THE Ministry of Trade and Industry, Cooperatives and Marketing approved the extension of a project worth over M8 million amid glaring irregularities, the Sunday Express has learnt.
The project, called Enhanced Integrated Framework (EIF) Tier 1— and which government started implementing in July 2010 through the ministry — was extended on 10 March this year after its three-year term lapsed in September 2013.
The EIF seeks to strengthen Lesotho’s “integration into the world trading environment and complement the implementation of the Poverty Reduction Strategy, as well as the country’s efforts in raising competitiveness, productive capacity and product diversification”.
Funded by the United Nations Office for Project Services (UNOPS) to the tune of M7.8 million, with the Lesotho government also contributing M704 800, the EIF is one of the mainstays of the country’s development agenda.
According to documents obtained by the Sunday Express, among other structures monitoring the project is the National Steering Committee (NSC) comprising senior officials from different ministries such as Trade, Finance, Planning and Economic Development, Gender, Youth, Sports and Recreation, Agriculture and Food Security, Tourism, Environment and Culture and Public Works and Transport.
The NSC is also made up of Lesotho National Development Corporation (LNDC), Basotho Enterprise Development Corporation (BEDCO), Lesotho Tourism Development Corporation (LTDC), Bureau of Statistics, National University of Lesotho (NUL), Lesotho Chamber of Commerce and Lesotho Business Council representatives.
However, the Sunday Express has since learnt the Ministry of Trade’s Chief Economic Planner and Head of Planning Unit, Phera Lepati, is probing how the extension was granted without the knowledge of most NSC members. The approval was allegedly made at a stakeholders’ meeting held on 10 March 2014 in Maseru, but which the NSC members are professing ignorance of.
Reads a letter dated 5 September 2014, which Mr Lepati has written to the NSC members: “Could you please confirm your presence in the EIF Technical Appraisal Committee meeting that was purportedly held on 10 March 2014, in which, among others, the following were discussed: Overview of the programme performance, Presentation of the Tier 1 Phase 2 proposal, Tier 1 Phase 2 project appraisal and Approval and signing-off of the proposal
“This is very urgent because the minutes form part of documents that led to the approval of the project that is EIF Tier 1 Phase 2. The EIF Coordinator reported in one of the meetings that we have held here in the ministry that you were present in that particular meeting wherein you approved the said project proposal to be submitted to the EIF secretariat in Geneva.”
The Sunday Express has seen some responses from the NSC members, who expressed shock at the contents of the correspondence, and distance themselves from the said meeting.
Among the responding NSC members was the Ministry of Development Planning’s Director of Project Management, Ntšiuoa Jaase, who indicated she was not part of the meeting.
Ms Jaase explained when contacted by the Sunday Express: “Apart from the possibility that there was never a meeting convened for the relevant stakeholders on 10 March 2014 to approve the EIF extension, the project implementation was also flouted as it was not even approved by the Public Sector Investment Committee (PSIC).
“All such government projects are bound by law to be approved by the PSIC. First, the ministry or funder involved should submit to the NSC what is called a concept note. If approved, the note will then pave way for the ministry to formulate the project proposal, which should also receive the approval of the PSIC. This process is followed even in a case where there is an existing project already, but its scope is being changed, like in the current case of the Ministry of Trade’s EIF project.”
The Sunday Express was shown a list of projects approved by the PSIC between November 2013 and 28 August 2014, and the EIF was not part of it.
Mr Lepati confirmed to the Sunday Express last week that he had inquired about the presence of the said members during the 10 March meeting, “and I found out that they had not been part of the meeting”.
He was, however, quick to refer this reporter to the Project Coordinator, Bokang Montši.
Mr Montši, when contacted, said: “I am sorry I can’t provide you with the information you want because I don’t know where you got it from.”
Pressed on the issue, Mr Montši was furious, and asked this reporter: “What is your real interest in this issue? Has somebody sent you?”
Meanwhile, the Sunday Express is in possession of a damning forensic audit report about the EIF finances. The audit was carried out by the Office of the Auditor General and covers the last three financial years.
The report indicates while the donor and government funds were supposed to be kept in different bank accounts “in accordance with sound and acceptable accounting practices…the audit observed with concern that GOL (government of Lesotho) funds amounting to M450 000 were transferred from the GOL account held at Nedbank to the EIF donor’s at Standard Lesotho Bank, without authority.
“The audit team, through interviews with the Financial Controller and Project Accountant, learned that the transferred funds were to be used to pay EIF staff salaries which, according to the Memorandum of Understanding (MoU), should be financed by the donor’s funds.”
Furthermore, the audit revealed that M20 000 had been taken from the GOL account to pay for “accountable tour imprest in respect of the Projects Coordinator while in Geneva from 17-24 November 2012; however, this activity should have been financed by the donor’s account as per the MoU.”
It was further noted that on return, the Project Coordinator only accounted for M10 435.95 as per the receipts submitted, “while the balance of M9 564.05 remained unaccounted for at the time of the audit”.
The project management did not submit annual financial statements to the Office of the Auditor General as required, the report further showed, adding: “…instead, they engaged a private audit firm on their own, without the Auditor General’s consent, at a cost of M18 000 for the audit of the two financial years ended 31 December 2010 and 31 December 2011.”
The Financial Controller, the report also indicated, was a bank signatory together with the Project Coordinator and any payment would be authorised by them.
“However, inspection of records revealed that the Financial Controller was not involved in most purchases of goods and services in his capacity as one of the authorising officers; he only emerged at the payment stage when it came to signing the cheques, at which stage the procurement of goods or services would already have been done. Only the Project Coordinator was involved in the requisitioning, ordering and purchasing of goods and services.
“It should be noted, at this juncture, that according to the MoU, the Principal Secretary (PS) and Deputy Principal Secretary (DPS) were to be the bank account signatories, not the Financial Controller. However, the ministry decided to assign the Financial Controller in place of the PS and DPS without any formal written justification communicated to the donor.”
The audit further revealed that the project cashbook was not balanced off and reconciled with bank statements on a monthly basis, and “instead, this was done at the fiscal year end, hence no monthly bank reconciliation statements for the fiscal years under review.”
The audit also revealed that pay-as-you-earn tax amounting to M303 652.32 was “correctly charged on gross salaries of EIF staff from 1 January 2012 to 31 December 2012, but had not yet been remitted to the Lesotho Revenue Authority at the time of audit in September 2013”.
The audit team also observed that the Accountant worked from 1 April 2012 to 31 March 2013 without any letter of engagement or contract.
“The Accountant originally had an employment contract which commenced on 4 November 2011 and expired on 31 March 2012. However, it was not renewed until April 2013 when he signed a new one running to 30 September 2013.”
Six officers, the report also noted, were due to be paid gratuities at the end of the project term, September 2013, yet “the auditors observed that these gratuities have not been catered for in the EIF project budget, hence are concerned as to how these are going to be paid.”
The audit report went further to note that M89, 813 of training fees could not be accounted for, and also showed M80, 181 was also unaccounted for due to irregularities in procurement services. Abuse of petty cash was also among other alleged misdemeanors the auditors noted.
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