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

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

  • 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

  • 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

  • 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

  • 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

  • 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

  • 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 foll