appoint board members based on the recommendation of the Council of Ministers.

Under section 3(9), "all appointments made under this section shall be published in the gazette" . lt is therefore not correct for the Minister when before signed off the prepared Official gazette instrument appointment of board as quoted "In exercise of the powers conferred on me by subsection 3{1) of the Broadcasting and Television Act {CAP 214}, I Hon. Minister acting in accordance with the recommendation of the Council of Ministers, appoint the following persons as members of the Vanuatu Broadcasting and Television Corporation".

The Secretary to the Council of Ministers advised that appointments of VBTC board members had never been discussed at the Council of Ministers' level in the past and present (Refer to Appendix C).

lt was noted that the two board members were removed on 14 March 2011 under section 3(3) (d) as follows (Refer to Appendix D):

1. Luc David 2. Tom Lorry

And were replaced by the following two members as per the official gazette dated 14 March 2011 (Refer to Appendix D):

1. Edmond Joseph 2. Jeff Joel Patunvanu

Conclusion Appointment of board members by the Minister responsible has not complied with section 3(1) of the VBTC Act.

Recommendations 1. The General Manager should advise Minister responsible to ensure full compliance with

section 3(1) of the VBTC Act when appointing board members of VBTC. 2. The proposed names of Board members must be first submitted to Council of Ministers for

their deliberations.

5

Page 8: AUDITOR-GENERAL'S REPORT -   · PDF fileAUDITOR-GENERAL'S REPORT ON ... 6.6 Duty allowances paid to board members ... 6.10 Daily allowances paid to general manager & board members

3. The appointment of Board members must be made based on the qualification and experience criteria set out in section 3{1) of the VBTC Act.

4. The current practice of appointing Board members based on political affiliation and or political interest must immediately stop.

5. Consideration is given to amending the VBTC Act to stop political interference and the continuous change in the board composition.

6.2 Sitting allowances for board members not approved

Findings Section 8(1) of the Broadcasting and Television Act [CAP 214L 11the members of the Corporation shall be paid such allowances in such manner and at such rate as may be determined by the Minister with the approval of the Minister responsible for finance".

An advice from the State Law Office states that 11 members of the Corporation are entitled to the allowances that have been determined by the Minister responsible for broadcasting and television with the approval of the Minister of finance". (Refer to Appendix G).

The determination of a rate of Vt 10,000 was made on 24 August 2005 by the then Prime Minister, Hon. Ham Lini Vanuaroroa (Refer to Appendix F). However this rate was never approved by the Minister responsible for Finance.

The Director General of the Ministry of Finance and Economic Management during a meeting on 22 October 2010 confirmed that they have no records of any approval given by the Minister of Finance with regards to the rate of sitting allowance of the members (Refer to Appendix G1).

Conclusion lt is evident that no approval was ever given by the Minister responsible for finance in respect of the rate of sitting allowances for the board members.

Recommendation 1. The General Manager must ensure that the current Board members' sitting allowance

rate of Vt 10,000 must be approved by the Minister responsible for finance in compliance with section 8(1) of the VBTC Act.

2. In future the General Manager must obtain the approval of the Minister responsible for finance in regards to the rate of the sitting allowances for board members.

6.3 Advances by board members not approved

Findings

6

Page 9: AUDITOR-GENERAL'S REPORT -   · PDF fileAUDITOR-GENERAL'S REPORT ON ... 6.6 Duty allowances paid to board members ... 6.10 Daily allowances paid to general manager & board members

Section 8(1) of the Broadcasting and Television Act [CAP 214), "the members of the Corporation shall be paid such allowances in such manner and at such rate as may be determined by the Minister with the approval of the Minister responsible for finance~~.

The State Law advised that "members of the Corporation are entitled to the allowances that have been determined by the Minister responsible for broadcasting and television with the approval of the Minister of finance".

Section 3{8) of the Staff Manual states, "special advances may be granted at the discretion of

the General Manager subject to the following conditions:

(a) The advance must not exceed one and a half times the basic salary of the Officer

concerned per month;

(b) The advance must be repaid over a period not exceeding 3 months commencing from the

date of the advance;

(c) No application will be approved if the officer is due to go on leave within the next 3

months of the date of such application; and

(d) All advances must be repaid in full by 31 December of each year.11

The Staff Manual provides for only staff members to make advances but not board members and as such, only staff members ofVBTC are entitled to this benefit.

However, it was evident from records that several members made advances from the

Corporation from 2007 to 2010 with amounts ranging from Vt 5,000 to Vt 40,000. All of these

members have repaid their advances with the exception of one member who is still owes

money (Refer to Appendix H).

Conclusion

The General Manager including the Chairman failed to ensure that advances by board members

were approved by the Minister responsible for finance under section 8(1) of the VBTC Act.

Therefore the advances to members are illegal.

Recommendation 1. The General Manager must ensure that any advance requested by a board member

must adhere to section 8(1} of the VBTC Act at all times. 2. Any advances to board members must have the approval of the Minister responsible for

finance before making any payments. 3. General Manager must cease immediately from approving advances to board members. 4. All advances to board members must be repaid in full immediately.

7

Page 10: AUDITOR-GENERAL'S REPORT -   · PDF fileAUDITOR-GENERAL'S REPORT ON ... 6.6 Duty allowances paid to board members ... 6.10 Daily allowances paid to general manager & board members

6.4 Bonus paid to board members not approved

Findings Section 8(1) of the Broadcasting and Television Act [CAP 214) states, "the members of the Corporation shall be paid such allowances in such manner and at such rate as may be determined by the Minister with the approval of the Minister responsible for finance".

The State Law advised that "members of the Corporation are entitled to the allowances that have been determined by the Minister responsible for broadcasting and television with the approval of the Minister of finance".

Section 3(3) of the VBTC Staff Manual states, "where an officer shown to be particularly diligent

in his or her work and performs exceptionally well, the Corporation may grant the Officer a

special bonus as a reward in acknowledgement of the officer's efforts".

The Staff Manual provides for only staff members to be paid bonuses but not board members.

The members meeting of 21 December 2009 approved payments of bonuses to staff and themselves (Refer to Appendix 1).

No records of bonuses paid to members in 2009 were provided.

In 2010 four members received bonus payments of Vt 50,000 each including an advance amount of Vt 200,000 as shown in table below (Refer to Appendix J).

Advances 200,000

David Tevi 50,000

Tom Lorry 50,000

Atis Kalo 50,000

Wilson Aru 50,000

Total 400,000

The members justified their bonus payments as being in recognition of their time in making important decisions with respect to the implementation of the reform program in VBTC.

Conclusion Bonus payments made to board members were not approved by the Minister responsible for

finance and were therefore illegal.

8

Page 11: AUDITOR-GENERAL'S REPORT -   · PDF fileAUDITOR-GENERAL'S REPORT ON ... 6.6 Duty allowances paid to board members ... 6.10 Daily allowances paid to general manager & board members

Recommendat ion 1. General Manager must ensure in future that any bonus paid to Board members must be

approved by the Minister responsible for finance. 2. General Manager must immediately cease from approving bonus payments for Board

members. 3. Appropriate measures must be taken immediately to recover all bonus payments made

to the board members involved.

6.5 Goodwill payments to Board members not approved

Findings Section 8(1) of the Broadcasting and Television Act [CAP 214], "the members of the Corporation sholl be paid such allowances in such manner and at such rate as may be determined by the Minister with the approval of the Minister responsible for finance".

The State Law advised that "members of the Corporation are entitled to the allowances that have been determined by the Minister responsible for broadcasting and television with the approval af the Minister of finance".

The General Manager approved the following goodwill payment fo r five (5) board members in December 2008 as shown in table below (Refer to Appendix K).

rr.m;~]l )~~F~;;r~~~·~Y~'f1l~~·ji~~~~~;·7'f·' r:J_tr;·~ ~1~~)~2~; .~'· ..... ·;·: .. ~..~~,. ·~ .. .r~~r, "'' .. \"T.'"'ti",-i.:i;f:. • .... :t· ~!. ~. ij •. t·.~-r"~~~- -"·1 :~ ·t· .;·, ~ ... ;-'; ''""'f•:JJ.t' ··mal"' '>r~,1~,:~> ':':. ~f1lillf'illlil~Ji~~·-'·-·· .... ;.· "¥.::\,•"~·:--~ I~ ~l£1 ~ ~~i.;;~ L'*iitJ 1 ~j,~;~~J,o,

19-Dec-08 David Tevi 30,000

19-Dec-

08 A bel Kalkot Ruatau 30,000

19-Dec-08 Leonard Carlot 30,000

19-Dec-08 AI an Sau 30,000

19-Dec-08 Maurice Joe 30,000

Total

The General Manager's approval of the goodwill payment is illegal and breached section 8(1) of

the Act. Only the Minister responsible for finance has the authority to approve such payments.

Conclusion Goodwill payments made to board members were not approved by t he M inister responsible for

finance and were therefore illegal.

9

Page 12: AUDITOR-GENERAL'S REPORT -   · PDF fileAUDITOR-GENERAL'S REPORT ON ... 6.6 Duty allowances paid to board members ... 6.10 Daily allowances paid to general manager & board members

Recommendation 1. General Manager must ensure in future that any goodwill payments made to Board

members must be approved by the Minister responsible for finance. 2. General Manager must immediately cease from approving goodwill payments for Board

members. 3. Appropriate measures must be taken immediately to recover all goodwill payments

made to the board members involved.

6.6 Duty allowances paid to Board members not approved

Findings Section 8(1) ofthe Broadcasting and Television Act [CAP 214], "the members of the Corporation shall be paid such allowances in such manner and at such rate as may be determined by the Minister with the approval of the Minister responsible for finance".

The State Law advised that "members of the Corporation are entitled to the allowances that have been determined by the Minister responsible for broadcasting and television with the approval of the Minister of finance".

Section 18 of the VBTC Staff Manual provides for staff members' entitlements as follows:

1. Subsistence allowance 2. Overseas subsistence allowance 3. Housing allowance 4. Child allowance 5. Acting allowance 6. Entertainment allowance

The Board members are also entitled to allowances but it must be determined by the Minister responsible and must be approved by the Minister of Finance before such allowance paid to members.

lt is evident from records that the General Manager approved a duty allowance for certain board members as shown in table below (Refer to Appendix L).

28-May-07 Christian Bihu 5,000

29-May-07 David Tevi 5,000

31-May-07 David Tevi 5,000

10

Page 13: AUDITOR-GENERAL'S REPORT -   · PDF fileAUDITOR-GENERAL'S REPORT ON ... 6.6 Duty allowances paid to board members ... 6.10 Daily allowances paid to general manager & board members

1 31-Ma;; I Christian Bihu 5,000

Total 20,000

The duty allowances were paid to certain Board members for reasons that they were on official duties in the attendance of special events and ceremonies.

The General Manager should not have approved the duty allowance for the Board members, but should consult and advise the Minister responsible with regards to board duty allowance after then seek Minister of Finance approval.

Conclusion Duty allowances paid to board members were not approved by the Minister responsible for finance and were therefore illegal.

Recommendation 1. General Manager must ensure in future that any duty allowances paid to Board

members must be approved by the Minister responsible for finance. 2. General Manager must immediately cease from approving duty allowances paid to

Board members. 3. Appropriate measures must be taken immediately to recover all duty allowances paid to

the board members involved.

6. 7 Overpayment of severance pay to Mr Bruno Leingkone

Findings Under section 13 of the VBTC Act, stated that "the Corporation may appoint at such remuneration and upon such term and conditions as it thinks fitJ such other OfficersJ employeesJ agents, advisers or consultants as my be required for the proper and efficient discharge of the functions of the Corporation".

The Vanuatu Broadcasting and Te levision Corporation recruited Mr Bruno Leingkone in May

1993 as a producer and presenter of news on Radio Vanuatu. From then on he was promoted

to other higher positions within the Corporation until on 12 May 2009 when the General

Manager offered him two options of either to be terminated or to resign from work on the

grounds of misconduct following a board decision.

Chronology of events

In May 1993, Mr. Bruno Leingkone was formally appointed by the VBTC Board as a

producer/presenter on sa lary scale of Vt. 33,040 per month.

11

Page 14: AUDITOR-GENERAL'S REPORT -   · PDF fileAUDITOR-GENERAL'S REPORT ON ... 6.6 Duty allowances paid to board members ... 6.10 Daily allowances paid to general manager & board members

In January 1994, Mr leingkone received a formal suspension letter from the Board Chairman for

walking out from duty without notifying neither the General Manager nor the Board.

On 14 November 1994 Mr Leingkone received another suspension letter for politising some

message that were supposed to be aired but was not, after confusion with the receptionist.

On 21 November 1994 the General Manager advised Mr leingkone to return to work following

a board decision.

On 7 June 1995, Mr leingkone was suspended for serious misconduct being under the influence

of alcohol and not able to produce his program and ended up sleeping on a desk in the

production room.

On 26 June 1995 the General Manager advised Mr Leingkone to return to work following a

board decision.

On 21 November 1995 Mr leingkone was suspended for two weeks on half (X) salary as a

punishment for not been on a shift duty under the influence of alcohol and was not able to

produce the program on air on time.

In March 1996 Mr Leingkone received a letter from his Program Manager to be transferred to

Studio 5 North in Luganville, Santa.

On 10 December 1996 Mr leingkone was suspended on a half (X) salary by the Board of

Directors from work due to non-transmission of Radio and TBV programs in luganville, Santa

without any valid reasons which is against the policy of VBTC.

On 30 January 1997 the Board of Directors has decided to re-instate Mr Leingkone to his duty at

Studio 5 North and warned him that his suspension was considered as a last warning for serious

misconduct.

On 23 May 1997 the Board of Director confirmed Mr Leingkone to a permanent position on a

salary scale of Vt 42,840 per month.

On 25 May 1998 the Board of Director gave a salary increase for Mr Leingkone to a salary scale

ofVt 50,120 per month.

On June 1998 Mr Leingkone requested the General Manage if possible that the Studio 5 North

to have a temporary Officer since Mr. Peter Joely, the Manager of Studio five North was on a

sick leave; and it is difficult to have one man performing the work of two persons as far as

Journalist is concerned.

12

Page 15: AUDITOR-GENERAL'S REPORT -   · PDF fileAUDITOR-GENERAL'S REPORT ON ... 6.6 Duty allowances paid to board members ... 6.10 Daily allowances paid to general manager & board members

On 4 March 1999 the Board of Directors approved and confirmed a new position for Mr

Leingkone as a Producer/On Air Presenter in accordance with the new Organization structure

on a salary scale of Vt 63,840 per month.

On 30 March 1999 Mr Leingkone received a warning letter from the Program Manager because

Mr Leingkone changed the English/Bislama or French program without the prior approval from

the Program manager or the Program supervisor.

On 24 May 1999 Mr Leingkone was transferred back to VBTC Head quarter in Vila and Mr James

Moli replaced him following the reform program undertaken in early 1999 in restructuring

VBTC.

On August 1999 the General Manager wrote to the Manager Programs & Chief Engineer and

raised his concerns that he was not happy at all on-air performance of Mr Leingkone and

requested the Manager to provide him of a detailed explanation of why Mr Leingkone has not

aired the Australia's 7 am News and the 7:30am Messages.

On 22 September 1999 Mr Leingkone signed a declaration of secrecy document with VBTC.

On 5 January 2000 Mrs Evelyne Toa, the Program Supervisor submitted a formal letter to her

Program Manager, Mr Ambong Thompson regarding Mr Leingkone requiring discipline by the

Board of Directors for not attending to his roster duty on 2 January 2000 at 4:30pm to 10:15pm.

On 25 January 2000 following a Board of Directors meeting held on 20 January 2000, a warning

letter was issued to Mr Leingkone for leaving the on-air studio of Radio Vanuatu unmanned for

about 15 minutes during the new year holidays, after the next announcer failed to turn up on

time.

On 3 July 2000 the Board of Directors appointed Mr Leingkone to a new position under the new

VBTC staff structure on a salary scale of Vt 72,240 per month, including his job description.

In February 2005 a complaint was made against Mr Leingkone by MP Hon. Thomas Nentu to the

VBTC General Manager for airing a news article on radio about Hon. Thomas Nentu which he

claimed was incorrect.

In May 2005 Mr Leingkone applied for the position of Radio Vanuatu and FM program Manager

and Board appointed him to the position on 17 May 2005 on a salary scale of Vt 86,240 per

month.

In November 2005 the Board of Directors appointed Mr Leingkone to the position of Manager,

Radio Vanuatu and FM Radio Program on the same salary scale ofVt 86,240 per month for a

probationary period of three months.

13

Page 16: AUDITOR-GENERAL'S REPORT -   · PDF fileAUDITOR-GENERAL'S REPORT ON ... 6.6 Duty allowances paid to board members ... 6.10 Daily allowances paid to general manager & board members

On March 2006 the Board of Directors confirmed the appointment of Mr leingkone as

Manager, Radio Vanuatu and FM Radio Program on a salary scale of Vt 97,440 per month.

On 29 March 2006 Mr leingkone received a warning letter from the General Manager for his

disruptive behavior under the influence of alcohol when he entered the premises of VBTC at

Brodkas Haos and caused consternation among the staff that are still at work.

On 17 August 2006 Mr Leingkone was appointed by the General Manager as acting Sales and

Marketing Manager whilst the Sales & marketing manager was oversea for two weeks.

On 24 August 2006 Mr Leingkone was appointed acting General Manager by the General

Manager whilst the General Manager was at Ambae attending the Official opening of the

Penama Provincial Games.

On 4 September 2006 Mr Leingkone was appointed to the position of Manager Radio program

and Radio news by the Board of Directors on the same salary scale ofVt 97,440 per month.

On November 2006 the Chairman and Mr Leingkone took a visit to China to purposely sign the

agreement for launching the CCTV 9 program through the VBTC tele-broadcasting programs. Mr

Leingkone was acting as a Secretary of the visit to China at that time.

On 24 April 2007 the Acting General Manager, Mr Fred Vurobaravu recommended the

appointment of Mr Leingkone as acting General Manager while he travelled to Melbourne

Australia following his nomination to be part of the interview panel to interview two Technical

Advisors(TAs) who will be part of the Program of Support to the Vanuatu Broadcasting artd

Television Corporation (VBTC).

On 20 May 2007 Mr Leingkone received a letter from the Acting General Manager, Mr Antoine

Malsungai delegating the responsibility of Ms Malonie Albert to be In-Charge of News Room

during her trip to China.

On 28 June 2007 Mr Leingkone was appointed to the audience survey committee for the Radio

Vanuatu AusAID funded rehabilitation project.

In September 2007 Mr Leingkone was recommended to participate in a Radio and Television

Seminar for Senior Managers and Officials in Beijing, China from October 17 to 312007.

On 19 December 2007 Mr Leingkone was appointed by the Board of Directors to the position of

Manager Business Development with new duties and responsibilities on the same salary scale

ofVt 97.440 per month.

14

Page 17: AUDITOR-GENERAL'S REPORT -   · PDF fileAUDITOR-GENERAL'S REPORT ON ... 6.6 Duty allowances paid to board members ... 6.10 Daily allowances paid to general manager & board members

On 21 December 2007 Mr Leingkone was appointed acting General Manager by the Board of

Directors, since the acting General Manager was travelling to his home island for a family

ceremony and also as part of annual leave.

On 9 May 2008 the Board of Directors appointed Mr Leingkone as Deputy General Manager on

the salary scale of Vt 120,000 per month including child allowance and housing allowance of Vt

10,000.

On 30 May 2008 Mr Leingkone was appointed as Acting General Manager until 3 June 2008,

given that the General Manager travelled to New Caledonia with the Chairman to attend

Oceania Football Confederation (OFC) meeting in Noumea.

In June 2008 Mr Leingkone was invited to be part of the Melanesian Voter Registration Working

Party Workshop held at the Melanesian Hotel in Port Vi la from 30 June to 4 July 2008.

On 19 September 2008 Mr Leingkone was appointed as Acting General Manager up until 29

September 2008 whilst the General Manager was on a one week leave.

On 12 December 2008 Mr Leingkone was given a strong warning letter following a

recommendation made from the then Prime Minister Hon. Edward Nipake Natapei dated 9

December 2008 for having being involved in political matters at that time with the present

coalition partners in Government.

On 24 December 2008 Mr Leingkone was appointed as Acting General Manager while the

General Manager was on a two weeks leave.

On 23 January 2009 Mr Leingkone was appointed as Acting General Manager while the General

Manager travelled overseas to attend a meeting in French Polynesia, Tahiti.

On 9 February 2009 Mr Leingkone was appointed as Acting General Manager while the General

Manager travelled oversea to attend a meeting in Tonga.

On 9 April 2009 the General Manager, following a Board decision, issued a suspension letter to

Mr Leingkone following serious allegations of misconduct over the past years.

On 27 April2009 Mr Leingkone responded to the General Manager's suspension letter dated 9

April 2009 and confirmed several allegations as correct and true on his part following his

personal conduct and behavior.

On 12 May 2009 Mr Leingkone was issued with a letter for gross misconduct and

underperformance due to allegations made against him in April of 2009. He was given two

options of either to be terminated and/or to resign from work as a gesture of goodwill as

referred to section SS(d) ofthe Employment Act [CAP 160].

15

Page 18: AUDITOR-GENERAL'S REPORT -   · PDF fileAUDITOR-GENERAL'S REPORT ON ... 6.6 Duty allowances paid to board members ... 6.10 Daily allowances paid to general manager & board members

Section SS( d) of the Employment Act [CAP 160] reads "employment ceases on the disposal of

the goodwill, or of the whole or a substantial part of the business as a going concern, or of that

part of the business in which the employee is employed and he is employed or offered

employment by the person who acquires the goodwill or business or part of the business

forthwith after the disposal, on terms and conditions which are not less favorable than those of

the former agreement, the employee shall not be entitled to severance allowance".

Given the above legal mandate, the General Manager and Board members neglected the

provision provided in the Act, therefore costing VBTC in total a sum of Vt 1,920,000 to pay to

Mr Leingkone's severance allowances including outstanding annual leave (Refer to Appendix M

).

A table below shows the number of suspensions and warning letters given to Mr Bruno

Leingkone from 1994 to 2009.

Number of Number of w •' ,, i ... ,xc:~,,_,~·,

''; :i• -·~ Suspension Number of Complain tetter of Letter of

Year Letters Warning Letters about Allegation Termlnatlon/Resignatlo s Received Letters Mr. Bruno L 5 n

1994 2 ·- . ~

1995 2 -· , , 1 t·,

,' . ~~

--~'-

1996 1 ~

;,.-",' ~\ . , . ' ',,,. '· 1999

,. ' 1

. -~ . < .... :'!":(.:-::· -'• --~ J - •. _ ~ -~- ...

2000 . h'- ~- 1 ;' •! • < .,. ~ ,•i;,. ... -••

~ '"L.'" ..

l. "'·· ,_( ·)'~'

2005 " ;f h ' 1 ,<;!' ~ .... . · \i /~'~.: ' /·;·• ~ ,

~

2006 '" ., 1 .

·= ... ·- '-'/ --- . -~

. .. - '

2008 ' 1 -~ ~

; 0. - <

2009 1 1 1

Total 6 4 1 1 1

Based on the above there is sufficient grounds to terminate Mr Leingkone for serious

misconduct without offering him the option of voluntary resignation.

·• ,,

On 13 May 2009 Mr Leingkone responded to the letter dated 12 May 2009 and accepted the

option of voluntary resignation from work instead of termination. And so he submitted a three

(3) months notice for his resignation from work dated 13 May 2009. He then asked for

management to consider his severance and three (3) months notice to be paid to him after the

three (3) months notice period lapsed.

Following on that as a member of Vanuatu National Workers' Union he reported his case to the

Trade Union Office for them to handle his case with VBTC.

16

Page 19: AUDITOR-GENERAL'S REPORT -   · PDF fileAUDITOR-GENERAL'S REPORT ON ... 6.6 Duty allowances paid to board members ... 6.10 Daily allowances paid to general manager & board members

Under the Employment Act [CAP 160] section 50(2) stated that "none of the following acts shall

be deemed to constitute misconduct by an employee:

(a) Trade union membership or participation in trade union activities outside working

hours, or with the employer's consent, during the working hours;

(b) Seeking office as, or acting in the capacity of, an employees' representatives;

(c) The making in good faith of a complaint or taking part in any proceedings against an

employer.

On 25 February 2010 the subject matter of Arbitration Panel for Mr Leingkone's case was

discussed and approved in a Board meeting (Refer to Appendix N}.

During the month of February 2010 to July 2010 the trade dispute was conducted by the

Arbitration Board dealing with Mr Leingkone's case of voluntary resignation.

On 17 August 2010 the ruling of the Arbitration Board was made to confirm the ca lculations

and figures as shown in the table below (Refer to Appendix 0):

,.

r Amounts Amount _:;, • Descriptions

~

In Vatu In Vatu

Morifes owing ta.BrunoLef~tkonel;tiVBTC, and a_lready ~d. ~-(1) Payments after voluntary resignation: 1,078,994 Monies owing to Bruno Leingkone by VBTC by Statutory obligation.

{2} Severance Allowances 1,920,000 Monies owing to Bruno Leingkone by VBTC as an entitlement and deductible. {3} Annual Leave accrued in 2009 43,397

1,963,397 Monies owing to VBTC by Mr Leingkone and to be deducted from any entitlements.

(4) VNWU Dues 60,000

(5) Phone Bills 124,849

{6) April 2010 Payment 180,000

304,849 304,849

Total Payments should be made to _Mr. Bruno Leingkone 'f;c 1,658,548.

Payment of his severance and entitlements was made in two installments as shown below

(Refer to Appendix M):

17

Page 20: AUDITOR-GENERAL'S REPORT -   · PDF fileAUDITOR-GENERAL'S REPORT ON ... 6.6 Duty allowances paid to board members ... 6.10 Daily allowances paid to general manager & board members

(1) First Payments made to Mr. Bruno L. as part of severance Feb-11 allowance 1-Apr- (2) Second Payments made to Mr. Bruno L. for complete

11

200,000

Our calculation of the severance pay indicates that VBTC should have paid only an I amount of

Vt 1,658,548 after the deductions made for amounts owing to VBTC and not Vt 1,920,000. The

amount of Vt 321,452 owing by Mr leingkone as shown below in the table:

Descriptio!'\

(1) Total payment of severance allowance paid to Mr. Bruno

(2) Proper actual amount or payment to be made to Mr. Bruno

(3) The amount Mr. Bruno now owes to VBTC

(4) The amount Mr. Bruno now owes to VNWU

, Amount in

· Vatu

. 1,9f0~000

1,658,548

261,452 . 60JOQO

On 14 January 2011 the Minister responsible appointed Mr leingkone to the Board of VBTC

(Refer to Appendix B).

According to the confirmed records obtained from VBTC Management and with the Arbitration

Ruling dated 17 August 2010 (Refer to Appendix 0); clearly shows that Mr Leingkone was

already paid and received the amount of Vt 1,078,994 after he voluntary resigned from VBTC.

But he did not receive an ongoing salary payment after he ceased employment from VBTC. In

fact, he only actually received two installment payments made to him in February 2011 and

April 2011 based on the Arbitration Board ruling awarded to Mr Leingkone (Refer to Table

above).

Conclusion Therefore, the allegation made against Mr. Bruno about receiving ongoing salary while he cease employment from VBTC was made due to diligence process of the Labor Arbitration Board ruling. Otherwise, no records of evidence obtained to confirm that Mr. Bruno received salary while ceasing employment from VBTC.

Recommendation Therefore, it is strongly recommended that:

18

Page 21: AUDITOR-GENERAL'S REPORT -   · PDF fileAUDITOR-GENERAL'S REPORT ON ... 6.6 Duty allowances paid to board members ... 6.10 Daily allowances paid to general manager & board members

1. Board members must not in future offered options to any staff or employees of VBTC if there are grounds of serious misconduct to terminate a staff.

2. Appropriate steps be taken immediately to recover all monies owing by Mr Leingkone. 3. Mr Leingkone be removed as a member ofVBTC board by the Minister responsible due

to conflict of interest as an ex-employee.

6.8 Advances by the General Manager

Findings The VBTC Staff Manual section 3(8) stated that "special advances may be granted at the discretion of the General Manager subject to the following conditions:

(a) The advance must not exceed one and a half times the basic salary of the Officer

concerned per month;

(b) The advance must be repaid over a period not exceeding 3 months commencing from the

date of the advance;

(c) No application will be approved if the officer is due to go on leave within the next 3

months of the date of such application; and

(d) All advances must be repaid in full by 31 December of each year.

The current General Manager, Mr. Fred Vurobaravou was appointed to the position of General

Manager of VBTC in May 2008 for a period of three (3) years with a salary scale of Vt 180,000

per month and later it was increased to Vt 250,000 per month following a Board decision made

in accordance with section 12 of the contract of service. (Refer to Appendix P). Apart from the

General Manager's base salary he is also entitled to the following benefits:

a) VNPF contribution of 6%

b) Annual Leave of 22 working days

c) Compassionate Leave for death of employees parents, child, brother, sister or

spouse or employee's relative

d) Sick Leave

e) Medical benefits

The General Manager's contract ended in May of 2011 and so a new contract was made and

signed on 6 May 2011 for another term of three (3) years as provided for under section 1 of the

contract of service, with a base salary of Vt 300,000 per month including other benefits (Refer

to Appendix Q). However, there was no performance appraisal done on the general manager by

the Board in order to award an extension of contract including an increased salary package of

Vt 300,000 per month as compared to his previous salary package of Vt 250,000 per month.

19

Page 22: AUDITOR-GENERAL'S REPORT -   · PDF fileAUDITOR-GENERAL'S REPORT ON ... 6.6 Duty allowances paid to board members ... 6.10 Daily allowances paid to general manager & board members

Based from records the total outstanding advance made by the General Manager stood at Vt

717,685 as at 4th February 2011 (refer to Appendix R).

Section 3(8)(a) of the Staff Manual clearly states that when a staff makes an advance from the

Corporation, funds advanced must not exceed one and a half times the basic salary of the

Officer concerned per month.

For example, the General Manager received a salary of Vt 250,000 per month (1.5 x 250,000 =

375,000). The Vt 375,000 is the maximum amount the General Manager can advance per

month and not exceeding it.

In fact, GM failed to repay his advances within the three (3) months and furthermore he failed

to repay his advances in full by 31 December of each year of which breached section 3(8) (d) of

the VBTC Staff Manual.

lt is proper and appropriate in the case when the General Manager requested an advance; the

Financial Controller or the Chairman of the Board should be the proper authorizing person or

person approving his request but not any other staff within the Corporation.

lt is evident from the records that the General Manager approved his personal advances (Refer

to Appendix R).

Conclusion The General Manager exceeded the advance limit stated under section 3(8) of the Staff Manual and has therefore not set a good example to the staff in his conduct. This obviously raises questions regarding his integrity and trustworthiness.

Recommendations 1. General Manager must cease immediately from making further advances.

2. General Manager must immediately reimburse his advances in full.

3. The Finance Controller must comply with section 3(8) of the Staff Manual and ensure at

all times that the laid down procedures for obtaining a staff advance is followed.

4. All advances to the General Manager must be approved by the board Chairman and the

Finance Controller.

6.9 Payment of legal services with no proper contract executed

Findings Section 23(1) of the VBTC Act stated that "contract on behalf of the Corporation may be made as follows:

20

Page 23: AUDITOR-GENERAL'S REPORT -   · PDF fileAUDITOR-GENERAL'S REPORT ON ... 6.6 Duty allowances paid to board members ... 6.10 Daily allowances paid to general manager & board members

(a) A contract which if made between private persons would be by law be valid although made by parole only and not reduced in writing, may be made on behalf of the Corporation in writing under the common seal of the Corporation;

(b) A contract which if made between private persons is by law required to be in writing, signed by the parities to be charged therewith, may be made on behalf of the Corporation in writing signed by any person or persons duly authorized thereto;

(c) A contract which if made between private persons would by law be valid although made by parole only and not reduced in writing, may be made by parole on behalf of the Corporation by any person or persons duly authorized thereto".

Section 23(2) of the VBTC Act stated that "a contract made according to this section shall be effectual in law and shall bind the Corporation and all other parties thereto".

The General Manager confirmed that there was never any contract executed between private Lawyers, Mr Ronald Warsal for legal services rendered to VBTC.

All payments from January 2008 to September 2010 totaling Vt 2 million made to the lawyer

had been substantiated as per Appendix S.

Conclusion

lt would be proper for a formal contract to be drawn up in relation to the legal services rendered given the duration and the cost involved.

Recommendation In the name of good governance, transparency and accountability in future the General Manager must comply with section 23 of the VBTC Act when engaging individuals to provide specia l services to VBTC.

6.10 Daily allowances paid to the General Manager and certain Board members for fully

funded oversea trip

Findings

Section 18(2) of the VBTC Staff Manual stated that "An Officer of the Corporation travelling on duty overseas approved by the Corporation may claim an overseas subsistence allowances to cover meals and minor expenses. The daily rate of overseas subsistence allowance (of Vt 8,500 for Pacific Islands, Australia, New Zealand. Vt 10,500 for Asian, America, Europe, Africa, Middle East) shall be determined by the Corporation in each case, having regard to the cost to the officer and the amount of any allowance from other sources. The allowance shall be paid prior to departure".

21

Page 24: AUDITOR-GENERAL'S REPORT -   · PDF fileAUDITOR-GENERAL'S REPORT ON ... 6.6 Duty allowances paid to board members ... 6.10 Daily allowances paid to general manager & board members

Section 8(1) of the Broadcasting and Television Act [CAP 214], "the members of the Corporation shall be paid such allowances in such manner and at such rate as may be determined by the Minister with the approval of the Minister responsible for finance".

The General Manager and some board members went to China on a fully funded trip. Despite the fact that it was a fully funded trip they paid themselves daily allowances which, was not approved by the Minister responsible for finance.

We were not able to establish the exact figures in connection with the amounts paid to them as

the General Manager and finance officers were not able to provide us with any relevant

documents and information relating to this matter despite repeated requests.

Conclusion Daily allowances paid to the General Manager and board members were not approved by the Minister responsible for finance and were therefore illegal.

Recommendation 1. General Manager must ensure in future that any daily allowances paid to Board

members must be approved by the Minister responsible for finance. 2. General Manager must immediately cease from approving daily allowances paid to

Board members. 3. Appropriate measures must be taken immediately to recover all daily allowances paid to

the General Manager and board members involved. 4. Further investigation is needed to clarify amounts of daily allowances paid.

6.11 Staff advances and bonus

Findings Section 3{8) of the VBTC Staff Manual stated that "special advances may be granted at the discretion of the General Manager subject to the following conditions:

(a) The advance must not exceed one and a half times the basic salary of the Officer

concerned per month;

(b) The advance must be repaid over a period not exceeding 3 months commencing from

the date of the advance;

(c) No application will be approved if the officer is due to go on leave within the next 3

months of the date of such application; and

(d) All advances must be repaid in full by 31 December of each year.

Section 3{8)(a) of the Staff Manual clearly states when a staff made advances from the

Corporation funds must not exceed one and a half times the basic salary of the Officer

concerned per month.

22

Page 25: AUDITOR-GENERAL'S REPORT -   · PDF fileAUDITOR-GENERAL'S REPORT ON ... 6.6 Duty allowances paid to board members ... 6.10 Daily allowances paid to general manager & board members

From the staff records of advances made, it is noted that staff have complied with section 3(8)

of the Staff Manual. However we are not sure whether proper procedures were followed when

applying for the advances or not?

Section 3(3) of the VBTC Staff Manual, stated that "where an officer shown to be particularly

diligent in his or her work and performs exceptionally wen the Corporation may grant the

Officer a special bonus as a reward in acknowledgement of the officer's efforts".

A listing of staff receiving bonus on 17 December 2010 amounting to a total ofVt 505,255 was

paid out as bonus to staff in recognition of their good performance during the year (Refer to

Appendix T) . However, there is no appraisal records of each staff receiving bonus was recorded.

In fact, the Board of VBTC has agreed in a Board meeting to acknowledge the performance of

staff by giving them a bonus as a form of reward.

Conclusion We note that staff members have been faithfully settling their advances. lt is evident that no staff appraisal has been done before payment of bonuses was made.

Recommendation

1. General Manager must ensure that advances made by staff comply with the procedures

as laid down in the Staff Manual.

2. General Manager must ensure that appraisal for each staff member must be completed

before payment of bonus is made.

6.12 Reinstatement of Mr Antoine Malsungai, former officer

Findings

Under section 13 of the VBTC Act, stated that "the Corporation may appoint at such remuneration and upon such term and conditions as it thinks fit, such other Officers, employees, agents, advisers or consultants as my be required for the proper and efficient discharge of the functions of the Corporation".

Any appointment of staff (officers) apart from the VBTC Board of Directors must first be made in accordance with section 2 of the VBTC Staff Manual. Sectjon 2(1) of the VBTC Staff Manual stated that the "applications for appointments to the service of the Corporation must be in writing and addressed to the General Manager of the Corporation. Each application may be accompanied by:

(a) A copy of any certificate or reference required by the Corporation; (b) A statement whether the application is related to any member or staff of the

Corporation

23

Page 26: AUDITOR-GENERAL'S REPORT -   · PDF fileAUDITOR-GENERAL'S REPORT ON ... 6.6 Duty allowances paid to board members ... 6.10 Daily allowances paid to general manager & board members

Section 34 of the VBTC Act allows for Board to delegate powers to the General Manager to appoint and dismiss a staff.

On 30 March 2009 Board delegated the responsibility of management, finance and human resources to the General Manager, including as well staff recruitment, terms of employment conditions with fixing wages/salary, allowances or other remunerations and dismissal and disciplinary of staff. (Refer to Appendix U)

Almost all the VBTC Staff became members of the Union through a Collective Bargaining Agreement approved in 2005 between VBTC and VNWU. [Refer to Appendix V]

Under Trade Disputes Act [CAP 162] section 3 stated that "where a dispute other than a trade dispute as defined in section 1, between a worker and his employer arises from, or in connection with, the terms and conditions of a contract of employment or the manner of its performance, either party may request a labor officer to assist with a view to bringing about a settlement of the dispute by conciliation".

A former officer of VBTC, Mr Antoine Malsungai was reinstated to work at VBTC on 14 March 2011 without following the requirements set out under section 2 of the VBTC Staff Manual but instead they applied the Collective Bargaining Agreement with the support VNWU and Labor department.

VNWU wrote to General Manager on 21 October 2010 (Refer to Appendix V1 ) requesting clarification on matters concerning Mr Malsungai's dismissal. lt was unfortunate that the General Manager had never responded to this request.

The VNWU's argument is that the dismissal of Mr Malsungai is unjustified in the sense that there was no reasonable time given for him to answer the allegations made against him (Refer to Appendix W).

The Board members completely ignored the VBTC Staff Manual that was approved by the previous Board delegating the power of appointment to the management (Refer to Appendix X).

VBTC Board at its meeting of 10 March 2011 reinstated Mr Malsungai based on the following reasons that:

1. A Notice of Strike was served on the Chairman of VBTC Board that if no acceptable settlement of dispute in relation to the unfair dismissal of Senior Journalist, Mr Malsungai on the 19 of November 2010 be met, then industrial actions in pursuance of this dispute will

take place on 2 April 2011. 2. Since Mr Malsungai was terminated; the news room section was understaffed in French

speaking journalists.

24

Page 27: AUDITOR-GENERAL'S REPORT -   · PDF fileAUDITOR-GENERAL'S REPORT ON ... 6.6 Duty allowances paid to board members ... 6.10 Daily allowances paid to general manager & board members

Chronology of events

On September 1992 Mr Antoine Malsungai commenced employment as a Journalist with VBTC.

On 20 October 2010, the Acting General Manager issued a letter of disciplinary action against Mr Malsungai for a number of offences committed by Mr Malsungai and requested him to

respond in writing. He was given more than a month to respond.

On 21 October 2010, Mr Malsungai went to Vanuatu National Workers Union since he was a member of the Union and seeking them to represent him in responding to these allegations. So the Union responded and argued that the time given for Mr. Malsungai to respond is unreasonable; and they asked the General Manager to formally respond in writing to a number of questions raised but General Manager confirmed that he failed to respond.

On 22 October 2010, Ms Olivia William Acting Team Leader NCAFFS made an internal respond pertaining to the note received from Mr Malsungai's representative dated 21 October 2010 and submitted to Mr Joe Harry at the Corporate Service; unfortunately it was never submitted to the General Manager which is why he was not able to respond to the questions raised.

On 29 October 2010, the General Manager wrote to Mr. Malsungai and thanked him for responding to a series of allegations put to him formally on 15 September and 20 October 2010 and after carefully considering the mitigation presented in his response along with the findings of their investigation and after having exhausted all options, VBTC Management is left with no other option but to terminate your employment effective immediately under the terms of VBTC Staff Manual which states: "All disciplinary actions shall be the responsibility of the Corporation". He was also given the choice to appeal the decision to the Board within 7 days.

Upon serving the letter of termination and as is required under section 50(4} of the Employment Act [CAP 160], it was noted that VBTC has fully complied with that section to give an employee adequate opportunity to answer any charges made against him or her.

In addition, according to the Collective Agreement document Schedule A of the Employment Relationship problem resolution procedure under step 1 bullet point no.7 states that "You must raise a personal grievance with the VBTC within 90 days of the grievance occurring or you become aware of the grievance unless there are exceptional circumstances" (Refer to Appendix Y) .

On his termination on 29 October 2010 Mr Malsungai was given 90 days to present himself to the Board. The 90 days periods began from 1st November 2010 to 30th January 2011. Unfortunately, Mr Malsungai did not raise his grievances within the given time frame. lt was well after the 90 days dateline that a note was received from the Labor department concerning the grievances of Mr Malsungai's termination.

25

Page 28: AUDITOR-GENERAL'S REPORT -   · PDF fileAUDITOR-GENERAL'S REPORT ON ... 6.6 Duty allowances paid to board members ... 6.10 Daily allowances paid to general manager & board members

On 11 February 2011, the Senior Labour Officer Mr. John Tasso wrote to Chairman of VBTC and informed him about the Union's disappointment over the action VBTC took to terminate Mr. Malsungai. The Union said that the termination of employment is unjustified reason and oversight of the existing CBA relating to its process. The Lab or Officer asked for GM to attend a meeting on 18 Feb 2011.

On 22 February 2011, the General Manager responded to Mr. Tasso and apologized for not attending the meeting as requested on 18 Feb 2011 due to not knowing the meeting place and secondly VBTC HRO suppose to attend but because of other pressing commitments. And so GM asked for Labor Officer to schedule anther meeting.

On 28 February 2011, Mr. Tasso informed the Chairman about the re-schedule date of the meeting will be on 2 March 2011 at 10:00 am Labor Conference Room.

On 2 March 2011, Mr. Tasso wrote to Chairman and informed him about cancellation of the meeting dated 2 March 2011 by VBTC between Labor Office regarding termination of Mr Malsungai. The labor Office advised VBTC that they should not be any more cancellation of the meeting again. lt was clearly stated in the note that it is very important for this meeting to convene in order to reach a solution that is deemed to be lawful. So the next meeting will be on 7 March 2011 at 10:00 am at Labor Conference Room.

On 2 March 2011, a strike notice was issued directly to the Commissioner of Labor and to the VBTC regarding the Trade Dispute over the termination of Mr. Malsungai and cautioned the two parties to settle the dispute under the collective agreement

On 8 March 2011, a Memorandum of Agreement was signed to agree that:

1. Mr Malsungai's termination has not been explained justifiably to the current Board 2. The vacuum created in the French speaking section through Mr Malsungai's termination 3. Mr Malsungai must be reinstated without loss of any labour entitlement forthwith and that

this decision be endorsed at the next Board meeting on Thursday 10 March 2011.

On 10 March 2011, the General Manager informed Mr Antoine Malsungai that he is to be reinstated to work effective of 14 March 2011 following a Board decision on 10 March 2011. He was further advised that following his reinstatement his performance will be closely monitored.

Mr Malsungai failed to comply with the Collective Agreement Schedule in raising his grievances within the 90 days period provided under schedule A, step 1 bullet point no 7. Further the suspension of him several times in the past are considered serious misconducts which may warrant his termination as shown on table below.

26

Page 29: AUDITOR-GENERAL'S REPORT -   · PDF fileAUDITOR-GENERAL'S REPORT ON ... 6.6 Duty allowances paid to board members ... 6.10 Daily allowances paid to general manager & board members

Conclusion

Based on the warning and suspension letters issued to Mr Malsungai lt is evident that Mr

Malsungai's conduct and behavior breached the VBTC Staff Manual and the VBTC Editorial

Guideline Policy and as such is considered serious misconduct.

Recommendation

1. Consideration must be given to amending the VBTC Act to provide for the human resource matters to be dealt with by the Management and not the Board.

2. The issue of staff appointments and disciplinary matters should be made by the

management in accordance with the VBTC Staff Manual and not the Board. 3. The current revised VBTC Partnership Agreement in draft form to be completed

immediately and approved by Board. 4. Mr Malsungai must be warned that should his conduct be called into question again he

would be dismissed without further notice.

6.13 Resignation of the Financial Controller

Findings Section 2(5) of the VBTC Staff Manual states that "all officers appointed must serve an initial

probationary period not exceeding 6 months. Confirmation of permanent appointment shall be

decided by the Corporation only after expiry of the probationary period and with a favorable

recommendation of the General Manager". Furthermore, section 2(6) states that "during the

probationary period either party may terminate the employment without compensating for the

uncompleted duration of the probationary period and without giving any notice other than the

working day already begun".

27

Page 30: AUDITOR-GENERAL'S REPORT -   · PDF fileAUDITOR-GENERAL'S REPORT ON ... 6.6 Duty allowances paid to board members ... 6.10 Daily allowances paid to general manager & board members

Mr lan Baltor was appointed by the Board to the position of Financial Controller on 7 June 2010

(Refer to Appendix Z) but resigned on 8 April 2011 after having been on the job for ten months.

His reason for resigning was that he felt insecure for being under the probationary period

longer than what was stated in his contract of employment for three months. (Refer to

Appendix Z).

Under section 10 of the terms of his contract agreement employment the "key employee will be

subject to a three-month probationary period on first signing this contract during which his/her

performance will be reviewed. Appointment to the position will depend on the recommendation

of a special performance review team in consultation with the General Manager. The General

Manager in deciding whether to confirm the key employee's position may, without limitation of

any other reasonable considerations, consider the key employee's medical health and obtain a

police clearance certificate on the key employee".

The General Manager for some reason failed to do a performance appraisal of the Finance

Controller within the required under the employment contract and as a result lost him.

This is the second highest position in the Corporation and the way the General Manager has

handled this matter lacks credibility in leading the institution.

The accounts of the Corporation have been outstanding for over ten years and the importance

of having a qualified accountant to fill the post must be given the highest priority.

Section 2(8) (a) in the VBTC Staff manual provides for the Corporation to make temporary

appointments to any post in the service of the Corporation where; a substantive vacancy exists

and needs to be filled quickly pending normal recruiting procedures.

Conclusion The handling of the Financial Controller calls into question the ability of the General Manager in

managing the Corporation.

Recommendation lt is of high priority for the Corporation to immediately make a temporary appointment pending the recruitment of a Financial Controller.

6.14 Unsigned & missing board minutes and no proper filing system

Findings Section 18 (4) (b) ofthe VBTC Act stated that the "Auditor-General shall in his report state:

whether proper accounting and other records have been kept, including records of all assets of

the Corporation whether purchased, donated or otherwise".

28

Page 31: AUDITOR-GENERAL'S REPORT -   · PDF fileAUDITOR-GENERAL'S REPORT ON ... 6.6 Duty allowances paid to board members ... 6.10 Daily allowances paid to general manager & board members

We note that some board minutes have not been approved yet and therefore not signed as

true minutes and further some minutes have gone missing as we were unable to locate and

peruse them.

Other financial records have not been filed in an orderly manner and also there is no proper

filing system in place for audit trial which makes it very time consuming to locate documents.

Conclusion Board secretary has not properly maintained the minutes of all board meetings. Financial records appear to be all over the place and no proper filing system appears to be in

place.

Recommendation 1. The board secretary must ensure all minutes are approved and signed off. 2. The board secretary must locate all missing minutes and filed properly. 3. The General Manager must ensure a proper filing system is set up.

7. Summary

Name of officer Comments

Mr Ham Lini Vanuaroroa 0 Appointed board members without the Former Prime Minister recommendation of the Council of Ministers

pursuant to section 3{1) of the VBTC Act;

0 Appointed board members based on political affiliations rather than on professional experience stipulated under section 3{1) of VBTC Act;

0 Determination of the sitting allowance rate for board members without the approval of the Minister responsible for finance pursuant to section 8(1) of VBTC Act .

Mr Nipake Natapei 0 Appointed board members without the

Former Prime Minister recommendation of the Council of Ministers pursuant to section 3(1) of the VBTC Act;

0 Appointed board members based on political affiliations rather than on professional experience stipulated under section 3{1) of VBTC Act;

0 Determination of the sitting allowance rate for board members without the approval of the Minister responsible for finance pursuant to section 8(1) of VBTC Act.

29

Page 32: AUDITOR-GENERAL'S REPORT -   · PDF fileAUDITOR-GENERAL'S REPORT ON ... 6.6 Duty allowances paid to board members ... 6.10 Daily allowances paid to general manager & board members

Mr Sato Kilman 0 Appointed board members without the Prime Minister recommendation of the Council of Ministers

Current pursuant to section 3(1) of the VBTC Act;

0 Appointed board members based on political affiliations rather than on professional experience stipulated under section 3(1) of VBTC Act;

0 Determination of the sitting allowance rate for board members without the approval of the Minister responsible for finance pursuant to section 8(1) of VBTC Act.

M r Pat rick Crowby 0 Failure to advise the Prime Minister to obtain Former Board Chairman approval from the Minister responsible for finance

in respect of the rate of sitting allowance for the board members;

0 Receiving sitting allowances not approved by Minister responsible for finance.

Mr David Tevi 0 Failure to advise the Prime Minister to obtain Former Board Chairman approval from the Minister responsible for finance

in respect of the rate of sitting allowance for the board members;

0 Receiving sitting allowances not approved by the Minister responsible for finance;

0 Receiving bonuses not approved by the Minister responsible for finance;

0 Receiving duty allowances not approved by the Minister responsible for finance;

0 Receiving goodwill payment not approved by the Minister responsible for finance.

Mr Christian Bihu 0 Failure to advise the Prime Minister to obtain Board Chairman approval from the M inister responsible for finance

Current in respect of the rate of sitting allowance for the board members;

0 Receiving sitting allowances not approved by Minister responsible for finance;

0 Receiving duty allowances not approved by the Minister responsible for finance;

0 Failure to have a performance appraisal done on

the General Manager; 0 Authorizing the reinstatement of Mr Antoine

Malsungai, who was dismissed on the ~rounds of serious misconduct, without due diligence and care taken in the interest of VBTC.

30

Page 33: AUDITOR-GENERAL'S REPORT -   · PDF fileAUDITOR-GENERAL'S REPORT ON ... 6.6 Duty allowances paid to board members ... 6.10 Daily allowances paid to general manager & board members

Mr Fred Vurobaravou 0 Failure to advise the Prime Minister to obtain General Manager & Board approval from the Minister responsible for finance Secretary in respect of the rate of sitting allowance for board

members; 0 Authorized payment of board members' sitting

allowances not approved by Minister responsible for finance;

0 Authorized payment of board members' bonuses not approved by Minister responsible for finance;

0 Authorized payment of board members' duty allowances not approved by Minister responsible for finance;

0 Authorized goodwill payments to board members without the approval of the Minister responsible for finance;

0 Authorized advances to board members without the approval of the Minister responsible for finance;

0 Failure to settle all his personal advances taken

before 31 December in breach of the Staff Manual; 0 Breaching the Staff Manual in advancing more than

1.5 times of his basic monthly salary; his maximum advance should be Vt 375,00 whereas he has exceeded it and advanced Vt 717,685;

0 Failure to have a performance appraisal done on the Financial Controller within the required time as stated in his Employment Contract and as a result of the delay the Financial Controller resigned;

0 Failure to have performance appraisals done on staff at year end before giving them bonuses;

0 Failure to have a contract executed between VBTC and lawyer, Ronald Warsal for legal services rendered;

0 Failure to have Mr Bruno leingkone terminated on the grounds of serious misconduct under the Employment Act;

0 Failure to deduct Vt364,849 from severance pay for money owing by Mr leingkone to VBTC;

0 Wasting money in approving severance payment for Mr leingkone;

0 Authorized payment of board members' daily allowances not approved by Minister responsible for finance;

0 Failure to have board minutes prepared on time

31

Page 34: AUDITOR-GENERAL'S REPORT -   · PDF fileAUDITOR-GENERAL'S REPORT ON ... 6.6 Duty allowances paid to board members ... 6.10 Daily allowances paid to general manager & board members

for board approval resulting in unapproved and unsigned minutes;

0 Failure to establish a proper filing system for board minutes to avoid minutes being lost or missing; resulting in some minutes still missing;

0 Failure to have the post of Financial Controller advertised and an appointment made as a matter of priority;

0 Lack of leadership and cooperation displayed during the conduct of the investigation, resulting in the prolongation of the task to six months instead of three months.

Mr Leonard Carlot 0 Receiving goodwill payments not approved by the Mr Alan Sau Minister responsible for finance. Mr Abel Kalkot Ruatau Mr Maurice Joe MrWison Aru 0 Receiving bonuses not approved by the Minister Mr Atis Kalo responsible for finance; Mr Tom Lorry

8. Acknowledgement I wish to thank all the officers ofthe Corporation and individuals who assisted us during the

conduct ofthe investigation.

32