Wednesday, October 26, 2011

Set Up Financial Accountability Commission

Every year Malaysians are treated to a series of "tall tales" in the Auditor-General Report, which are unfortunately true stories. This year, despite an "upgrade" in ratings for the overall financial management by Government departments and agencies, the tales of financial abuse and degrees of incompetence is no less fantastic than previous years.

In previous years, we had screw drivers worth RM32 was purchased at RM224 or a car jack worth RM50 purchased at RM5,700 making a complete mockery of the Government’s procurement process. Last year, Kolej Kemahiran Tinggi Mara in Balik Pulau purchased a whole list of products for its computer laboratory at prices well above that of the market, including 2 Acer computer laptops at RM84,640 when it is worth only be a tenth of the price paid.

This year is no different with the Marine Parks Department taking the leading role by purchasing binoculars worth not more than RM1,940 was purchased at RM56,350, more than 28 times the market price. It was of course not the only offending item – the Department purchased RM192,694 worth of products including common items such as laptops, printers, LCD TV, DVD Player when their total value should not exceed RM20,193.

There were many repeat offenders as well in the current year’s report. Of note is the construction of computer laboratories by the Ministry of Education throughout the country. In Sabah, a RM160.7 million project was awarded to equip 300 schools by 2008. However, as at the end of 2010, only 2 computer laboratories were completed.

Majlis Amanah Rakyat (Mara), an agency tasked to uplift the welfare of bumiputeras is again chastised for making high-priced purchases such as an oven worth RM419 for RM1,200, folding beds worth RM100 for RM500 among other things.

What is perhaps more illuminating is the fact that everyone the Auditor-General only has the necessary resources to audit a small sample of Government procurement and projects. And despite that, such tales of incompetence and abuse are in abundance.

The logical conclusion from the Auditor-General’s report is that heads must roll, but it rarely or never happens. The Government’s Chief Secretary Tan Sri Sidek Hassan has the all-important role to take the necessary disciplinary actions against the relevant offenders, including the supervising officers who failed in exercising their responsibility in a diligent fashion. However, as informed by the Auditor-General during our Public Accounts Committee briefing yesterday, most of these offending officers are only given a letter of reprimand “surat teguran” before the cases were closed.

The natural outcome is, there is little disincentive for government officers to increase its level of competence or reduce the amount of waste, mismanagement and abuse since the “rewards” far outweigh the potential punishment, even if their deeds are hung out to dry in the Auditor-General’s Report.

While the Public Accounts Committee (PAC) has the powers to call upon the relevant Ministries and officers to explain their actions and conduct, the PAC has no powers whatsoever to mete out punishment except to make “recommendations” to the Government. This has proven to be completely ineffective, made worse by the fact that the PAC is only able to focus on a handful of the misdeeds highlighted in the Auditor-General’s report.

Therefore, given the inability of the Chief Secretary of the Government, the absence of powers endowed upon the PAC as well as the lack of political will from the Prime Minister and his Cabinet to mete out effective punishment and deterrence to offending civil servants, we would like to call for a independent Financial Accountability Commission (FAC) set up via an Act of Parliament to be created.

The FAC should not be staffed with any civil servant to avoid conflicts of interest, but instead by headed by leading professionals in the field of audit and integrity such as the Malaysian Institute of Certified Public Accountants (MICPA) and Transparency International (TI) Malaysia. The proposed Commission should be made answerable only to the Parliament and granted the powers to take punitive and disciplinary actions against officers guilty of misconduct, negligence and sheer incompetence highlighted in the Auditor-General’s Report.
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