NIGEL HINDS FINANCIAL SERVICESCERTIFIED PUBLIC ACCOUNTANTS

www.nhfinancial.net

National Drainage & Irrigation AuthorityForensic Audit Report for the period November 1, 2011 to May 31, 2015.

Report date: November 30, 2015.

ContentsPages

1. Cover Letter 12. Acronyms and Abbreviations 23. Executive Summary

3-153.1 Introduction 163.2 Background of Entity 17-213.3 Terms of Reference

3.3.1 Background 223.3.2 Objectives & Scope of Audit

22-233.3.3 Specialized Areas 23-243.3.4 Co-operation 24-253.3.5 Eligibility 253.3.6 Reporting 25-26

3.4 Methodology 26-273.5 Limitations 27

4.Findings4.1 Corporate Governance 28-344.2 Fixed Assets Management 35-494.3 Revenue Structure 50-514.4 Expense Management

52-574.5 Capital Expenditure 57-604.6 Capital Projects 60-614.7 Bank Reconciliation 61-624.8 Stores and Fuel Management 63-724.9 Procurement System 72-774.10Hope Canal Project 77-80

4.11Fixed and Mobile Pumps and Spares 80-814.12Fixed Pumps 81-824.13 Internal Audit Department 82-834.14Accounts and Audit 84-854.15Water User’s Association 85-884.16Community Development Councils 89-904.17Community Development and Irrigation Projects 90-924.18Legal Matter 92-93

5 Recommendations 94-110Annexes 111-142

1. Cover Letter

November 30th, 2015

Honourable Jaipaul Sharma, MPMinister within the Ministry of Finance49 Main & Urquhart StreetsGeorgetown, Guyana

Re: Forensic Audit and Review of the operations of National Drainage & Irrigation Authority

Dear Minister Sharma,

With reference to our engagement to carry out a forensic audit review of the National Drainage & Irrigation Authority, we are pleased to submit herewith our report which includes our findings and recommendations.

Cooperation and assistance from the management and staff of National Drainage & Irrigation Authoritysatisfactory during the course of the forensic audit.

Kindest regards,……………………………Clifton Nigel Hinds, CPA

Forensic Audit Principals: Clement DeNobrega and Nigel Hinds.

Page | 1

2. Abbreviations

Descriptions and explanations of terms and abbreviations relevant to this report are listed below.

NDIA National Drainage & Irrigation Authority

GOG Government of Guyana

GRA Guyana Revenue Authority

MOF Ministry of Finance

MOA Ministry of Agriculture

CEO Chief Executive Officer

DI Drainage & Irrigation

WUA Water User’s Association

FA Farmer’s Association

AOG Audit Office of Guyana

AG Auditor General

HR Human Resources

PS Permanent Secretary

NPTAB National Procurement Tender Administration Board

IFMAS Integrated Financial Management Accounting System

EDWC East Demerara Water ConservancyCDIP Community Development & Irrigation ProjectGUYSUCO Guyana Sugar CorporationDHB Demerara Harbour Bridge RPA Rice Producer’s Association

Page | 2

3. Executive Summary

The Executive Summary informs on the principal findings of the forensic audit pursuant to the scope of the terms of reference as set out by the Ministry of Finance for the forensic audit of National Drainage and Irrigation Authority.

1. Governance:Board Members were paid $1,584,000 for nine Board Meetings for the period July 2014 to March 2015, however the records revealed that only two Board Meetings were held for the related period. Aside from the overpayment to Board Members, the Chairman of the Board failed to hold the required number of statutory meetings, thereby exacerbating the weakness of NDIA corporate governance.

2. NDIA Act 2004 provides for the establishment of an Appointments Committee comprising a Chairperson and two other Directors to be appointed by the subject Minister. In breach of the Act, no such Board Committee was put in place.

3. Fixed Asset Register:NDIA has never maintained a Fixed Asset Register for the review period to record acquisition date, purchase cost, estimated life of fixed asset, depreciation and disposal of asset. This reckless omission for an entity that has over $4 Billion in Fixed Assets is incomprehensible.

4. The Auditor General reports for years 2012 and 2013 repeatedly stated that the management of NDIA had failed to maintain historical records for vehicles, equipment, machinery, office furniture and computers etc. Despite these concerns no effort was made by management to compile a fixed assets register in accordance with best practice.

5. Japan International Cooperation Agency handed over six excavators and pontoons to NDIA as noted in the Board Minutes of a meeting held

Page | 3

on July 16, 2013; but there was no evidence that the excavators were accounted for by NDIA.

6. The CEO, Mr. Lionel Wordsworth indicated that one of the excavators fell into the conservancy and was salvaged at a later date. However, we could not verify its existence.

7. Motor Vehicles: As at December 31, 2014 – of the twenty-three motor vehicles listed as belonging to NDIA; certificates of registration show that one is in the name of NDIA, 16 are in the name of the Ministry of Agriculture, four were without registration and two were in the name of contractors. The breach of administrative and accounting procedure undermines the ability of NDIA to properly manage its fixed assets and ensure that assets are transferred to NDIA after project completion.

8. NDIA was de-linked from the MOA in 2004. NDIA received Capital Assets from the MOA upon its establishment as a separate entity. An analysis of the registration documents of machinery revealed that ownership of the machinery NDIA acquired from MOA was never vested in NDIA.

9. A total of G$1,490,127,000 in supplementary funds was approved by Parliament to cover over-expenditures for 2011 to 2014. This indicates the lack of proper planning and budgeting that obtained at NDIA.

10. Repairs:Over $1.8 Billion from both the capital and current budget over the period 2011 to 2014 was expended on repairs. No one from management could provide any justification for the level of expenditures on repair works, which was done by contractors. New machinery and equipment acquired during the period 2011-2014 exceeded 50% of the listed machinery and equipment of NDIA.

11. Minutes of the Board Meeting showed members were not told at any point of the massive repair costs.

Page | 4

12. Capital expenditures for the period January 2011 to June 2015 amounted to G$6.3 Billion and this excluded the Hope Canal Project. 21% or G$1.3 Billion was used for restoration of machinery and equipment.

13. The stated belief by several staff as to the existence of a “kickback scheme” between senior management and contractors could not be confirmed or denied without access to the financial assets of the named individuals.

14. Of the total G$1.08 Billion in purchase of heavy duty machinery, 47% was purchased from Guytrac. The model years were absent from four contracts examined, the price paid is influenced by the year of manufacture. Since this information was not available it was not possible to do a price comparison with the local and foreign suppliers.

15. NDIA purchased ten excavators valued at G$295 Million and tractors with harrows valued at G$198 Million for Guysuco in 2013, a total of G$493 Million. There has to be a clear Policy Guideline to inform Finance Staff as to what items of machinery and equipment should be included on its asset listing and reasons why items purchased with NDIA Funds are excluded. Instead of having NDIA appearing as a banker for Guysuco.

16. We also reviewed a letter written by Mr. Rajaindra Singh, DCEO of Guysuco to CEO, Mr. Lionel Wordsworth dated June 26, 2013 for NDIA to provide short term financing for ten Holland Tractors to the tune of G$161.9M and this was repaid on January 3, 2014. NDIA used funds from its own budget to fund that request and this would have impacted on NDIA own plans for that fiscal year 2013.

17. In addition to these purchases, NDIA constructed pumping stations valued G$146 Million based on figures seen in its Capital Expenditure Plan.

Page | 5

18. It is still not clear why Tractors with Harrows used primarily for tillage by Guysuco would have been purchased by NDIA. More importantly there was no evidence from the Board Minutes reviewed that this matter was discussed at the Board level. Even the letter written by Mr. Rajaindra Singh, DCEO of Guysuco was not presented to the Board

19. In order to complete the draft Financial Statements for year ended December 31, 2014, a physical count of all stock was undertaken and concluded on February 9, 2015. Based on that exercise the valuation of Inventory was G$76,290,588. We could not determine the accuracy of the valuation as we could not access the original invoices to confirm the prices used.

20. Fuel Purchases represent a significant cost to NDIA. G$1.4 billion was spent between January 1, 2011 to December 31, 2014 and there were serious concerns raised by the Executive Management and Employees related to the accounting and management of fuel and lubricants.

21. NDIA does not have storage facilities for fuel and we were told that the fuel was stored in contractor’s tanks, with the same contractors being used to transport the fuel. There were no proper explanations as to how fuel held in contractors’ tanks was accurately monitored.

22. We compared the Fuel Reconciliation Monthly Summary generated by the Fuel Controller, Mr. Garfield Roberts and the Machine Status report generated by Mr. Avinash Singh, Head of the Mechanical Division for the period 2013 to mid-2015 using a sample of 18 heavy duty machines. Fuel was issued to machines classified as not working or out of service. These machines showed that for the period referenced, the machines worked a total of 3,812 hours and utilized a

Page | 6

total of 47,897 litres of fuel. This amounted to approximately G$9,709,755 in fuel losses for the few months sampled each year.

23. The Machine Status Report is prepared by the Regional Engineer. There is evidence that the fuel clerk manipulates his figures. Many persons we interviewed from communities in the Corentyne and who requested that their names not be mentioned - these indicate that fuel was sold illegally from the Whim outlet.

24. Procurement:For Jan-July 2015, a review of the Projects awarded showed that out of G$647,338,367, 59% were awarded by Sole Sourcing, 17% by Quotations and 24% by Public Tendering. It was also noted that most of the contracts awarded by Sole Sourcing went to Water Users Associations.

25. A three quotation procedure is used for projects up to 15 million. Numerous works were sole sourced to just under 15 million to avoid cabinet scrutiny.

26. Most contracts documents sent to tender board for approval are already completed, but the submission to tender board gives the false impression that the works are yet to commence.

27. Monies are regularly transferred to Mahaica Mahaicony Abary- Agricultural Development Authority (MMA-ADA). Many at just under 15 million to avoid cabinet scrutiny.

28. Further testimony of mismanagement of contracts was evidenced in the award of a contract to Suresh Jagmohan Hardware Supplies and Construction Services in August 2014 for the supply of Steel Sheet Piles at a value of G$177,820,000 for the Construction of Pumping Stations. When the steel sheet piles were delivered it was found by an Independent Consultant Mr. Mark Yhann - who advised that steel Q345B is not ASTM A690 as required by the contract specification and it should be coated with coal tar. Although Management was aware that the specifications were incorrect, the Chief Executive Officer

Page | 7

instructed the contractor to utilize the sum of G$4,000,000 in the contract for factory inspection to supply more sheet piles.

29. There were significant sums of monies spent on “The Operating, Servicing and Monitoring” of NDIA machinery at various locations over the review period. Contractors submitted invoices for hours worked at various rates. Members of the Finance Office indicated that they could not verify what work was actually done but signed in good faith. Other staff members from engineering sections claimed that they were instructed to sign and certify documents for payments even though they had no knowledge of the projects.

30. The Hope Canal Project was approved in 2009 but actual works began in 2010. The Project budgeted cost was G$3.6 Billion and was completed in May 2015 at a purported cost of G$3.4 Billion. However, our findings indicate the costs of the project was over $4.1 Billion. The Hope Canal was substantively funded from the PetroCaribe Fund and all payments for the project were done through the MoF. The Ministry of Finance, Ministry of Agriculture nor NDIA were able to locate contract agreement or loan terms for such a massive contract. However, we reviewed the documentation available at the Finance, Procurement and Engineering Offices at NDIA and noted the following.

31. In addition to the monies paid by the Finance Ministry as shown above, we noted that NDIA paid significant sums from its own funding for the following years excluding the cost of fuel supplied:2013 166,596,6442014 90,817,833Total 257,414,477

32. No information was available for years 2010, 2011 and 2015.33. Fuel supplied to NDIA to the Hope Canal amounted to 1,927,844

litres between June 2011 and May 2015 which amounted to G$402,919,396 as shown in annex 11.1.

Page | 8

34. Fourteen super long reach excavators were purchased between 2009 and 2012 for the Hope Canal Project for G$441,628,000, but the Finance Office is showing G$466,862,450 were paid for thirteen excavators and one bulldozer between 2009 and 2012 as shown in annex 11.2. Documents were not available to verify dates of acquisition and amounts paid for equipment purchased directly for Hope Canal Project.

35. We were unable to obtain all the documentation to compute the actual cost of the Project as it would appear that deliberate efforts were made to understate the actual cost. NDIA, Ministry of Agricultural and Ministry of Finance were unable to access the Loan Agreement to determine the parties to the contract, the terms of the loan and the method of repayment. Any finance cost would increase the cost of the project as it has to be capitalized. Given the non-availability of critical information, it is reasonable to infer that the Project exceeded its original cost from the information gathered above.

36. Surendra Pumps: A contract for the supply and installation of 8 fixed and 6 mobile drainage pumps was awarded on May 6, 2011 to Surendra Engineering Corporation Limited of Mumbai for the sum of US$4 Million.

37. A total of US$2,991,147 was disbursed, leaving a balance of US$1,008,853. We are yet to receive a confirmation from Exim Bank through the Ministry of Finance that this balance exists. Included in the sum US$2,991,147 disbursed to Surendra Engineering Corporation Limited of Mumbai India received the sum US$126,000 to supply spares. The spares were never received by NDIA.

38. Consequent upon the non-receipt of spares, The Contract was terminated on October 8, 2014.

39. Internal Audit: NDIA spent in excess of G$12 Billion in both Capital and Revenue Expenditures over the past four years and the

Page | 9

Internal Audit Unit or the watchdog for NDIA only has one person who is tasked with responsibility of auditing the entire organization.

40. The Internal Auditor is inadequately resourced given the level of expenditure incurred; it is not possible for one person to monitor the effectiveness and efficiency of internal controls over the financial operations. This is clearly demonstrated throughout this report with the many red flags and breaches identified.

41. The Internal Auditor erroneously reports to the CEO who showed little or no interest in the internal controls generally and this was evidenced by the multiple breaches identified in this Report.

42. Accounts and Audit: National Drainage and Irrigation Act 2004 section 47, subsection one - states that the Authority shall keep proper accounts and other records of its transactions and the accounts shall be audited by the Auditor General, or by any such auditor appointed each year by the Board with the written consent of the Auditor General. NDIA has never prepared its own accounts since it was incorporated by the Act of Parliament.

43. Water Users Associations: NDIA Act of 2004 section 17 provides for farmers to establish themselves into Water User’s Association to actively participate in the planning, design, management, operation and maintenance of drainage and irrigation systems.

44. A Water User Association (WUA) is a non-profit business organization of rural residents and farmers to perform O&M of secondary D&I structures to provide water users with irrigation and drainage inputs for agricultural production and for rural housing areas. In early 2004 nine water users’ associations were established across the country; each registered as a separate entity with its own constitution, board and management. It is important to note that water user associations collect fees from farmers for provisions of services and are expected to be financially sustainable as business entities.

Page | 10

45. Water Users Associations received over the period January 2011 to June 2015 the sum G$1.1 Billion, of which 53% of the funds were expended in region 6.

46. None of the associations have prepared annual financial reports or have financial statements audited for the years 2011, 2012, 2013 or 2014. The last financial audit was done in 2010 despite the amount of funds received over the years. Quarterly financial reports are prepared but none were available for examination.

47. There were serious allegations of corrupt practices in some associations re: mismanagement of finances and absence of regular statutory elections. An NDIA board meeting held on June 8, 2012 members requested that all WUA's prepare audited financial statements as there were many reports of mismanagement. No financial audit was done to date despite the request made by the Board.

48. Special investigations were done by then Field Auditor Mr. Pablo Singh on July 2, 2012 at Black Bush Polder, WUA and on August 22, 2012 at Charity/Zorgen Zlygt, WUA where significant malpractices were discovered.

49. While we were unable to confirm the accuracy of these reports in the absence of the supporting documentation, we noted that at Black Bush Polder (BBP) WUA management converted in excess of G$7,000,000 of the BBP WUA funds to their personal use in various schemes.

50. Community Development Councils (CDC): The Community Development Councils in Guyana were essentially the vision of the late and former President, Dr. Cheddi Jagan who after winning the National Elections in 1992, challenged all communities to refresh the landscape, and in fact to restore the country’s image, by cleaning up all canals, parapets, lawns and backwards.

Page | 11

51. NDIA with the national responsibility for drainage and irrigation in Guyana has taken the CDC mandate upon itself by supporting these organizations to reduce the incidence of flooding on the coastland in Guyana. We have extremely limited information of the actual operations of this body and the number of CDCs’ that exist in Guyana. There are detailed Standard Operating Procedures for CDCs’ including the legal basis, and a synopsis of operational procedures. The CDC Direction Agency was headed by Ms. Philomena Sahoye-Shury.

52. The Community Development Councils duplicates the work done by NDIA and the unnecessary cost in its administration could be reduced if its entire operations are restructured and absorbed by NDIA. It is the general opinion that the CDC was also used as a mechanism to create employment for the governing party supporters.

53. The management of CDC according to the Standard Operating Procedures, requires activity reports to be submitted to the finance office of NDIA, along with copies of registrations, monthly financial statements and bank statements for review. In addition, engineers at NDIA are required to review the cost and benefits of all projects initiated by CDC’s. However, based on information available, the management of NDIA is hardly involved in providing any oversight in financial or engineering matters.

54. There is no evidence from the management at NDIA that audited financial statements were ever prepared by the CDC. It is difficult to assess its stewardship in the absence of audited financials and interviewing the officers that are involved in the day to day activities.

55. For the years 2013 and 2014, NDIA disbursed G$426,272,600 to CDCs’ for cleaning and maintenance of channels and canals etc. NDIA were unable to provide us with information for years 2011, 2012 and January to June 2015.

56. Community Development & Irrigation Project (CHIP): The CDIP Project started in 2006 and it is funded by the MOF. There is very

Page | 12

limited information available on this project hence we were extremely constrained to provide a thorough assessment. We understand the purpose of the project is to clean community drains.

57. The total amounts of monies disbursed between January 1, 2011 to December 31, 2014 as shown below amounted to G$2,294,752,891. G$ 1,945,296,211 or 84% was spent on contracted employees to provide for cleaning drains and canals. The Project was transferred to the Ministry of Housing in 2014.

58. We noted that in the year 2013 - G$500,000,000 was paid into the CDIP Account and the money was used to purchase Machinery and Equipment for Guysuco.It appears that substantial cash support was provided through NDIA to Guysuco without cabinet approval. NDIA acted as a Banker to Guysuco as mentioned earlier in the report. The CEO explained that all the machinery and equipment belonged to NDIA but were used by Guysuco. These units were shown as property not belonging to NDIA on the report provided by finance staff. The matter was not discussed at the Board level.

59. Source documents to verify transactions of monthly receipts and payments were not available for examination. Returned cheques and bank statements were also not available. We tried to determine the organizational structure in place and the officers responsible for the management of CDIP but the information was not provided by NDIA.

60. No audited financial statements were available for the activities of CDIP from its inception to date when it was terminated at NDIA.

61. We are of the considered opinion that the CDIP Project was another duplication of work that could have been undertaken by NDIA management rather than treated as a separate project.

62. Legal Matters Outstanding: There are several legal matters outstanding and Ms. Jaya Manickchand has served as Attorney at law representing NDIA in all legal issues and court matters for the review period.

Page | 13

63. Faizal Mohamed vs. NDIA, the Plaintiff claimed G$8,055,000 was the amount owed by the Defendant to the Plaintiff for the sourcing, installation of spares and new engine on caterpillar excavator.

64. In addition to this matter before the court, Mr. Faizal Mohamed made several claims for various contentious jobs completions, for which no payments have been made to date. Examples: payment for unpaid pump of G$1,000,000 and two separate amounts of G$11,032,000 and G$13,813,000 for spares supplied to Lusignan Stores on the East Coast, for which no documentation was available

65. Mr. Pablo Singh vs. NDIA; the Plaintiff claimed $754,156 for special damages. The Attorney at Law, Ms. Jaya Manickchand charged fees of G$2,500,000 for this matter. The case has been ongoing for over three years. The CEO claimed that Mr. Singh walked off the job and refused to accept a settlement.

66. Other Issues: NDIA operates without a qualified accountant, with the requisite experience suitable to the nature of NDIA operations. Immediate action is needed to correct this anomaly.

67. There were many breaches of operating procedures, with weak and non-functioning internal controls across multiple transactions processed.

In addition, the annual external audit done by the Audit Office provides limited coverage of the activities of NDIA since NDIA audit is incorporated as part of the audit of MOA.

Our review was limited to the examination of records made available to us, along with interviews of various management personnel. We identified red flags particularly in the areas mentioned earlier which could lead to several improprieties but we were unable to gather the evidence to support a successful prosecution against any management personnel at this time.

Page | 14

In many instances corruption is an off the book fraud that requires the use of white collar investigative methodologies such as Net Worth Computation, Asset Analysis or expenditure approaches to measure assets acquired against earnings.

Such techniques will require access to personal bank accounts and records of property owned by individuals being investigated to reveal indication of unexplained wealth. These matters are outside the Terms of Reference of this forensic audit.

We are of the considered opinion that the failure of the Board of Directors and senior management to provide good governance led to a loss of confidence in the governance and management of NDIA.

It is therefore the task of the new Board of Directors to use this Report as a basis to do further work in the troubled areas to improve the quality of management at NDIA.

Page | 15

3.1 Introduction

Nigel Hinds conducting business as Nigel Hinds Financial Services were appointed by the Ministry of Finance to conduct a forensic audit of NDIA with emphasis on corporate governance, financial systems, commercial transactions and compliance with legal authority.

Limitations in the scope of the forensic audit existed where we were unable to access the financial profile of key individuals. This includes comparative analysis of earnings to growth of their net assets, including access to personal accounts of in financial institutions.

Nigel Hinds Financial Services were also required to recommend corrective action to be taken and specific recommendations geared towards greater and better financial management, accountability and corporate governance.

This report is provided solely in accordance with the terms of our engagement and for no other purpose.

Page | 16

3.2Background to Entity

3.2.1 Introduction

The NDIA was formed by Act of Parliament #10 of 2004 to focus on Drainage, Irrigation and Flooding. A detailed review of the corporate governance structure as specified by Act #10 of 2004 is given below to aid understanding of the Scope of the Authority and the deficiencies that exist in the operations of NDIA that could lead to management override and misconduct by management personnel.

3.2.2Principal Functions of the Authority

The general functions of the Authority are to:

Recommend a national D&I policy; Co-ordinate the operation and maintenance of D&I activities through such measures as may be appropriate and to make suitable recommendations therefor;

Page | 17

Manage, operate and maintain the D&I systems and related access roads and facilities constructed or acquired by the Authority under this Act; Develop programs and plans to locate, evaluate, conserve and distribute water resources for agricultural development and for the efficient management, operation, evaluation and monitoring of the D&I systems; Implement a system of financing that separates public and private services of the D&I systems and divide drainage and irrigation infrastructure into related public and private categories with the result that the operation and maintenance of the private elements of the system are paid for by the direct users of the services and that upkeep of the public good elements of the system is supported by public revenue; Develop procedures, norms, standards including irrigation and environmental standards and operation schedules for the efficient operation and maintenance for the D&I systems across the regions; Execute feasibility studies and appraisals for programmed works to determine priorities and quality standards for plans for the D&I systems; Carry out capital works or contract them to the private sector using competitive bidding procedures; Develop mechanisms and procedures for the efficient execution of maintenance and capital works; Set, monitor and enforce the terms and conditions subject to which contracts are entered into by the Authority; Undertake anything incidental or conducive to the performance of any of the foregoing functions.

3.2.3 To assist Responsibilities of Governing Board

Page | 18

To assist in the management of the Authority, a governing board is established and responsible for:

Keeping under review the NDIA policy; Keeping, promoting and providing support for the establishment and development of WUA and FA; Developing the institutional capacity of regional or local government organs in the management, operation and maintenance of the D&I systems; Encouraging the participation of private sectors section in the development, management, operation and maintenance of the drainage and irrigations systems; The adoption of procurement procedures relating to supplies, contracts and tenders; The approval, review, monitoring and evaluation of the annual and semi-annual financial and technical plans and budgets of the Authority; The supervision and control of the functioning and activities of the Authority; Ensuring the co-ordination of plans, programmes and activities between the Authority, the Sea Defense Board, Conservancy Boards and other relevant entities; Giving general directions to the CEO; Undertaking anything incidental or conducive to the performance of any of the foregoing functions.

3.2.4 Responsibilities of Governing Board

The board shall consist of the following members:

A chairperson to be appointed by the Minister;

Page | 19

Six directors to be nominated by the regions and approved by the Minister; Two directors to be nominated by the WUA; Two directors to be nominated by the RPA; The MOA, the MOF, the Ministry responsible for the sea defense and Surveys Commission and GUYSUCO shall each nominate one person as an ex-officio director: and One director to be nominated by the Minister; The CEO shall be an ex-officio director; The directors of the Authority may be appointed on such terms and conditions as the Minister may determine.3.2.5ManagementThe NDIA Act No. 10 of 2004 also makes provisions for the establishment of a number of committees / working groups to facilitate efficient and effective oversight across all sectors of the operations:

3.2.5.1 The Appointments Committee: This committee comprises a Chairperson and two other directors (other than the CEO) to be appointed by the Minister. It has the power to make appointments of officers, to remove and exercise disciplinary control over the officers and employees of the Authority. Also it may delegate to the CEO the power to take disciplinary action against all or any class of employees of the Authority for such misconduct and to impose such penalties as may be specified by the Committee.

3.2.5.2 Management Committee: The Minister shall establish a committee to be known as the

Page | 20

Management Committee consisting of the Chairperson who shall preside over the meetings of the Committee, the CEO, a representative of the MOF and two other directors.3.2.5.2.1 Functions of the Management Committeea. Make recommendations relating to short term policy of the Authority with a view to improve the efficiency and effectiveness of the discharge of the functions of the Authority;b. Monitor, review and evaluate the plans, programmes and activities of the Authority;c. Facilitate the collaboration with other agencies and bodies, including WUA or Associations of Farmers, responsible for the operation and maintenance of secondary D&I systems.

3.2.5.3 Working Groups The Board may appoint such groups as it deems fit to consider and assist on any matter arising out of or connected with, the discharge of its functions under the Act. The Board may adopt any recommendations or with such modifications or adaptations as the Board may determine.

Page | 21

3.3 Terms of Reference

3.3.1 BackgroundThe GOG is reviewing the performances and of public owned entities, statutory bodies, projects and activities financed by or through public funds. In this regard, the GOG has commissioned this forensic audit of the operations of the NDIA.

3.3.2 Objectives and Scope of the Audit

The audit should include such procedures as necessary to:

3.3.2.1 Determine the entity’s adherence to and fulfillment of principles of corporate governance in all aspects, including its interpretation of its mission,

Page | 22

adherence to legal or statutory and policy instruments and good practices;3.3.2.2 Asses and test systems and detect any instance of corporate malfeasance and inefficiency for remedial and or judicial intervention and system realignment;3.3.2.3 Determine the authenticity and validity of significant commercial and financial transaction entered into by the entity with related parties, suppliers and customers and measure the extent of potential prejudice the entity may have suffered through such dealings if any;3.3.2.4 Carry out a comprehensive financial system audit which should look at all systems, decisions and practices which have underpinned the entity’s finances test and assess financial discipline at all levels. Without limitation, the auditor should:

a. Review and examine all financial books and records of the entity as required to undertake such review and to obtain such clarifications and explanation as may be required in relation to such books and records;

b. Review all contracts administrations and approval processes in relationship to the expenditure of funds during the period;

c. Review all material expenditures and contracts made by the entity during the period and obtain all necessary information and explanations as may be required in relation to such books and records;

d. Examine all areas, including budgeting, financing, expenditure, management of revenue inflow, trade terms, procurement or purchase decisions and supply chain management;

Page | 23

e. Examine the entity’s assets management system, including its fixed assets, their disposal, management or deployment;

f. Examine the entity’s marketing production and commissioning policies, systems and agreements to determine their integrity, efficiency and responsiveness;

g. Examine the entity’s archiving policy both by way of records keeping and as a performing asset that yields revenue for the entity.3.3.2.5 Recommend statutory, legal or organizational changes required to identify and prevent any recurrences of improprieties.

3.3.3 Specialized AreasThe review may be extended to any or all of the following:3.3.3.1 Conduct a human resource audit which should include key issues like manpower policy and needs determination, selection and recruitment regarding philosophy, grading and departmentalization, payroll system and management, performance, culture and whole policy on advancement and promotions, labor issues, skills development and deployment. Examine current incentives, their access and distribution and what impact they have on skills attraction and retention on staff motivation, performance and commitment;3.3.3.2 Determine the planning culture of the entity;3.3.3.3 Determine the entity’s manpower and skills development policies to equip its key functional areas with strategic competences needed for migration to a digital era and beyond;

Page | 24

3.3.3.4 Recommend a business model, development and innovativeness which would help a restructuring exercise by gauging the entity’s capacity to align itself with and keep adjusting to the larger macro-environment through periodic strategic interventions;3.3.3.5 Gauge the entity’s readiness to do business in an environment characterized by open competition locally, regionally and globally and the removal of statutory sources of revenue including subsidies.

3.3.4 Co-operation

The Consultant/Firm shall be afforded every opportunity to access such records, meet such personnel and visit such places as he/she considers necessary for the achievement of the audit’s objectives.

The Consultant/Firm shall immediately report any instances of non-cooperation of staff, customers, suppliers or other persons or entities to the Financial Secretary, Ministry of Finance.

Where the Consultant/Firm has reasonable reason to believe that the records of the entity are under threat, the Consultant/Firm shall, on behalf of the Government of Guyana, immediately take steps to secure such records and report the matter forthwith to the Financial Secretary, Ministry of Finance.

3.3.5 Eligibility

Page | 25

Consultants or Firms that provided audit or accounting services to the entity are not eligible for appointment as Consultant/Firm. The consultant/firm must disclose all transactions with the entity during the period covered by the audit.

3.3.6 ReportingNo later than seven days after the completion of the file work, the auditor shall submit to the entity, copied to the Financial Secretary and the Minister of Finance, a draft report of comments, and shall conduct an exit interview with the management of the entity or key persons responsible for providing information for purposes of engagement.

The entity’s comments and feedback are to be provided to the Auditor within fourteen days of the receipt of the draft report.No later than fourteen days thereafter, the Auditor shall submit a comprehensive report to the Minister of Finance, highlighting his /her findings, recommendations on corrective actions to be taken and specific recommendations geared towards greater and better financial management, accountability and corporate governance.

In the event the Forensic Audit uncovers acts of malfeasance, the Auditor is required to bring the matter of the illegal or dishonest activities to the immediate attention of Minister of Finance. In addition, to recommend to the Government any action to be taken to institute

Page | 26

appropriate disciplinary action this may include prosecution.

Without prejudice to the requirement set out in the proceeding paragraphs, the Auditor is required to submit a monthly update, where the engagement extends beyond one month.

3.4 Methodology

The general approach to the forensic audit was guided by the terms of reference commissioned.

Traditional audit and investigative methodologies were utilized in performance of the audit. Interviews were conducted with relevant personnel and documents examined as required in the following stages: -

a. Planning the Audit- Determine audit strategy and plan audit approach; Examination, Identification, Assessment of risks and critical accounting matters;

b. Control Evaluation- Understand accounting and reporting activities, Assessment of control risk and risk of material misstatement, Selected Evaluation and Testing of designed and implemented controls;

c. Substantive Testing- Plan and perform substantive procedures on samples including reconciliations, re-performance and analytical reviews, determine sufficiency and appropriateness of audit evidence, conclude on critical accounting matters;

d. Completion- Conclude, perform an overall evaluation and form an audit opinion.

Page | 27

3.5 Limitations

The findings are “reasonably” expressed in this report as a result of but not limited to the following inherent limitations: -

a. Inevitable misjudgment in the identification of audit risks, selection of appropriate auditing procedures and the interpretation of audit evidence;

b. Sampled instead of detail testing of transactions and balances in order to perform the audit efficiently and cost effectively may not be representative of the entire population;

c. Misrepresentations by management relied upon which were not deemed for corroboration;

d. Undetected fraud despite the application of our methodology and procedures.

e. This report is referenced with and may be modified if additional information and explanations is obtainable.

4 Findings

Our findings reported reflect the work completed over the period January 1, 2011 to May 31, 2015 in each of the areas and are based primarily on documents perused, discussions held and clarifications sought from management. These findings, inferences or conclusions are supported by detailed schedules.

4.1 Corporate Governance

Page | 28

The expiration of the term of office of the Board Directors expired in June 2015. The same Board Members also served on the previous board. There was no evidence or instrument to confirm that members were properly appointed as specified in the First Schedule of the NDIA Act - No.10 of 2004, which states that the Chairperson and every director shall be appointed for a term not exceeding two years and under such terms and conditions of service as the Minister may fix in the instrument of appointment. The then Chairman, Mr. Walter Willis at a Board meeting held on December 14, 2011 requested that the Hon. Minister of Agriculture, Mr. Leslie Ramsammy re-appoint the Board as it was the end of the year. At a meeting held in February 2012 Mr. Dharamkumar Seeraj was appointed Chairman. The Minister indicated that the Board would be fully constituted by the end of March, 2012.

The Board is required to meet at least once in each quarter, however the Board only met twelve out of seventeen times. No reasons were given for not holding the required number of meetings. At a meeting held on February 10, 2012 Board members agreed that meetings be held the 2nd Friday of every month but this did not occur. Furthermore, on April 16, 2015 Board members including the Chairman were paid a total of $1,584,000for meetings attended between July 2014 and March 2015 -for a total of nine meetings. This was evidenced by payment voucher # 2101326, with fifteen members signing and receiving their cheques on March 16, 2015. However, there were only two meetings that were held, being on December 30, 2014 and February 13, 2015.

Page | 29

Twenty persons were elected to attend the quarterly meetings and this number was increased to twenty-one at a meeting held on July 16, 2013. However, the average number of persons that attended meetings amounted to thirteen. This represented an average of 65% attendance. One reason cited for the level of attendance was the $4,000 stipend paid to Board members which was considered inadequate given the cost of transportation for members travelling from outside of Georgetown.

The NDIA Act No. 10 of 2004 as indicated earlier, provided for the appointment of Committees to help the Board meet its obligations as outlined in the Act. However, based on the Board minutes of March, 2011, two committees were appointed: The Works and Tender Committee which comprised of Mr. Walter Willis, Mr. Dharamkumar Seeraj, Mr.Omadatt Persaud and Mr. Fredrick Flatts and the Finance and Administration Committee which consisted of Mr. Clement Corlette, Mr. Harrinarine Baldeo, Mr. George Jarvis, Mr. Tarachand Balgobin and Mr. Zulfikar Mustapha. In March 2013 two similar committees were again appointed and reconstituted, the Finance and Administrative Committee which comprised Mr. Dharamkumar Seeraj, Mr. Rudolph Gajraj, Mr. Tarachand Balgobin, Mr. Clement Corlette, Mr. Lionel Wordsworth, Mr. OmadattChandan and the Works Committee consisted of Mr. Dharamkumar Seeraj, Mr. Omadatt Persaud, Mr. Godfrey Vaughn, Mr. Fredrick Flatts, Regional Chairmen (Regions 2,3,4,5, 6 & 10), Mr. Lionel Wordsworth,Mr. Omadatt Chandan and Mr. Deonarine Shiwsankar.

According to the Board Minutes of December 14, 2011, The Works Committee visited the East Demerara Water Conservancy (EDWC) Northern Relief under construction at Hope/Dochfour, the

Page | 30

Greenfield pumping station and sluice and the Abary and Cottage Sluices. On December 20 and 23, 2013, the Works Committee met to discuss the Pineground Project. On January 27, 2015, the Works Committee met to discuss the construction of the pump station at Vriendschap and to review findings of the controversial sheet piles purchased. Minutes were available for the Works Committee meetings held on those dates.

Outside of these activities, the Works Committee scarcely addressed its terms of reference which included critical areas such as review designs, review bills of quantities, specifications of works to be undertaken by NDIA and make recommendations to the Board, provide advice in relation to planning, coordination and execution of capital works and infrastructure program, recommend work priorities for capital projects, provide quarterly reports among many other tasks and responsibilities. An evaluation of the terms of reference of the Works Committee against what was actually done showed that the committee failed to comply with its terms of reference.

4.1.1 The Finance and Administrative Committee - was tasked with investigating one issue at a committee meeting on December 30, 2014. On February 13, 2015 the Chairman of the Administrative and Finance committee provided a comprehensive report on the issue for the Board’s consideration and acceptance. No decision was taken on the recommendation up to the last Board meeting held for period under review.

Other than the assignment referred to above The Finance and Administrative Committee never really addressed its terms of reference which included matters critical to financial governance;

Page | 31

including: overseeing the financial affairs of NDIA, recommend the annual budget, review the annual financial statements and make recommendations as necessary, ensure that assets are properly managed, review quarterly accounts and make recommendations, oversee the strategic planning and review accounting and auditing procedures.

Given the scope and importance of the role of the Finance and Administrative committee in setting sound financial governance practices, it certainly failed during its tenure to deliver on its mandate and its ineffectiveness contributed to the myriad problems identified in this report.

4.1.2 The Appointment Committee -The only mention of this committee was in the minutes dated March 8, 2013 when the Board directed that the Minister be written for an Appointments Committee to be set up since the NDIA Act provided for such an appointment. There was no further mention at any subsequent meeting to bring thiscommittee into operation. However, matters pertaining to employment are being addressed by the HR manager, sectional head and an independent person from the MOA and a sister Agency like Fisheries. A report is prepared and sent to the CEO and once approved it is forwarded to the PS of the MoA for onward submission to the Public Service Ministry, where the appointment is finalized.

4.1.3 The following were some of the important matters raised at Board meetings held over the tenure of the board but were never further discussed or actions taken to address them:

4.1.3.1 Increase stipend from G$4,000 to G$10,000 to help members finance travelling expenses.

Page | 32

4.1.3.2 Prepare an inventory of all structures including canals, sluices, compile database and introduce a GIS system. The CEO claimed that this matter is currently work-in-progress.

4.1.3.3 Water User’s Association (WUA) failed to prepare annual financial statements and have same audited. There were many concerns expressed at board level about the poor management of the WUA. A document was prepared by the CEO in June 2015 to address the management issues and according to him the document was approved by the new MoA for action.

4.1.3.4 Fuel discrepancies were identified at various meetings and the CEO was tasked with the responsibility of preparing a Fuel Policy document; a copy was obtained but there was no evidence that the document was approved by the Board at any subsequent meeting.

4.1.3.5 Contracts over G$9m should be brought to the attention of the Board with a report.

4.1.3.6 A printout of the Integrated Financial Management and Accounting System (IFMAS) be provided to NDIA Directors showing budgetary allocations.

4.1.3.7 The status of financing of the NDIA operations is to be reported to the Chairman.

4.1.3.8 Quarterly press briefings on the works undertaken by NDIA and a special Press briefing on the Internal Auditor’s Report done by Mr. Pablo Singh that adversely impacted on the image of NDIA.

4.1.3.9 The Board advised at a meeting held on June 8, 2012 that a person with an engineering background

Page | 33

should be appointed to head the Procurement Department. However, a person with an accounting and project management skill set was appointed.

4.1.3.10 At each meeting, minutes were read, followed by the CEO's Report which included status reports on finance, deployment of earthworks equipment, D&Ipumps, projects in progress, new projects and legal matters outstanding. This was followed by Regional Reports presented from the representative Regional Chairman, which provided the scope of works undertaken in each region and problems experienced with possible recommendations.

We are not qualified to give an opinion on engineering works both mechanical and civil but based on the information reviewed there was a paucity of discussion on the financial performance of NDIA. At two Board Meetings held on June 8, 2012 and August 21, 2012 matters pertaining to approval of budget and supplementary financing were briefly noted. The members of the Board were never engaged in discussions that related to Strategic Planning, feasibility of projects undertaken, over expenditure with analysis of variances and explanations at both the current and capital levels. The CEO’s Report included a brief section designated “financial reporting” but this was not very helpful as it provided little information that would help members of the Board to evaluate the financial affairs of NDIA. Furthermore, there was little discussion on policy formulation with a view to

Page | 34

improving the efficiency and effectiveness of the authority, monitoring, reviewing and evaluating plans, programsand activities.

4.1.3.11 Annual Reports were prepared for three years commencing December 2011 to December 2013.No report was prepared for the year ended December 31, 2014. The Annual Report is very informative and it provided detailed information on the works completed for the year and special projects undertaken. The section on organization structure which outlined the role of each sub-section was less helpful and this was repeated each year. That should have included a performance review with well thought out performance indicators and an assessment of those performance indictors over the period would be more meaningful.

The finance section was not properly presented for non-finance persons to assess the stewardship of the management. No financial information was presented for the year 2013; without any explanation. The NDIA Act # 10 of 2004 section 48 sub-section 1 states clearly that the Annual Report should contain an audited statement of accounts of the Authority. However, this was never done for reasons better explained in the relevant sections below.

Page | 35

4.2 Fixed Assets Management

Fixed Assets refer to assets acquired by NDIA which included heavy duty equipment and machinery, pontoons, pumps, light vehicles and structures constructed by the Authority to discharge its functions as required by NDIA Act 10 of 2004. NDIA has never maintained a Fixed Asset Register which is a document that shows the assets owned by the organization; it includes important details for each asset re: date of acquisition, cost, identification number, location, estimated life, method of depreciation, rate of depreciation, written down value, date asset is sold or disposed and condition of the asset. Benefits include:a. It is a valuable planning tool as it assists in both short and long term planning. b. It helps in making replacement decisions, it is important to note that NDIA spends significant sums of money on rehabilitation and repairs works. The document helps the management to make informed decisions particularly when assets have outlived their usefulness and considerable sums are invested in repairs. c. It helps to determine whether an asset should be disposed.d. It provides an audit trail for both internal and external auditors to confirm relevant assertions in the financial statements.e. It helps finance staff and management to keep track of the assets acquired.

Page | 36

For the purpose of our review, we categorized the assets held by NDIA as follows:

4.2.1 Heavy Duty Machinery & Equipment

From a non-current asset listing provided by Finance staff we were able to construct the following:

Period Draglines

Short Boom

Excavators

Long Boom

Excavators

Bulldozers

Mini Excavator

s

January 01,2011 1 22 21 2 0Additions during year 0 4 1 6 1December 31,2011 1 26 22 8 1

January 01,2012 1 26 22 8 1Additions during the

year0 2 8 1 0

December 31,2012 1 28 30 9 1January 01,2013 1 28 30 9 1

Additions during Year 0 11 0 0 5December 31,2013 1 39 30 9 6

January 01,2014 1 39 30 9 6Addition during the

year0 0 0 0 25

December 31,2014 1 39 30 9 31January 01,2015 1 39 30 9 31

Addition during period 0 0 0 0 0Total at May 1 39 30 9 31

Page | 37

11,2015

4.2.1.1 Heavy Duty Machinery & Equipment Count

The number of units of Machinery and Equipment held:

There are 110 pieces of heavy duty machines, however, the data obtained for each machine listed relative to the listing in the register is incomplete, as 25 machines (22.73%) were without their historical value while 4 (3.64%) were without their dates of acquisition as shown in Annex 1, Machinery & Equipment. The total value of the machinery and equipment where values were listed amounted to G$2,283,567,568 (G$2.20B).It is important for NDIA management to know the total cost of machinery and equipment held at any point in time with additions and disposals shown clearly for each category. Without this information it becomes a difficult task to manage the fixed assets inventory and to plan work programs.

4.2.1.2 Errors in recording values and omission of machinery purchased:

Page | 38

Twenty (20) mini excavators (Hyundai R55 – 9) valued at G$11,900,000 each and four (4) trailers at G$4,200,000 each (total tender amount – G$246,000,000). The excavators were delivered between December 2013 and January 2014 while the trailers were delivered in May, 2014. However, the mini excavators were subsequently recorded as costing G$12,380,000 each in the assets listing for 2014 and the trailers were completely omitted as shown in Annex 1, Machinery and Equipment. No explanations were given for the misstatement and omission.

At a Board meeting held on October 31, 2012 it was mentioned that NDIA would receive 8 excavators and 2 pontoons through a Japan International Cooperation Agency. However, at a further meeting held on July 16, 2013;six excavators and 2 pontoons were handed over. The two pontoons were listed as received but there was no evidence as to whether the 6 excavators were received from that source according to the listing provided. The source of funding should be shown clearly for each acquisition, according to the capital expenditure plan thirty-four excavators were purchased and six were received via Japanese funding; giving a total of 40 excavators received in 2013/2014. However, the asset listing is showing 41 for the same period. The

Page | 39

difference of one could not be explained and whether or not NDIA subsequently received the two pontoons held on October 31, 2012 was not shown in the table above. The CEO indicated that one of the excavators fell in the conservancy and was salvaged at a later date. According to him this accounted for the missing one. However, we did could not verify its existence.

4.2.1.3 Ownership and Registration of Machinery and Equipment.

Registered Owner Total # of Units RemarksMoA 58 10 Excavators with GuysucoNDIA 16

MoA - NDIA 10 1 Excavator registered not in list

Not available 26 Registration not seenTotal 110

NDIA was de-linked from the MOA in 2004. NDIA received Capital Assets from the MOA upon its establishment as a separate entity. The analysis of the registration documents of machinery revealed that ownership of the machinery NDIA acquired from MOA was never vested in NDIA as shown above.This practice continued well into 2014 when all 25 excavators procured for NDIA were registered in the name of MOA. There were also some units that were correctly registered

Page | 40

to NDIA. Some other machines are described as owned by “MOA & NDIA”.Ten (10) Hyundai R220 LC Excavators were purchased through NDIA in November 2013. These machines are registered as owned by the MOA and are listed as “MOA NDIA Property”. These excavators are listed as located at Guysuco. The Guysuco situation would be dealt with under capital expenditure as it appears as though NDIA acted as a bank to that Corporation. A clear distinction has to be made as to what assets are owned by NDIA and the MOA since NDIA is a separate entity incorporated by an Act of Parliament. Unfortunately, management could not provide any explanation for this irregular practice.

4.2.1.4 Age of Machinery and Equipment

Age No. of Pieces Percentage %5 years and more 46 424.5 years and more 12 113.5 years and more 11 102.5 years and more 16 151.5 years and more 25 22Total 110 100

Approximately 58 pieces or 53% of the Machinery are more than four and half years old and we were not able to verify the condition of the machines. Immediately

Page | 41

noticeable were the substantial sums spent on capital and routine maintenance as shown in the latter part of the report. The justifications for that level of expenditure could not be explained.

It is important to note that NDIA has an approved Financial Operations Manual and page 22 details the procedures for Fixed Assets Management and includes computing depreciation. Unfortunately, there is no evidence that this aspect was implemented by management and the board showed little interest in the Assets of NDIA as evidenced from the Board minutes available. There needs to be a clear Policy at earliest - when machinery, equipment, motor vehicles and other assets are purchased by NDIA through its annual appropriations that these must be recorded in its name or else it becomes an impossible task to determine what assets are owned.

4.2.2 Motor Vehicles

There are twenty three motor vehicles listed as belonging to NDIA as shown in Annex 2. These motor vehicles were categorized as pick-ups, motor cars, trailers, tractors and SUVs. The motor vehicles list presented for audit did not include information on acquisition values. An examination of the Certificates of Registration showed that sixteen

Page | 42

motor vehicles were registered in the name of the MOA, one in the name of NDIA, four without Registration and two in the name of contractors.

4.2.2.1 List of Motor Vehicles at December 31, 2014

Period Pick - Ups

Motor Cars

SUV Trailers Tractors

At January 1, 2011 14 1 4 1 1Additions during year 0 0 0 0 0

Total at December 31, 2011

14 1 4 1 1

At January 1, 2012 14 1 4 1 1Additions during year 0 0 0 0 0

Total at December, 2012 14 1 4 1 1At January 1, 2013 14 1 4 1 1

Additions during year 2 0 0 0 0Total at December 31,

201316 1 4 1 1

At January 1, 2014 16 1 4 1 1Additions during year 0 0 0 0 0

Total at December 31, 2014

16 1 4 1 1

a.Further examination showed that five additional Registrations were in the possession of NDIA as shown in Annex 2and these were registered in the name of MoA and one in the name of a contractor;b.The ownership documents are kept by the Administration and Human Resources Manager and Finance Staff have little or no knowledge of the vehicles owned by NDIA or in the possession of NDIA;

Page | 43

c.The vehicles registered in the names of contractors were bought for specific projects and after those Projects were completed, the vehicles were to be transferred to NDIAd.Finance staff provided examples of two specific contracts awarded in August 2014 and October 2014 to contractor Roopan Ramotar Investment for construction of a drainage pump station at Gangaram and Joppa, Corentyne, Berbice. e.NDIA assets were provided to the contractor to execute the Projects after which these assets were to be returned to NDIA. For instance, the contract awarded in August 2014 provided for the purchase of G$11,438,000 worth of assets and these are to be transferred to NDIA after completion of the contract. f. Accountant - Mr. Wasir Mohamed wrote the acting CEO Mr. Flatts on August 11, 2015 captioned “Reporting and Recording NDIA Assets held by Contractors’’ informing him that it was a breach of administrative and accounting procedures when Assets were acquired by NDIA through these contracts and were not reported to Finance since these assets would form part of the NDIA’s asset portfolio.g.Given the poor quality of Fixed Asset management, it is therefore important that a special investigation be done covering the past four years to examine those contracts which provided for purchase of assets for specific projects and to determine whether those assets were transferred by contractors to the NDIA after project completion. The CEO explained that there were eight such contracts but this would need to be confirmed and to determine if assets purchased through those contracts were transferred to NDIA.

Page | 44

4.2.3 Pumps

There were forty-six pumps - see Annex 3. Pumps and our observations: Dates of Acquisition were not provided for any of the pumps listed; Only eight of those listed had values recorded. Total valueamounted to G$448,875,000. These Surendra pumps were procured through the India line of credit; Thirty-nine (84.78%) of the pumps were identified via serial numbers and; All pumps had their locations listed.

4.2.4 Pump Houses and Fuel Tanks

4.2.4.1 There were 18 pump houses and 9 fuel tanks listed in Annex 4, Pump Houses and Fuel

Tanks, of which:

No dates of acquisition were listed; No cost of acquisition was recorded; All pumps were listed at their location.

4.2.4.2 There are 9 fuel tanks listed, our observations are as follows:

No date of acquisition listed; No cost of acquisition recorded; 2 tanks were described as “fuel tank on concrete base”; 1 tank is described as “inside pump station”;

Page | 45

1 built in fuel tank was listed; 5 were described as “fuel tank” in the listing; The capacity of the tanks ranged from 400 to 22,000 gallons; All tank locations were identified.

4.2.5 Generators

A list consisting of 4 generators were presented for audit as shown in Annex5. The following was evidenced:

No values were recorded; No date of acquisition was given; All have their serial numbers listed; All have their location listed.

4.2.6 Water Pumps

There were three water pumps. The following observations were made: No dates of acquisition were given; No values were recorded; All have their serial numbers listed; All were listed at their respective locations.

4.2.7 Boat and Engines

4.2.7.1 There were 2 boats which were described as aluminum boats as shown in Annex 6 – re:

No date of acquisition was given; No valueswere recorded; The serial numbers were listed;

Page | 46

Locations were recorded.

4.2.7.2 There were 6 outboard engines listed, with the following observations:

No values were recorded; Serial numbers of only two of the engines were recorded; No locations were recorded; The engines range in capacity from 25 to 50 Horse Power.

4.2.8 Pontoons

There were 9 Pontoons listed in this category of assets as listed in Annex 7– re:

No dates of acquisition were recorded for those assets; The values of the Pontoons were stated. Total value amounted to $363,222,750; The remaining 3 Pontoons, listed as located at Hope Canal, were described as “not repairable, Leased from DHB”; The other 6 Pontoons were listed at their respective locations.

4.2.9 Tools

Page | 47

There were 5 items listed as tools. Of the five, 17 plate batteries which by definition are not tools and should not

be on the list are shown in Annex8 – re: There were no dates of acquisition for those items; No cost of Acquisition was given; No serial numbers were recorded; All tools were listed as located in Black Bush Polder.

4.2.10 Office Furniture and Computer Equipment

There was no information provided on quantities, description and values of office furniture and computer equipment held by NDIA other than the external accountant D. Bahadur & Co. who was contracted to compile the draft financial statements for year ended December 31, 2014. His incomplete draft dated May 28, 2015 showed a balance of G$1,726,880 for office furniture and equipment but there was no analysis for the amount provided. However, an examination of the capital expenditure plans for 2012 and 2014 showed that the following items in the category of office furniture, equipment and computers etc. were purchased:

4.2.10.1 Furniture & Equipment Etc. purchased for NDIA Office

Year: 2012

Year

Description Value (G$)

201 Purchase of filing cabinet 48,720

Page | 48

2201

2Purchase of Studmark magazine file and metal storage cabinet

163,328

2012

Supply of furniture 510,400

2012

Supply of electrical equipment 251,000

2012

Supply & installation of venetian blinds 428,040

2012

Supply & installation of AC unit 169,940

2012

Supply and install wall partition and carpet 179,899

2012

Supply and install wall partition and carpet 32,016

2012

Purchase of one leather high back executive chair 55,680

2012

Purchase of one binding machine for NDIA 75,400

2012

Purchase of dinette set 83,520

TOTAL 1,997,943

Year: 2014

Date

Description Value (G$)

Dec-201

4

Supply and install one BTU compression for AC unit 81,200

Dec-201

4

Supply of desktop printers and printers 342,000

Dec-201

4

Purchase of office furniture and fax machine 290,000

Page | 49

Dec-201

4

Purchase of six (6) high back chairs 229,402

Dec-201

4

Purchase of one jet printer and ink 110,400

Nov-201

4

Purchase of two (2) microwaves 46,944

Dec-201

4

Purchase of fireproof safe for NDIA 290,000

Jul-201

4

Purchase of executive chairs for NDIA 336,934

TOTAL 1,726,880

The total for the two years was G$3,724,823 and that figure does not take into consideration items purchased prior to or after the dates given above or the opening balances held. It therefore requires a validation and verification exercise to determine the value of office furniture and computer equipment held by NDIA. Equipment purchased for specific contracts which should be returned by contractors at the end of the contracts should also form part of the stock of office furniture, computers as noted earlier.

The Auditor General’s Reports for years 2012 and 2013 repeatedly stated that the management of NDIA had failed to maintain historical records for vehicles, equipment, machinery and office furniture and computers etc. Despite these concerns no effort was made by management to

Page | 50

compile a fixed assets register in accordance with best practices. The listings provided as shown in the annexes 1 – 6 are inadequate since there were serious short comings in the data presented.

Furthermore, there were no source documents provided by management to confirm values shown on the asset listings. We also noted from the listing that three excavators shown as decommissioned remained on the asset listing. The “Financial Operations Manual” which was approved by the board at meeting held on July 16, 2013, page 22 of the manual details disposal procedures for assets that were decommissioned.

It appears that the Accounting Manual is not being used as Organization’s reference for addressing accounting matters and the absence of a qualified and experienced accountant as the head of finance only serves to exacerbate matters. An external accountant with the relevant expertise and experience with this type of operation should be hired to compile an asset register in accordance with best practice.

Page | 51

4.3 Revenue Structure

NDIA Act No 10 of 2004, section 50 sub-section 1 states that NDIA will compute fixed rates and charges for D&I services provided and sub-section 3 details how the rate shall be computed. The revenues generated from those charges were expected to meet the operating and capital expenditures of the entity. However, this was never done in practice and the CEO claimed that a major cause was legal complications with the Neighborhood Democratic Councils. Only the WUA charges farmers for services provided.

As it stands NDIA is funded fully by annual appropriations by Parliament and for the years 2011 to June 2015 the following sums were drawn to fund capital and recurrent expenditures:

Actual Receipts

Capital G$M Recurrent G$M

Total G$M

2011 1,228,268,386 1,426,755,496 2,655,023,8822012 1,100,000,000 1,553,421,815 2,653,421,8152013 1,299,799,739 1,512,827,373 2,812,627,1122014 1,921,899,959 1,592,975,305 3,514,875,264

2015 to June 696,756,614 679,801,189 1,376,587,803Grand Total 6,246,754,69

86,765,781,17

813,012,535,87

6

The sums drawn over the four and a half years included Roll over Projects and supplementary funds. There was some contradiction between applying for supplementary funds and then returning significant funds. The CEO claimed that those sums were given for

Page | 52

specific purposes and since those sums were not utilized, the amounts were refunded to the treasury. There was no documentation to confirm this. Members of Finance followed the required procedures laid out in the Accounting Manual for the release of funds. The necessary documentation and approvals were found to be consistent with management’s policies.

4.3.1 Comments on Expenditures

There was massive over-expenditure with the recurrent budget for 2011-2014 which was in excess of G$1.4 billion. There was little or no discussions by the board on justification for over-expenditure based on board minutes examined and there appears to be little involvement of the board in budget preparation and approval. There were only three instances from the minutes examined where members of the board were informed about budget matters. On June 8, 2012 members were told that the budget was approved, on August 21, 2012 there was need for a supplementary provision and in March 2013, estimates were approved. The CEO’s report included a section on Financial Reporting which was not helpful to board members regarding financial performance and the cash flow position of the entity. G$46,175,286 and G$78,541 were returned to the Consolidated Fund - MOF as excess receipts over payments in 2014 for 2013 and at the end of 2014, G$226,325,675 returned in 2015. The CEO explained that the amount of G$226,161,235 was transferred from the MOA to NDIA to purchase twenty mini hydraulic excavators and

Page | 53

G$46,175,286 were funds approved for the Liability Payment of “Operations of D&I Pumps within Regions 2,3,4 and 5.” We were not provided with any documentation to support these assertions.

4.4 Expense Management

Recurrent Expenditures for Years January 1, 2011 to June 30, 2015.

 Years Budget (G$) Actual (G$) Variance (G$)% over

Expenditure2011 1,001,696,000 1,426,755,496 (425,059,496) 422012 1,100,000,000 1,553,421,815 (453,421,815) 412013 1,154,735,000 1,512,827,373 (358,092,373) 312014 1,227,539,000 1,592,975,305 (365,436,305) 302015 817,022,000 679,801,189 137,220,811 N/A

Total 5,300,992,000 6,765,781,178 (1,464,789,178) 36

As noted on the table above there was massive over expenditure which amounted to G$1.5 billion over the review period. Detailed analysis of those expenditures is found in annex 9 on the Appendix. The average over expenditure for first four years was 36% and further analysis revealed that the over expenditure was due to the increased spending in the undermentioned areas.

4.4.1 Analysis of Recurrent expenditure by type for years June 1, 2011 to December 31, 2014

Year Expenditure Type Budget (G$) Actual (G$) Variance (G$)

% Over Expenditur

e2011 Fuel & Lubricants 1,156,000,000 1,351,927,526 195,927,526 16.9%2012 Maintenance of

Infrastructure1,918,290,000 2,115,662,790 197,372,790 10.2%

Page | 54

2013^ Other goods & services

433,458,000 895,901,609 462,443,609 106.7%

2014* Other Operating expenses

537,260,000 1,218,354,638 681,094,638 126.8%

Total 4,045,008,000

5,581,846,563

1,536,838,563

38%

*Other Goods and Services purchased: Services and repairs to pumps and equipment.*Other operating expenses: operating cost of pumps and equipment.

4.4.2 We interviewed members of the Finance team who offered the following explanations for the increased spending: Increase in the number of mini excavators and pumps; Constant flooding along the coastal belt; The use of low bed and hauler for the transportation of

its excavators; the use of tugs during the rainy season from the private sector to facilitate the dredging of Mahaica and Abary River entry channels.

Increased purchases of spares to service a bigger fleet of machinery and equipment.

Longer operating hours for pumps and excavators during flood periods. For example: in 2014, there was a breach of the main canal embankment at Airy Hall and pumps were deployed for extended hours. Increased monitoring and security cost for excavators, pumps, bulldozers, dragline and pontoons. Increased maintenance of infrastructure; in the year 2012 D&I channels was not catered for in the budget for a totaling 2,073,038yards of canals and drains in 11 WUA/NDC areas. Also there was an increase in the number of Civil Defence Commissions (CDC) groups in Region 4

Page | 55

and Region 10. In Region 10 there was an increase in the scope of works with 36CDC Groups performing biannual cleaning instead of annual cleaning.

A total of G$1,490,127,000 in supplementary funds was approved by Parliament to cover the over expenditure for 2011 to 2014. The funds were drawn as follows: G$401,000,000 in 2011, $322,622,000 in 2012, G$360,000,000 in 2013 and G$406,505,000 in 2014. Approximately G$1,102,693,980 (74% of supplementary expenditure) went towards purchases of other goods and services - repairs to pumps and equipment and other operating expenses - operating cost of pumps and equipment. NDIA has expended significant sums of money in repairs and rehabilitation of machinery and equipment during the review period. Monies for repairs are budgeted in both the Capital and Recurrent Budgets.

4.4.3 The following observations were noted: The total amount spent from both the Capital and Recurrent Budgets is G$1.8 billion on repairs and rehabilitation of machinery and equipment; No one in management was able to provide any justification for this level of repair works. More than 50% of the machinery and equipment were acquired from 2011-2014 and these assets were purchased new. Parts removed from machinery and equipment were not available for inspection primarily in Lusignan and Whim, Corentyne. It was difficult to reconcile parts which were available to particular work orders and machinery and equipment. Vague descriptions were written on the work orders. The descriptions written were as follows, “provide tools, materials and labour to repair draglines”. This was noted in several cases with huge

Page | 56

invoice values attached. It was impossible to determine the works done in the absence of specific details on the work orders. Minutes of the Board Meeting showed members were not told at any point of the massive repair costs or provided with cost reports for discussion and decision making as to the level of expenditures. The Finance department lacks the expertise to prepare targeted management accounts which would have highlighted the unusually high level of expenditures. The members of the Board with relevant and reliable information would be better positioned to take necessary actions to correct the situation. Interviews with Mr. Avinash Singh, Head of the Mechanical Division, revealed that he was aware of the high cost of repair works done on machinery and equipment. Mr. Singh agreed that the sums spent did not make financial sense and should be halted immediately. There were several memos exchanged between the CEO, Mr. Lionel Wordsworth and Mr. Avinash on this matter but little or no action has been taken to date to address the high repairs costs. Mr. Avinash Singh did not have a clear work program for his department; hence it is difficult to measure how well his department was doing particularly the utilization of machinery and equipment in a given month. The CEO, Mr. Lionel Wordsworth wrote Mr. Singh on this matter in April 2, 2012, but it appears again that little or no action was taken other than Mr. Singh continued to note the lack of or insufficient resources to manage his department efficiently and effectively. Based on contracts examined for years 2012 to June 2015, which amounted to G$587 Million out of G$896 Million we noted the following: Ninety-three (93) % of the amount spent was on repairs and rehabilitation of machinery and equipment and 7% on spares and supplies which suggests a preference for external repairs rather than

Page | 57

for repairs to be done in house. Mr. Avinash Singh argued that NDIA was not equipped to handle its own repairs because of the absence of mechanic and other resources. Contracts to the tune of G$547Million was awarded to 52 contractors for repairs and maintenance out of which 72% or G$392Million were awarded to 8 contractors as follows:

Contractors G$M Guytrac 51.0 International Imports 77.4Krishna Ralph 70.2D. Sawh 39.7Harrychand Tulsi 26.5RMCB 29.7Dax Contracting 53.1General Engineering 43.7 Total 392.0

Harrychand Tulsi also trades as General Engineering. In the rehabilitation of machinery and equipment shown in the next section,most of the same contractors were utilized:

Out of the G$39.6m awarded for procurement of spares and supplies 43% or G$17.1m was awarded to Deonarine Sugrim and Guytrac. Deonarine Sugrim is the owner of Guytrac.

4.4.4 Repairs to Machinery & Equipment and Procurement of spare and supplies.

For years: 2012, 2013, 2014 & 2015.

2012 2013 2014 2015 Total

Page | 58

G$ G$ G$ G$ G$Repairs & Rehabilitation to Machinery & Equipment

78,229,408 211,615,304 210,405,210 47,321,850 547,571,772

Procurement of Supplies

664,196 19,282,633 18,341,336 1,395,280 39,683,445

GRAND TOTAL 78,893,604 230,897,937 228,746,546

48,717,130

587,255,217

4.5 Capital Expenditure

Capital Expenditure for the period January 2011 to June2015 amounted to G$6.3 Billion and this excluded the Hope Canal Project which wasfunded through the Ministry of Finance. Highlights of Capital Expenditure:

4.5.1 21.2% or G$1.3 Billion of the total funds was allocated to rehabilitation of machinery and equipment. Of that total 81% or G$1.075 Billion was paid to 8 contractors as follows:

G$MHarrychand Tulsi 191.9Krishna Ralph 352.0Guytrac 51.5International Supplies 195.2RCMB 42.0General Engineering Supplies 95.2Dax Contractors 11.0D. Sawh Workshop 137.3Total 1,075.8

4.5.2 A total of G$2.2 Billion was spent on repairs and rehabilitation of machinery and equipment over the four and half years. Members of the mechanical, civil, procurement and finance

Page | 59

departments agreed that this figure did not make financial sense given the cost of the machinery and equipment. There was no explanation other than silence from management. If the written down values were computed annually, and measured against the repairs and rehabilitation cost, it raises concerns as to why the current members of the management team should continue being part of NDIA. Furthermore, it is interesting to note that G$1.5 Billion or 67% was awarded to eight contractors who also participated in other contracts. This raises a red flag and from discussions with staff members it appears that there is a flourishing kickback scheme between management and contractors. Mr. Lionel Wordsworth and Mr. Avinash Singh were often identified by staff of being the major beneficiaries of the self-enrichment schemes. However, we do not have evidence to confirm these allegations. Hence, it is important to build a financial profile for each member of the management team and to match their earnings against their assets to determine if there is unexplained wealth. This approach requires access to information that is not currently accessible.4.5.3 NDIA invested in excess of G$1.6 Billion in various structures excluding pump stations but there was no record available to show an analysis of the expenditures incurred bytype of structure or by region. The capital expenditure forms part of the asset base of NDIA and should have been properly documented. Also, the present condition of the structures are not known and whether the communities continue to benefit from these investments. At two board meetings held in July 16, 2013 and December 2014;Mr. Vaughn an engineer suggested that an inventory of all structures including canals, sluices etc. be recorded and those be on GIS. However, the CEO explained it away as being work-in-progress. An external consultant would

Page | 60

need to confirm when this exercise started and what progress was made given the concerns expressed by former board member Mr. Vaughn.4.5.4 Of the total G$1.08 Billion in purchases of heavy duty machinery and other assets, 47% was purchased from Guytrac which supplies mainly excavators. The model year was absent from four contracts examined, the price paid is influenced by the year of manufacture. Since this information was not available it was not possible to do a price comparison with the local and foreign suppliers. There is some level of doubt whether the machines procured locally were reputable brands given the monies paid per unit. This area requires more in-depth investigation to determine whether NDIA is getting value for money. 4.5.5 NDIA purchased ten excavators valued at G$295 Million and tractors with harrows valued at G$198 Million for Guysuco in 2013, a total of G$493 Million. The ten excavators were on the Asset listing provided by Finance staff but the excavators were described as not NDIA property and registered in the name of Guysuco. The registrations for the tractors and harrows were not available as those were still with the supplier and were not on the listing provided. Those tractors were supplied directly to Guysuco for drainage and tilling of the land.In addition, one excavator was purchased and registered in the name of Ministry of Public Works at a cost of G$27 Million and shown on NDIA Asset Listing.There has to be a clear Policy Guideline to inform Finance Staff as to what itemsof machinery and equipment should be included on its asset listing and reasons why items purchased with NDIA Funds are excluded. Instead of having NDIA appearing as a banker for Guysuco.

Page | 61

4.6 Capital Projects

For years: 2011, 2012, 2013, 2014, and 2015

2011 2012 2013 2014 2015 TotalG$ G$ G$ G$ G$ G$

Construction of Pump Station

0 77,475,336 325,897,491 589,824,797 193,828,163 1,187,025,787

Excavation Works 125,887,466 107,967,957 148,503,785 193,225,320 43,489,104 619,073,632

Rehabilitation of Machinery

157,555,533 379,950,243 199,432,858 419,386,326 169,668,800 1,325,993,760

Rehabilitation of Structures

217,969,765 133,276,830 96,165,667 243,950,110 42,509,464 733,871,836,

Procurement of Supplies

312,627,100 70,707,154 345,579,807 267,697,280 87,380,200 1,083,991,541

Construction of Sluice

98,140,076 56,323,053 18,667,401 37,921,967 62,760,400 273,812,897

Construction of Structure

213,078,762 132,833,568 114,098,094 97,528,967 49,080,027 606,619,418

Construction of Pontoons

57,599,250 0 0 0 0 57,599,250

Monitoring, Security & Remedial Works

22,489,600 32,704,000 2,777,600 0 0 57,971,200

Supervisory Services 22,720,834 105,542,859 48,677,036 59,669,192 41,245,456 277,855,377

Manual Labour 0 3,219,000 0 0 0 3,219,000Compensation for removal of private Property

0 0 0 12,696,000 6,825,000 19,521,000

Grand Total 1,228,068,386 1,100,000,000 1,299,799,739 1,921,899,959 696,786,614 6,246,554,698

4.6.1 All contracts for these purchases were made between NDIA and the suppliers with funds budgeted under NDIA. We tried to determine why NDIA purchased those items for Guysuco and the Permanent Secretary; Mr. George Jarvis provided the following explanations: As part of The Guyana National Action Plan (GNAP), Guyana is the beneficiary country for disbursement of funds by the European in meeting certain targets. As part of the 2013-2014 indicator in the improvement of drainage services, the National Drainage and Irrigation Authority was tasked to deliver on the following drainage indicator by the Chairperson of the GNAP

Page | 62

Steering Committee which included the Construction of drainage pump stations at Skeldon, Rose Hall, Canje and Enmore and the acquisition of ten excavators for rehabilitation of D&I channels and ten tractors with harrows for preparation of access dams as directed by NDIA and for other use as directed by Guysuco. We also reviewed a letter written by Mr. Rajaindra Singh, DCEO of Guysuco to CEO, Mr. Lionel Wordsworth dated June 26, 2013 for NDIA to provide short term financing for ten Holland Tractors to the tune of G$161.9Million and this was repaid on January 3, 2014. NDIA used funds from its own budget to fund that request and this would have impacted on NDIA own plans for that fiscal year 2013.

4.6.2 In addition to these purchases, NDIA constructed pumping stations valued G$146 Million based on figures seen in its Capital Expenditure Plan. It would appear that construction works and purchases were in keeping with the above GNAP Agreement which was not made available for examination. It is still not clear why Tractors with Harrows used primarily for tillage by Guysuco would have been purchased by NDIA. More importantly there was no evidence from the Board Minutes reviewed that this matter was discussed at the Board level. Even the letter written by Mr. Rajaindra Singh, DCEO of Guysuco was not presented to the Board.

4.7 Bank Account ReconciliationsAt a Board Meeting held on July 4, 2013 the PS of the MOA advised the Board that NDIA managementestablishes its own financial accounting system and this was introduced in November of 2013. Monies were paid into an account held at Bank of Guyana and cheques were written for each authorized payment voucher. The bank reconciliations were all completed for the period reviewed up

Page | 63

to May, 2015. However, there were several observations noted here: No returned cheques were available for examination; those cheques were held by Bank of Guyana, hence we could not cross reference cheques with payment vouchers for accuracy and validity. There were cheques in excess of six months which were shown on the bank reconciliation as unpresented. Fox example, the bank reconciliation for the month of April included fifteen cheques totaling G$913,500 as unpresented. These cheques were dated between December 31, 2013 and October 31, 2014. Such cheques should be removed from the reconciliation and be cancelled. This matter was brought to the attention of Mr. George Jarvis, PS in the MOA by the Auditor General in his Audit Report dated August 2, 2012 where he mentioned that as at December 31,2011 there were 122 cheques totaling $11 Million which would have become stale dated and should have been refunded to the Consolidated Fund. This practice of including stale dated cheques as part of the bank reconciliation should be discontinued immediately as it results in misrepresenting the cash book position and allows monies that should have been returned to the Treasury to be held by the Ministry of Agriculture or NDIA.

4.8 Stores and Fuel Management

Page | 64

We examined the stores manual, section under Inventory which provided the duties of a storekeeper, record- keeping and

procedures for receipts and issues of stock items and noted the following points:

The employees who work in the stores report to the Human Resources and Administration Manager, Mr. Elvis Jordan who seemed to have very little or no working knowledge of the inventory management. The members of the Finance Staff are not involved in the management of the stores. This arrangement was set since NDIA was managed under the MOA. The issues discussed in the following paragraphs showed the level of incompetence that exists and it is unfortunate that the PS in the MOA could not have halted this situation earlier. The stores at Lusignan, East Coast is disorganized. Bin Cards are not available for stock items; bound books are maintained to record issues, receipts and balances. We conducted a physical count of a sample of stock items and compared it with the book figures and the results were:

Stock Count Description Book Balance Physical count VarianceAir Filter Kabelco 41 44 (3)Fuel Filter Kabelco 58 47 11Oil Filter Kabelco 12 9 3Fuel Separator Kabelco 19 178 (159)Element Filter Kabelco 8 25 (17)Relay Kabelco 94 84 10OIL Seal Kabelco 6 15 (9)Fuel Filter Dorsan 0 55 (55)Top Roller Kabelco 4 0 4Fuse l Kabelco 6 15 (9)V Belt Kabelco 1 0 1Oil Filter Dorsan 0 90 (90)Air Filter Cat 73 65 8Bushings 4 28 (24)Clamp exhaust 33 21 12Oil Ring seal 50 50 0Pin 8 0 8Oil Filter 148 129 19

Page | 65

Grease Nipples 44 0 44Filter Kit 2 0 2Bolt 63 69 (6)Seal track master 24 35 (11)Gasket G/head 7 0 7

Based on 96% of the items examined, the records showed that the book quantities differed from the physical quantities. 43% or 10 items counted recorded more than the book quantities and 52% or 12 items indicated book quantities were more than the physical quantities. When we measured the level of activity at the stores we noted that it was low as evidenced by the number of receipts and issues. From January 1, 2014 to June 2015, 50 stock items were received, an average of 2.7 items per month, while 208 items were issued for the same period or an average of 12 items per month. Finance staff claimed that there were instances where items were purchased but were not recorded in records. Immediate efforts should be made to end these irregularities. In addition, the Internal Auditor Ms. Lois in her report to the CEO dated March 11, 2015 indicated that there were purchases from Trophy World, CCS Guyana Ltd, Silvie’s Variety Store and Guyana National Printers that were not documented in the stores. Given the level of Inventory held that there is no justification for the level of inaccuracies and weaknesses that obtained at the present moment. There was no evidence of any disciplinary action initiated against any member of staff for not following the established procedures detailed in the Operations Manual. The value of inventory maintained demands that those responsible should be held accountable for the poor state of affairs. The values for stock items are not documented and it was difficult to determine the value of inventory at any point in time or even the number of items. Members of staff claimed annual

Page | 66

physical inventory exercises or periodic inventory checks were never conducted. In order to complete the draft Financial Statements for year ended December 31, 2014, a physical count of stock items was undertaken and concluded on February 9,2015.Based on that exercise the valuation of Inventory was G$76,290,588. We could not determine the accuracy of the valuation as we could not access the original invoices to confirm the prices used. In addition, we could not verify the procedures used to conduct the inventory exercise, nor the date it was completed or the staff that conducted the inventory count. The Field Auditor Mr. Pablo Singh in his report dated August 22, 2012 to the CEO, Mr. Lionel Wordsworth noted that there was a major breakdown of Internal Controls over the Accounting for Inventories which contravened the NDIA Act No 10 of 2004 and there was urgent need for implementation of measures to strengthen the management and accounting of Inventory at Lusignan and Georgetown. He listed a number of recommendations including computerization or use of Bin Cards, none of which has been implemented to date. Mr. James McCrae who is at present the storekeeper at the Lusignan stores, indicated during an interview that the only Report prepared was a Re-Order Report when stock items were required. It is difficult to maintain control in the absence of bin cards, monthly or quarterly reports on receipts, issues, balances of stock items or values. Also the absence of regular checks comparing book values with physical values makes it difficult to accurately account for the quantities and values. The inventory controls were also absent from the Whim Sub Office. Fuel Purchases represent a significant cost to NDIA. G$1.4 Billion was spent between January 1, 2011 to December 31, 2014 and

Page | 67

there were serious concerns raised by Executive Management and employees related to the accounting and management of fuel and lubricants. We reviewed the accounting for fuel at Lusignan, East Coast Demerara and Whim, Corentyne, Berbice and the following was noted:

4.8.1 Lusignan At the end of each month the Fuel Controller and his staff prepared a report titled Fuel Reconciliation Monthly Summary for Equipment. This report is submitted to the Head of the Administration and Human Resources and it is signed off by Mr. Garfield Roberts, Fuel Controller. It shows the total fuel purchased and fuel issued monthly with a number of subsidiary sheets attached. Thereport format remained the same from January 2012 to June 2015 and no one expressed any concern about the accuracy of the report. We noted that the report showed an Opening Inventory for several months in 2013 and 2014 to which purchases of fuel were added and issues were deducted. Closing Inventory was not shown in the report. The reports are shown in annex 10. NDIA did not have storage facilities for fuel during that time and we were told that the fuel was stored in contractor’s tanks, with the same contractors being used to transport the fuel. There were no proper explanations as to how the accuracy of the fuel held in contractors’ tanks were maintained. More importantly, the Reports for years 2013 and 2014 showed that 130,824 litres and 171,779 litres respectively of fuel were issued more than what was actually available. The unreliability and inaccuracies within the Fuel Inventory System is obvious and promotes fraud. Fuel values were manipulated

Page | 68

and the Head of Administration and Human Resources claimed he lacked the necessary expertise to check the accuracy of these reports. In 2014 NDIA started its construction of storage tanks at Lusignan, but this was not operational as at July 31, 2015.In addition, a contract was awarded for the purchase of a tanker that was canceled because of changed specifications that generated suspicion. We compared the Fuel Reconciliation Monthly Summary generated by the Fuel Controller, Mr. Garfield Roberts and the Machine Status report generated by Mr. Avinash Singh, Head of the Mechanical Division for the period 2013 to mid-2015 using a sample of 18 heavy duty machines. We discovered as noted in annex 10, fuel issued to machines classified as not working or out of service. These machines showed that for the period referenced, the machines worked a total of 3,812 hours and utilized a total of 47,897 litres of fuel. This amounted to approximately G$9,709,755 in fuel losses for the few months sampled each year. We compared the list of vehicles in the possession of NDIA with those shown by the Fuel Controller as receiving fuel and we discovered that a number of unauthorized vehicles received fuel with no proper explanations for the years 2011 to 2014. A total amount of 14,060 litres of gasoline was issued to those vehicles which amounted to G$2,918,828 as shown in annex 10. This matter of issuing fuel to unauthorized vehicles was raised by the Auditor General in his report dated August 21, 2013 to Mr. George Jarvis, PS in the MoA in which the Auditor General alluded

Page | 69

to 24 motor vehicles received fuel valued at G$1,534,568 for year 2012 Audit; consistent with our findings for 2012. The Field Auditor Reports dated April 12, 2012 and September 26, 2012 which was addressed to the CEO referred to a major breakdown of Internal Control over the receipts and issues of fuel which lend itself to fraudulent practices. He identified a number of weaknesses and made recommendations, none of the recommendations were implemented. The Auditor General’s Report dated 21st

August 2013 for Fiscal year ended 31 December, 2012 addressed to Mr. George Jarvis, PS in the MOA further supported the view that fuel was badly managed at this entity. He noted on page three of his report that Log Books presented were not properly written up by the operators, nor was there evidence that the operators were monitored by NDIA; the absence of bulk storage facility compounds the mismanagement of fuel storage at NDIA. Resulting in the contractors storing bulk fuel; work orders for the issue of fuel were not properly prepared by contractors; and a stock ledger and internal stores requisitions not being maintained to record and account for the issues of fuel to contractors. Also, there was no reconciliation of the usage of fuel and amounts received by contractors to accurately disclose whether the full amount was utilized efficiently. At the two Board meetings held on March 2013 and June 2013; concerns were raised about the mismanagement of fuel by members particularly Chairman of Region 4. The CEO, Mr. Lionel Wordsworth was tasked with the responsibility of developing standard operating procedures for the management of fuel and lubricants. The CEO developed a draft document which outlined in detail the

Page | 70

procedures for procurement of fuel and lubricants to collection of fuel and lubricants by NDIA vehicles with prescribed forms attached. This document was not presented to the Board for discussion and approval prior to the life of the board coming to an end in June 2015. A proper evaluation of thefuel report has not been done to date, to determine if it is workable and if the report eliminates the weaknesses identified.There is need from our reading of the report that input from members of the finance, mechanical and civil engineering departments or even an outside consultant should be sought. It is incomprehensible that given the cost of fuel and lubricants to this entity, members of senior management of NDIA and the PS Mr. George Jarvis allowed this situation to continue unabated. It is not difficult for one to conclude that poor management of fuel and lubricants over the years contributed to corrupt practices which resulted in significant cash losses to the entity. The subject Minister for this entity ought not to have continue to have confidence in the present management given the bad practices that occurred.

4.8.2 Whim, Corentyne

It is important to note that at the Whim office, fuel and lubricants are paid for by the Region 6,

Administration. We examined the fuel records for year2013 to July 2015 to determine the accuracy of those records particularly for fuel issued for use by NDIA machinery and equipment that serve the Region. Wenoted the following:

Page | 71

The Monthly Fuel Consumption Report is seriously flawed and manipulated. For several months between 2013 to July 2015, the total fuel issued per month exceeded the total fuel available for those months as shown in annex 10, analysis of fuel. Examples include; in February 2015, the total fuel available was 205,310 litres and total fuel issued was 207,260 litres, in year 2014 for months May, July, August and November, the total fuel available was 645,584 litres and total fuel issued was 659,713; and in year 2013 for months April, July, August, November and December, the total fuel available was 442,652 and the total fuel issued was 451,721. The closing balance at the December 31, 2013 was -1,324 litres and the opening balance in 2014 was +6,957 litres and the closing balance at December 31, 2014 was +5,504 and opening balance in January 2015 was +8,339 litres.Then in the year 2013, at the end of March the closing balance was +1,778 litres, the opening balance in April was +5,625 litres and the closing balance in April was -84 litres and the opening balance in May was +703 litres. We sampled four machines in four months in the year 2013 and compared the figures shown in theFuel Reconciliation Report for fuel issues to the sampled machines. The findings are detailed in annex 10, comparison between fuel reconciliation report and machine status report, and summarized below:

Fuel Issues recorded in Fuel Reconciliation Report and Machine Status Report - Year 2013

Month Fuel Machine Status Variance

Page | 72

Reconciliation Report (Litres)

Report ( Litres) (Litres)

June 7,913 7,650 263July 5,628 3,703 1,925August 9,369 9,352 17September 7,678 7,373 305Total 30,588 28,078 2,510

The clerk responsible for the fuel reconciliation showed that 2,510 litres more of fuel was issued for the period examined that actually utilized. The Machine Status Report is prepared by the Regional Engineer. There is further evidence that the fuel clerk manipulates his figures. Many persons we interviewed from communities in the Corentyne and who requested that their names not be mentioned - these indicate that fuel was sold illegally from the Whim outlet. There were twenty-three pieces of machinery comprising two bulldozers and twenty-one excavators which corresponded with a master sheet provided by Finance Staff at NDIA Head Office. Eight units were deemed ‘Not operational’ and for what length of time or whether they would ever be put back into use could not be determined. A sample of repair works done on pumps and excavators in year 2013 showed vague description for works done- ‘Provide all tools, labour and materials for repairs’. These works were completed by D. Sawh Mechanical Workshop, Charran Deo Motilall and Everaldo Callender with a total value of G$5,426,330. Whim sub office maintained an inventory comprising of thirty-eight stock items and we noted that these items

Page | 73

were not part of the count that was done by the staff at Lusignan, East Coast, Demerara to determine the quantities and valuation of Inventory held by NDIA at the February 9, 2015.These items here should have been shown as issues by Lusignan to Whim sub-office, hence as the items were not captured in the count, the quantities and valuation would be understated. Of the 208 issues done by Lusignan Stores, 110 issues were made to Whim sub-office. Annex10.7 shows a listing of spares at Whim sub-office. No proper inventory or database is maintained for new structures completed over the years. Hence it is difficult to determine the current condition of these structures and whether they continue to benefit the communities. Also, no post evaluation work is done after project completion.

4.9 Procurement System

At a Board meeting held on June 8, 2012; members expressed preference for an engineer to be appointed as the Head of Procurement Department because the organization is involved in mechanical and civil engineering works. However, management appointed a person with an auditing and business background. The Procurement Department is guided by well-established Standard Operating Procedures which according to the Supervisor is vigorously followed by all staff members. For the years 2014 and 2015, there were 118 and 111 pre-qualified contractors respectively. We detailed the steps below in the Public Tendering process as given in the Standard Operating Procedures and then listed the weaknesses, accusations or override by management:

Page | 74

The Procurement Department (officer) is instructed/informed by the CEO as to placement of advertisement for Project(s) via Public Tendering. The following information is submitted to the Procurement Department by the Engineer with responsibility for the specific Project used for the preparation of the bid document prior to the placement of the advertisement;

i. Technical Specifications.ii. A blank bill of quantity (BOQ).iii. The Engineer’s estimate.

A NPTAB standard bidding document is then used to prepare the bidding document with all the necessary information required for the bidder’s (blank BOQ, technical specifications, evaluations, criteria etc.) This is done by the engineer assigned to the Procurement Department. The bidding document is then taken to the NPTAB for rectification and approval along with the engineer’s estimate. Upon approval of the document by the NPTAB, the bidding document is placed for sale in the NDIA Accounts department. On the day of the opening at the NPTAB a staff from the Procurement Department must attend the public opening (any procurement staff can attend). On completion of the public opening, the submitted tenders are handed over to the NDIA staff along with the NPTAB official letter detailing the appointed evaluation committee. The submitted tenders are then reviewed by the NDIA procurement engineer for preliminary information such as, arithmetic corrections, mandatory administrative compliance, etc. after which a draft evaluation report is prepared and handed over to the evaluators along with all tendered documents for their evaluation and recommendation.

Page | 75

Upon completion of the evaluation by the evaluators the signed report is then submitted to the National Procurement and Tender Administrative Board along with the submitted tender document for their review, approval and award. Upon receipt of NPTAB award a contract is entered into with the awarded bidder and NDIA. After interviews with personnel attached to the Procurement, Engineering and Finance departments and review of documentation, the following observations were made:

I. For Jan-July 2015, a review of the Projects awarded showed that out of G$647,338,367, 59% were awarded by Sole Sourcing, 17% by Quotations and 24% by Public Tendering. It was also noted that most of the contracts awarded by Sole Sourcing went to Water Users Associations;

II. Members of the Civil Engineering Department expressed serious concerns with the Procurement Process during interviews and these concerns are listed below:

NDIA overspends over 200 million every year. At the end of the year some projects are placed in the roll over capital budget to be paid for in ensuing year/s. Although roll over for multi-year contracts, these works would have been completed already. Some of the remaining amount is placed in maintenance cleaning contract, where the rates for January cleaning are increased to compensate for monies owed. This is put as initial cleaning. For other non-payments new contracts are prepared and the old payment is scrapped.

More than 75% of the works on the Current budget are sole sourced. Quotations are requested from other contractors at a higher price for works already executed.

Page | 76

A three quotation procedureis used for projects up to 15 million although it has a limit of $800,000. A lot of works were sole sourced to just under 15 million to avoid cabinet scrutiny.

Most contract documents sent to tender board for approval are already completed but the submission to tender board gives the false impression that the works are yet to commence.

All evaluation of tenders for capital projects are done in house and then given to the appointed evaluators to sign. Documents can be removed from tenders or prices change to cause a particular contractor to win before given to evaluators for review.

The Mechanical Department prior to this year did all their procurement with a few contractors getting all the jobs through sole sourcing. Krishna Ralph and International Imports are two examples.

Many other works for the Hope Canal were paid through NDIA current budget. E.g. removing and transporting earth.

Monies are regularly transferred to Mahaica Mahaicony Abary- Agricultural Development Authority (MMA-ADA). Many at just under 15 million to avoid cabinet scrutiny.

Monies due to contractors for works completed with no contracts exceed 200 million.

Contract Splitting – Variation works for supervision of Buxton Sluice was placed as a new project for the 2015 Budget as Design of Boulder slope and sea defense components for the Buxton Sluice at a value $3,750,000.

Page | 77

Works completed weresubmitted in the 2015 budget as new projects. Re: Construction of timber bridge at Hyde Park Mahaicony, 2015 Budgeted Sum - $1,968,000.

Transfer of Funds to MMA-ADA: Sum $14,963,670, NPTAB #4679/14, Approval date 2014/12/31; Sum $14,236,330, NPTAB #4632/14, Approval Date 2014/12/24. Notice the amounts transferred are under 15 million which avoid cabinet scrutiny.

There were several memos between the Senior Section Engineer, Mr. Dave Hicks and the CEO Mr. Lionel Wordsworth, Mr. George Jarvis and the Minister of Agriculture which provide support that these matters were brought to the attention of management several times. It would appear little or no action was taken to address the concerns. In addition, members of staff are of the firm opinion that Mr. Lionel Wordsworth micromanages each department and makes decisions favorable to himself.

Further testimony of mismanagement of contracts was evidenced in the award of a contract to Suresh Jagmohan Hardware Supplies and Construction Services in August 2014for the supply of Steel Sheet Piles at a value of G$177,820,000 for the Construction of Pumping Stations. When the steel sheet piles were delivered it was found by an Independent Consultant Mr. Mark Yhann - who advised that steel Q345B is not ASTM A690 as required by the contract specification and it should be coated with coal tar. Although Management was aware that the specifications were incorrect, the Chief Executive Officer instructed the contractor to utilize the

Page | 78

sum of G$4,000,000 in the contract for factory inspection to supply more sheet piles.

NDIA wrote the supplier proposing that the piles will be used and a 10% will be withheld pending verification by a Witness Test or Notarized Inspection Certificate. The supplier on June 23, 2015 supplied the Notarized Certificate and requested final payment 10%.The CEO indicated that the matter is still ongoing and NDIA is awaiting the new board to advice on the way forward.

There were significant sums of monies spent on “The Operating, Servicing and Monitoring” of NDIA machinery at various locations over the years. Contractors submitted invoices for hours worked at various rates. Members of the Finance Office indicated that they could not verify what work was actually done but signed in good faith. Other staff members from engineering sections claimed that they were instructed to sign and certify documents for payments even though they had no knowledge of the projects.

4.10 Hope Canal ProjectCost Analysis:

G$

Purchases of 14 Excavators 441,628,0002 4*4 Vehicles 8,400,000Consultancy and Oversight Fees 283,241,632Fuel and Lubricants 224,250,744Supply of materials 138,971,420

Page | 79

Compensation Package 112,510,730Operation & Monitoring of Mach’ 384,682,800Construction of Structures 1,773,575,417Aluminum boats 1,700,000Grand Total 3,368,960,743

The Hope Canal Project was approved in 2009 but actual works began in 2010. The Project budgeted cost was G$3.6 Billion and was completed in May 2015 at an actual cost of G$3.4 Billion. The Hope Canal was substantively funded from the PetroCaribe Fund and all payments for the project were done through the MOF.The Ministry of Finance, Ministry of Agriculture nor NDIA were able to locatecontract agreement or loan terms for such a massive contract. However, we reviewed the documentation available at the Finance, Procurement and Engineering Offices at NDIA and noted the following.

In addition to the monies paid by the Finance Ministry as shown above, we noted that NDIA paid significant sums from its own funding for the following years excluding the cost of fuel supplied:2013 166,596,6442014 90,817,833Total 257,414,477

No information was available for years 2010, 2011 and2015. Fuel supplied to NDIA to the Hope Canal amounted to 1,927,844 litres between June 2011 and May 2015 which amounted to G$402,919,396 as shown in annex 11.1. Fourteen super long reach excavators were purchased between 2009 and 2012 for the Hope Canal Project for G$441,628,000, but the Finance Office is showing G$466,862,450 were paid for

Page | 80

thirteen excavators and one bulldozer between 2009 and 2012 as shownin annex 11.2. The dates do not correspond with the information shown for the Hope Canal Project. Documents were not available to verify dates of acquisition and amounts paidforequipment purchased directly for Hope Canal Project. In addition, from a list prepared by Finance Staff, it showed that eighteen units of machinery were dedicated to the Hope Canal Project over the years of construction. Then an additional four units with an estimated value of G$90,000,000 were added. Two Pick-ups were purchased for G$8,400,000 from Ainlim for the Hope Canal Project, registrations and Invoices to verify ownership and cost were notavailable. Based on the information provided thus far, the Project Cost of the Hope Canal Project amounts toG$4,119,294,616. We were not able to obtain any information from the MOA to confirm whether any payments for the Hope Canal Project were made through its records as was done in the case of NDIA. We were unable to obtain all the documentation to compute the actual cost of the Project as it would appear that deliberate efforts were made to understate the actual cost. NDIA, Ministry of Agricultural and Ministry of Finance were unable to access the Loan Agreement to determine the parties to the contract, the terms of the loan and the method of repayment. Any finance cost would increase the cost of the project as it has to be capitalized. Given the non-availability of critical information, it is reasonable to infer that the Project exceeded its original cost from the information gathered above. Additional work needs to be done to access all information to determine the true cost of the project and the sources of finance.

Page | 81

The Chief Executive Officer indicated that part of the increased cost was maintenance work done because of the prolonged time to complete the project and should not be treated as part of the project cost. We did not share this opinion because project cost will include all cost incurred up to the point of completion. We also noted that the Project was supervised by external consultants CEMCO and SRKN who provided monthly Reports on the progress of the Project which were reviewed by the CEO, Mr. Lionel Wordsworth. NDIA hired two consultants namely Mr. Paul Sarran and Mr. Surendra Singh to assist with various aspects of the Project.

4.11 Fixed and Mobile Pumps and Spares: Surendra Ltd.

NDIA were unable to provide us with the dollar credit line agreement, but we were told that the Agreement was signed between the GOG and Export-Import bank of India on July 26, 2010 (Exim Bank).The Agreement provided for a Credit Line by Exim Bank to the GOG in the sum of US$4 Million for the purpose of acquiring, installing and commissioning of fixed and mobile pumps. From discussions and documents provided by management personnel, we made the following observations: A contract for the supply and installation of 8 fixed and 6 mobile drainage pumps was awarded on May 6, 2011 to Surendra Engineering Corporation Limited of Mumbai for the sum of US$4 Million. The Contract also provided for the supply of spares and technical support. An irrevocable Letter of Credit in keeping with Dollar Credit Line Agreement was established on November 3, 2011 at Bank of Baroda Guyana Inc.; reference Letter of Credit No. 95411MSB0000111 for US$4 Million.

Page | 82

A total of US$2,991,147 was disbursed, leaving a balance of US$1,008,853.We are yet to receive a confirmation from Exim Bank through the Ministry of Finance that this balance exists. Included in the sum US$2,991,147 disbursed to Surendra Engineering Corporation Limited of Mumbai India received the sum US$126,000 to supply spares. The spares were never received by NDIA. Consequent upon the non-receipt of spares, The Contract was terminated on October 8, 2014. The CEO indicated that he had rejected four of the pumps because of poor quality materials. There were significant delays in the shipments from India as was noted at several Board Meetings. The first batch of pumps along with auxiliary components along with engine, radiator and hydraulic hoses arrived in January,2013, the remaining pumps along with engine, radiator and hydraulic hoses arrived in March,2013.These complete units are presently installed at various locations:

4.12 Fixed PumpsThe Fix Pumps consist of the following units in order for the pumps to operate as a complete unit:

Page | 83

Item No Region Location Quantity1 2 Lima Sluice 012 2 Three Fields Sluice 013 4 Lusignan Sea side 014 5 Pine Ground, Mahaicony

Creek01

5 6 Rose Hall Town sea side 016 6 Mibicuri, Black Bush 01

Total 06

1. Engine and Radiator2. Power take off or Clutch assembly3. Drive Shaft4. Gear box5. Pump Assembly

The table below identifies what components arrived, when it arrived, quantity received and where the pumps were installed.

Item No

Descriptionof part

Date ofArrived

QuantityReceived

QuantityDue

StockBalance

Installed Location

1 Power Take off unit

January,2013 07 01 03 One each at Windsor Forest, Bagotville, Paradise and No. 66 Village

2 Engines and Radiators

July,2014 07 01 03 One each at Windsor Forest, Bagotville, Paradise and No. 6 Village

3 Drive Shift July,2014 04 04 00 One each at Windsor Forest, Bagotville, Paradise and No. 6 Village

4 Gear Box July,2014 07 01 03 One each at Windsor Forest, Bagotville, Paradise and No. 6 Village

5 Pump Assembly and Column

July,2014 04 04 00 One each at Windsor Forest, Bagotville, Paradise and No. 6 Village

NOTE: See Detailed Schedule in annex 12.

4.13 The Internal Audit Department

Page | 84

NDIA spent in excess of G$12 Billion in both Capital and Revenue Expenditures over the past four years and the Internal Audit Unit or the watchdog for NDIA only has one person who is tasked with responsibility of auditing the entire organization. The present internal auditor previously functioned as Accountant for a number of years. In addition, the following points were noted: The Internal Auditor is inadequately resourced given the level of expenditure incurred; it is not possible for one person to monitor the effectiveness and efficiency of internal controls over the financial operations. This is clearly demonstrated throughout this report with the many red flags and breaches identified. The Internal Auditor reports to the CEO who showed little or no interest in the internal controls generally and this was evidenced by the many breaches identified in the Report. Internal audit matters were not usually discussed at Board Level with the exception of the Mr. Pablo Singh’s Internal Audit report which was given national publicity.The Internal Auditor claimed that only some reports sent to the CEO received attention. We examined eight internal audit reports between December 2014 and June 2015 and we noted that these reports addressed issues such as preparation of Job Sheet concerning handover of equipment to D. Sawh and Krishna Ralph, lack of required documentation like NIS Compliance, TIN, contractors using a business name and their personal name to bid for contracts, overpayment to contractors, fuel discrepancies, absence of three quotes, among many issues. The matters raised continue to be major concerns and very little action is taken by management. It appears generally that members of the senior staff are afraid to challenge the CEO because of fear of losing their jobs. Unfortunately, the organization is losing substantial sums of

Page | 85

money due to a very weak Internal Audit Unit that exposes NDIA to fraudulent internal schemes. The Internal Audit Plan examined was too narrow and only focused on examination of routine transactions undertaken. The plan has to be expanded to cover critical aspects of the operations particularly viability of projects, performance management, assessment of fraud indicators and vulnerabilities, fraud management and the quality of the budgetary system.

4.14 Accounts and Audit

National Drainage and Irrigation Act 2004 section 47, subsection 1 states that the Authority shall keep proper accounts and other records of its transactions and the accounts shall be audited by the Auditor General, or by any such auditor appointed each year by the Board with the written consent of the Auditor General.NDIA has never prepared its own accounts since it was incorporated by the Act of Parliament. This was brought to the attention of management on several occasions by the Auditor General; NDIA operated as part MOA and at a Board meeting held on June 4, 2013 the Permanent Secretary advised the members of the Board that NDIA could commence its own accounting system which was introduced from November 2013.

NDIA was never audited as a separate entity but as part of the MOA up to fiscal year ended December 31, 2013.The amount of coverage given in the previous audits was very limited given the size of the operations. We are of the view that had more detailed coverage being given; corrective actions would have been taken

Page | 86

earlier to address the many breaches and poor controls in critical areas noted herein.

D. Bahadur & Co. was awarded a contract in April 2015 to prepare the Draft Accounts for NDIA for year ended December 31, 2014.The deliverables of the contract on page 17 provides for a Statement of Financial Position, a Statement of Financial Performance and Statement of Cash Flows. The members of the Finance Office indicated that verbal agreement exists between management, the consultant and Auditor General to prepare the accounts on a cash basis.

The consultant prepared a draft cash basis report which was submitted to management. The consultant is awaiting management to provide critical information to complete the finalize the draft accounts.

We recommendthat the Financial Statements should be prepared on accrual basis as detailed in the Contract and in accordance with NDIA Act of 2004. We do not recommend the traditional cash based accounting because it only focuses on receipts and payments and changes in cash balances. More importantly it does not provide the level of transparency that is required to properly manage the entity and to assess the stewardship of those entrusted with taxpayers’ money. Management requires a full set of financial statements to properly asses the financial position, financial performance and cash flows and to develop a long term plan for the organization.

4.15 Water Users Associations

Page | 87

NDIA Act of 2004 section 17 provides for farmers to establish themselves into Water User’s Association to actively participate in the planning, design, management, operation and maintenance of drainage and irrigation systems.

A Water User Association (WUA) is a non-profit business organization of rural residents and farmers to perform O&M of secondary D&I structures to provide water users with irrigation and drainage inputs for agricultural production and for rural housing areas. In early 2004 nine water users’ associations were established across the country; each registered as a separate entity with its own constitution, board and management. It is important to note that water user associations collect fees from farmers for provisions of services and are expected to be financially sustainable as business entities.

4.15.1 Associations establishedName Target Group Acres

Cultivated

Membership

1 Vergenoegen- Naamrick Rice and non-traditional

12,000 1,200

2 Den Amstel - Fellowship Rice 3,500 4003 Vreed-en-Hoop- La

JalousieRice 4,300 200

4 Canals Polder Non traditional 13,000 8005 Golden Grove- Victoria Non traditional 3,600 2006 Cane Grove Rice & non

Traditional8,500 1,000

7 Black Bush Polder Rice and non- 18,000 1,200

Page | 88

traditional8 Lots 52-74 Rice 15,000 7009 Crabwood Creek Rice and non-

traditional8,500 600

We reviewed the operations of the associations and noted the following:

On a six-month basis the WUA's submit to NDIA a request for contracts for monthly maintenance of canals, stating the names of the canals, the rods and the rate per rod. Based on the information obtained, there are 6,300 farmers that make up the nine water users associations and there are 86,300 acres of land under cultivation with both rice and non-traditional crops. The WUA between the 1st January 2011 to mid-2015 received a total sumof G$1,120,919,628 from NDIA as shown on page 62 and analyzed as follows:

Association G$ Crabwood Creek 120,281,420 52/74 235,973,080 Black Bush Polder 248,005,943 Cane Grove 108,819,090 Golden Grove 88,509,835 Canals Polder 64,298,860 Vreed-en Hoop La Joulsie 51,247,800 Blankenburg Den Amstel 68,418,200 Vergenoegen/Naamrick 135,365,400 Total 1,120,919,628

Page | 89

NB: 53% of the funds were expended in region 6. None of the associations have prepared annual financial reports or have financial statements audited for the years 2011, 2012, 2013 or 2014. The last financial audit was done in 2010 despite the amount of funds received over the years. Quarterly financial reports are prepared but none were available for examination. There were serious allegations of corrupt practices in some associations re: mismanagement of finances and absence of regular statutory elections. An NDIA board meeting held on June 8, 2012 members requested that all WUA'sprepare audited financial statements as there were many reports of mismanagement. No financial audit was done to date despite the request made by the Board. The WUA's collection of funds has been very poor and there is urgent need to develop a database with all active members and determine what sums are in arrears, what balances are collectable and make every effort to collects fees from farmers. The goal of the WUA as stated earlier is to achieve financial sustainability. Special investigations were done by then Field Auditor Mr. Pablo Singh on July 2, 2012 at Black Bush Polder, WUA and on August 22, 2012 at Charity/Zorgen Zlygt, WUA where significant malpractices were discovered. While we were unable to confirm the accuracy of these reports in the absence of the supporting documentation, we noted that at Black Bush Polder WUA management converted in excess of G$7,000,000 of the BBP WUA funds to their personal use in various schemes. At Charity/Zorgen, Zlyt, WUA, the chairman, Mr. Lackanlall Boodhoo was found to have breached the WUA Bye Laws in many instances by ignoring and flouting its requirements. These acts point to poor accountability and management of the

Page | 90

water users’ associations which certainly needs immediate corrective actions, given the amounts of monies disbursed to the WUA by NDIA. It was not until June 3, 2015 that the CEO, Mr. Lionel Wordsworth wrote the new Minister of Agriculture Mr. Noel Holder and presented a general work plan to improve the entire management of the water users associations with particular reference to Elections, Audit and outstanding legal issues. There was no evidence during our accounting investigation as to whether or not any decisive course of action has been taken to apprehend the deterioration in WUA management and to address the many concerns discussed at NDIA at Board meetings.

4.16 Community Development Councils

The Community Development Councils in Guyana were essentially the vision of the late and former President, Dr. Cheddi Jagan who after winning the National Elections in 1992 challenged all communities to refresh the landscape, and in fact to restore the country’s image, with the task of cleaning up all canals, parapets, lawns and backwards.

NDIA with the national responsibility for drainage and irrigation in Guyana has taken the CDC mandate upon itself to support these organizations to reduce the incidence of flooding on the coastland in Guyana. We have extremely limited information of the actual operations of this body and the number of CDCs’ that exist in Guyana.There are detailed Standard Operating Procedures for CDCs’ including the legal basis, and a synopsis of operational procedures. The CDC Direction Agency was headed by Ms. Philomena Sahoye-Shury. We interviewed one engineer Mr. Lall

Page | 91

Peterdeo and member of the finance office and the following was noted: The Community Development Councils duplicates the work done by NDIA and the unnecessary cost in its administration could be reduced if its entire operations are restructured and absorbed by NDIA. It is the general opinion that the CDC was also used as a mechanism to create employment for the governing party supporters. The management of CDC according to the Standard Operating Procedures, requires activity reports to be submitted to the finance office of NDIA, along with copies of registrations, monthly financial statements and bank statements for review. In addition, engineers at NDIA are required to review the cost and benefits of all projectsinitiated by CDC’s. However, based on information available, the management of NDIA is hardly involved in providing any oversight in financial or engineering matters. There is no evidence from the management at NDIA that audited financial statements were ever prepared by the CDC. It is difficult to assess its stewardship in the absence of audited financials and interviewing the officers that are involved in the day to day activities. For the years 2013 and 2014, NDIA disbursed G$426,272,600 to CDCs’ for cleaning and maintenance of channels and canals etc. NDIA were unable to provide us with information for years 2011, 2012 and January to June 2015.

4.17 Community Development and Irrigation Projects (CDIP)

The CDIP Project started in 2006 and it is funded by the MOF. There is very limited information available on this project hence we were extremely constrained to provide a thorough assessment.

Page | 92

We understand the purpose of the project is to clean community drains and we noted the following: The total amounts of monies disbursed between January 1,2011 to December 31, 2014 as shown below amounted to G$2,294,752,891. G$1,945,296,211 or 84% was spent on contracted employees to provide for cleaning drains and canals. The balance of the funds or 16% was used for administrative expenses. The Project was transferred to the Ministry of Housing in 2014 but a balance of G$3.6M remained in the account after all unpresented cheques are cleared. This balance was not confirmed but needs to be investigated. Any balance remaining in the account will be transferred to the MOF.

4.17.1 NDIA Funds disbursed by NDIA for CDIP Project For years: 2011, 2012, 2013 & 2014.

    Expenditure

No. Activities 2011 2012 2013 2014

           

1 Salary to contracted employees 16,800,000 16,800,000 16,800,000 4,200,000

2 Salary to temporary employees 598,919,200 611,272,200 592,919,200 142,185,611

3 Gratuity/Vacation Allowance 4,953,500 4,953,500 4,953,500 1,200,000

4 NIS 61,354,800 61,354,800 61,354,800 15,338,700

5 Drugs/ Medical Supplies 450,000 450,000 450,000 150,000

6 Field Materials & Supplies 10,232,500 10,232,500 10,232,500 1,930,050

Page | 93

7 Office Materials & Supplies 800,000 800,000 800,000 150,000

8 Janitorial & Cleaning Supplies 400,000 400,000 400,000 150,000

9 Fuel & Lubricants 1,200,000 1,200,000 1,200,000 150,000

10 Travelling & Subsistence 9,000,000 9,000,000 9,000,000 3,835,530

11 Telephone Charges 540,000 540,000 540,000 360,000

12 Maintenance of Equipment 900,000 900,000 900,000 600,000

13 Training 450,000 450,000 450,000 150,000

  TOTAL 706,000,000 718,353,000 700,000,000

170,399,891

We noted that in the year 2013 G$500,000,000 was paid into the CDIP Account and the money was used to purchase Machinery and Equipment for Guysuco.It appears that substantial cash support was provided through NDIA to Guysuco without cabinet approval. NDIA acted as a Banker to Guysuco as mentioned earlier in the report. The CEO explained that all the machinery and equipment belonged to NDIA but were used by Guysuco. These units were shown as property not belonging to NDIA on the report provided by finance staff. This matter was not even discussed at the Board level. Source documents to verify transactions of monthly receipts and payments were not available for examination. Returned cheques and bank statements were also not available. We tried to determine the organization structure in place and the officers responsible for the management of CDIP but that was not provided by NDIA. No audited financial statements were available for the activities of CDIP from its inception to date when it was terminated at NDIA.

Page | 94

We are of the considered opinion that the CDIP Project was another duplication of work that could have been undertaken by NDIA management rather than treated as a separate project.

4.18 Legal matters outstanding

There are a number of legal matters outstanding and Ms. Jaya Manickchand served as the Attorney at law representing NDIA in all legal issues and court matters for the review period. We believe the following matters are important and should be noted: Faizal Mohamed vs.NDIA, the Plaintiff claimed G$8,055,000 was the amount owed by the Defendant to the Plaintiff for the sourcing, installation of spares and new engine on caterpillar excavator. In addition to this matter before the court, Mr. Faizal Mohamed made several claims for various contentious jobs completed for which no payments are made to date. Examples:payment for unpaid pump of G$1,000,000 and two separate amounts of G$11,032,000 and G$13,813,000 for spares supplied to Lusignan Stores on the East Coast, for which no documentation was available. It appears that Mr. Pradeep Lall, the former storekeeper was aware of these transactionsbut resigned under disputed circumstances. Staff refrained from providing information on these matters. Mr. Pablo Singh vs.NDIA, the Plaintiff claimed $754,156 for special damages. The Attorney at Law, Ms. Jaya Manickchand charged fees of G$2,500,000 for this matter. The case been ongoingfor over three years. The CEOclaimed that Mr. Singh walked off the job and refused to accept a settlement.

Page | 95

5 Recommendations

Our recommendations are grounded on the analysis and observations made primarily from information provided by management and the views expressedby personnel from both within and outside of the organization. We believe that our recommendations will impact on the quality of corporate governance particularly at the level of the Board and Executive Management. Once changes are made immediately at the

Page | 96

top level and the correct tone is adopted, the impact of the changes will filter down to all levels of the National Drainage and Irrigation Authority.

5.1 Governance Structure

5.1.1 Board of Directors A vigilant board of directors should be established that

understand their roles and are willing to:

Proactively participate in strategic decisions; Ask management tough questions; Oversee management’s actions; Monitor management’s ethical conduct, financial reporting, and legal compliance; Determine the entity’s risk profile.

We believe that the board’s responsibility is to establish strategic goals to ensure that Government gets value for its money. They must then direct management to implement these strategic goals. The primary duties of the board are to:

Hire an ethical CEO Oversee the hiring process for other top executives

Monitor management’s sustainable strategic, financial, and operational goals in achieving long-term value

Set the agenda for board meetings

These were sadly lacking in the previous board as noted with the many breaches and financial mismanagement in

Page | 97

the troubled areas noted. We believe that GOOD MEMBERS should possess the following attributes to get the best performance.

Professionals with executive-level experience and integrity from outside of the organization would make good board members. These members are typically:

Independent and willing to challenge management. Excellent analysts, Able to take a broad view of the organization and evaluate. its objectives and strategies. Familiar with the challenges of a similar organizations. Risk and control experts. Versed in internal and external audit as well as financial reporting

The Subject Minister should avoid the use of Politicians who do not necessarily have the attributes to function effectively and “tend to be the typewith a go with the flow mentality”.

We believe that performance at the board level could be enhanced with a better stipend. The present G$4,000 paid is inadequate and should be improved. This was one of the concerns cited by the previous board. Also board members should not be automatically appointed every two years but their performance should be reviewed and if found poor, the member or members should be replaced. We need to get this right early if we intent to have quality governance.

Page | 98

The new Board of Directors should meet early to plan their workprogram; the chairman should immediately establish the Works, Appointment and Finance committees as specified in the NDIA Act of 2004. Detail terms of referenceshould be provided and the works of these committees should be constantly monitored. These sub-committees should be properly constituted with persons who possess the right mix of experience and technical expertise. Meetings should be held quarterly or as deemed fit by the chairman particularly for subcommittees.

The Chairman should also establish an Audit Committee to which the Internal and external auditors should report. The present arrangement where the Internal Audit Reports are submitted to the CEO should be discontinued immediately.

The Board of Directors should decide what Management Reports should be presented at each Board Meeting to help them assess the performance of the organization rather than the CEO just providing reports to the Board what he believes is appropriate. The Board must be integrally involved in all aspects major components of the financial operations particularly the operating performance, expenditure on capital projects, budget preparation, viability of projects and justification for supplementary funds.

5.1.2 Management’s Code of Conduct

Page | 99

A general code of conduct and/or code of ethics should be instituted for all employees.Manyorganizations elect to have a separate code of conduct especially for senior management. Management is supposed to set an example for the rest of the organization. A management-specific code of conduct is useful because it addresses issues that typically don’t apply to the rest of the organization.

A management-specific code of conduct might address such issues as:

Avoiding conflicts of interest; Protecting the confidentiality of proprietary information; Cooperating with internal and external auditors, and respecting their independence; Promoting full disclosure in financial statements; Certifying that financial statements are free of material;

misstatement due to fraud.

The Chairman of the Board should task the Human Resource and Administrative Manager to look at different models used locally or overseas and chose a model that meets the requirements of NDIA. The draft document should be presented to the board for discussion and finalization. Once this is approved training sessions should commence at all levels to make sure that employees are familiar with the code and are fully aware of the consequences for non-compliance.

We believe the existing salary structure should be reviewed because after taxes and other deductions, the

Page | 100

net salary shows little equivalency with salaries paid in other sectors. Hence, the Appointment Committee or a separate Compensation Committee should be tasked with the responsibility of reviewing salary structure for employees at all levels given their responsibilities and job functions within the organization. Alternatively, Executive Management and the Board could seek the advice of a Compensation Consultant to advice whether the existing salary structure match the responsibilities and roles of personnel throughout the organization. Annual evaluation of employees’ performance should be done and any further increases should be performance based.

5.1.3 Fixed Assets

The Board of Directors and Executive Management should take immediate steps to improve the management of Fixed Assets: Hire an expert to assist with the compilation of a Fixed Asset Register and this should be completed in accordance with best practice with a view to computerized application. A Valuation Expert should be hired to assist with valuation of assets where the original values could not be found. The original values should be supported with invoices to verify cost of acquisition. The Fixed Assets Register should commence from 1st

January 2011to date since records are available for that period and the written down values computed from that time to date will give a more realistic value for each asset. The MoA should immediately vest all assets handed over to NDIA to establish ownership.

Page | 101

The fixed asset categories should be agreed and should be consistent with the asset portfolio held by NDIA. The Fixed Asset Register should be updated with purchases and disposal and should always be current. The Fixed Assets categorization, estimated lives, residual values, depreciation rates etc. should be guided by IAS 16, Property, Plant and Equipment.

5.1.4 Professional Management

We recognized that the Finance and Internal audit need to be professionalized.Weimmediately recommend that a suitably qualified(CPA/ACCA) accountant with experience in the private or public sector be employed to head the Finance Department. The job functions should be carefully agreed and be consistent with needs of NDIAboth at the Board, executive and middle management levels.There is an urgent need to prepare quarterly management accounts to reflect budget and actual performance. Managers should justify adverse variances, especially huge over-expenditure, similar to those shown over the yearsandalso provide explanations for the heavy maintenance cost for equipment and machinery are necessary.

A qualified ACCA or CPA with substantial experience in auditing in a professional accounting practice or a large organization should be employed to head the internal audit unit and the internal auditor should report to the Audit Committee and not the CEO. The presence of an audit committee gives stakeholders comfort that an independent

Page | 102

body is ensuring the integrity of the financial statements. Audit committees are supposed to protect owners’ interests by taking the lead on oversight responsibilities in the areas of internal controls, financial reporting, audit activities, and compliance. They must meet regularly with key internal parties, such as the chief audit executive, to discuss identified fraud risks and the steps taken to prevent fraud.

The audit committee should have at least one member who is a financial expert. A financial expert is someone who has an understanding of International Financial Reporting Standards (IFRS), experience in the preparation and auditing of financial statements, experience with internal controls, and an understanding of audit committee functions.

Responsibilities of the audit committee should include, but not be limited to: Appointing, compensating, and overseeing external auditors; Reviewing financial reports overseeing the effectiveness of both design and operation of NDIAentity’s internal control structure; Reviewing management’s and auditors’ reports on internal controls over financial reporting; Overseeing the entity’s whistleblower policy and being available to receive tips from potential whistleblowers Overseeing the establishment and implementation of the ethical code of conduct;

Page | 103

Evaluating and communicating any possible instances of fraud to the company’s legal counsel.

Audit committees have always been considered a best practice, but they used to be optional. It is up to the Board to choose to have a separately designated audit committee composed of members of its board, or it may opt to have the entire board of directors constitute the audit committee. Additionally, the entity’s external auditors must report to the audit committee rather than to management.

Accounting scandals like the ones released to the media by the previous internal auditor could probably have been mitigated, if not prevented, by a responsible audit committee. This matter should be given careful thought by the new Board to prevent such releases that could impact on the image of the organization.

5.2 Inventory and Stores Management

The entire inventory and stores system needs a complete reorganization and this should be headed by an experienced professional. Help should be sought from a reputable external consultant. Consideration should be given to the following for immediate implementation:

The management of the stores should report to a designated person in the finance department and not to the Human Resources and Administrative Manager as is the present practice.

Page | 104

The staff should receive regular training on best practices in stores management and members should be thoroughly familiar with stores operating procedures. Finance Staff and internal audit should monitor stores activities to ensure that operating procedures are followed and actions taken against defaulters. The layout of the stores should be organized in a way that makes it easy to access any part and should always be kept clean. Records should be maintained for all activities of the stores including receipts, issues, returns, balances, items destroyed and stolen goods. Reports should be generated monthly for issues, receipts and balances. Quantity and values should be included in all reports. Surprise checks should be undertaken by the internal audit department comparing physical inventories with book balances. Major discrepancies should be reported to the Audit Committee. Annual Stock taking should be done using established procedures, ideally in the presence of the external auditor. Reports and adjustments should be forwarded to the Audit Committee and copied to the CEO, Finance Manager and Internal Auditor. The Standard Operating Procedure prepared by the CEO on the instruction of the previous Board should be presented to the new Board for discussion and finalization. The procedures should allow for regular reconciliation and monitoring by senior personnel given the discrepancies identified in the report.

5.3 Procurement Function

Page | 105

We recognize that NDIA has a well-established Procurement Policy document for goods and services as outlined in its operational manual on pages 12 to 18. It appears from the issues discussed in this report that the major weaknesses relate to lack of compliance with the procedures outlined in that manual. Once the new Board addresses these matters by taking a proactive approach in all major aspects in procurement management, lack of compliance will be mitigated significantly.

One of the keys areas identified for review is in the contract preparation; we believe that contracts above a certain level and that level is to be decided by the board should include a right to audit clause as discussed below:

5.3.1 Right to Audit

The inclusion of a right-to-audit clause in a contract can be critical to addressing, or perhaps inhibitingfraud during the course of a construction project. A right-to-audit clause ensures that the purchasing organization is able to audit the contractor’s invoices and business records related to the contract at hand.

Organizations often exercise their right to audit when they are looking for contractor fraud, including:

Shell company schemes Non-conforming materials Unnecessary services Overbilling Conflicts of interest Ghost employees

Page | 106

Corruption schemes between employees of the owner and contractor Failure to report discounts or similar changes to costs as required by the contract

Right-to-audit clauses can help to generate trust in relationships between project management and contractors. These clauses also tend to send a message to contractors that the purchasing organization will be monitoring the vendor to ensure that the vendor is complying with the contractual relationship between the two entities right.

When developing a right-to-audit clause, organizations should require that the contractor maintain a reasonable accounting system by which review can be easily performed. For example, by including the statement, “XYZ Company shall establish a reasonable accounting system, which enables ready identification of seller’s cost of goods and use of funds,” the organization requires the contractor to keep adequate books and records for review.

To more readily identify schemes such as kickbacks and illegal perks, the clause should include language that allows the organization to analyze how a contractor’s funds are used. Otherwise, a contractor could refuse access to the particular records the auditor wants to examine, thus limiting the scope of the organization’s right to audit.

The clause should also include the ability to audit sub-contractors. In many fraud schemes, the sub-contractor has direct ties to the buyer through family, ownership, joint venture, or undisclosed financial interest. Also, it is not uncommon to find that the vendor

Page | 107

has purchased materials or rented equipment from companies that the buyer should have contracted with directly at a lower cost.

We believe the board and executive management should consider the benefits of this clause and incorporate in all future contracts. This will certainly protect the organization from exploitation by avaricious contractors for the supply of goods and services. The situation with the supply of sheet piles and shoddy works completed by contractors as alleged by persons in and out of the organization are good examples for the need to include this clause.

5.4 The Internal Audit Function

A well-functioning internal audit function is an essential component of an effective corporate governance system. They might be considered the eyes and ears of the board of directors, particularly the audit committee. They are the board’s most important source of independent, inside information. It is therefore important for the new Board to appoint a professional accountant to head the internal audit function.

The internal annual audit plan examined at NDIA is very narrow and only focuses on routine financial transactions and we believe that this should be expanded to include the full scope of the internal audit functions which will bring enormous benefits to the organization. For instance, while external auditors provide assurance that the financial statements are fairly presented; internal auditors evaluate and improve the effectiveness of the following functions:

Page | 108

Internal controls Risk management Corporate governance

Internal auditors are responsible for serving the entire organization and are accountable to the audit committee. As such, internal auditors should meet with the audit committee continuously throughout the year, separately from management and the rest of the board. Audit committees should use internal auditor services to fulfill their oversight responsibilities over financial reporting, internal controls, and audit activities.

The Institute of Internal Auditors (IIA) standards clearly state the role of the internal auditors with regard to fraud. According to Attribute Standard 1210.A2: “Internal auditors must have sufficient knowledge to evaluate the risk of fraud and the manner in which it is managed by the organization, but are not expected to have the expertise of a person whose primary responsibility is detecting and investigating fraud. “While some might argue that Standard 1210.A2” undermines internal auditors’ role with regard to fraud detection, internal auditors should have awareness of potential fraud risk and the appropriate response to fulfill their internal audit duties. They need to learn what constitutes fraud, the ways in which it can be committed, and what they can do to help address it in their organization.

The Board should look at internal audit costs as an insurance against corporate scandals and financial losses. Furthermore, operational auditing can save NDIA money by uncovering

Page | 109

duplication, waste, and wrongdoing at lower levels of the organization.

In the context of NDIA, the internal audit function should comprise accountants, civil engineers and mechanical engineers. The scope of works undertaken by NDIA includes building of structures, procurement, maintenance of heavy duty machinery and equipment Accountants are not trained in engineering and do not have the technical training of an engineer to review civil works or to assess mechanical works completed. The engineers could be trained in basic accounting and audit procedures and this training could be done through the Auditor General’s Office or a public accounting firm.

The internal audit function is the board’s window into the inner workings of a company. It adds value to an organization by improving NDIA corporate governance, risk management, operations, internal controls, and financial reporting. Internal auditors should help the audit committee establish internal controls, a whistleblower program, and a code of ethics. The head of internal audit should be independent, unbiased, and ultimately accountable to the audit committee.

5.5 Fraud Risk Management

NDIA internal audit function should incorporate managing the risk of fraud as this is one of the primary reasons for establishing a corporate governance program. Well thought out mechanisms on fraud risk management effectively prevent or detect fraud.

Page | 110

Successfully mitigating this risk is a goal of corporate governance. The following groups have a key role in dealing with fraud risk:

The board of directors and audit committee Management Internal audit External audit

We believe that NDIA should conduct a Fraud Risk Assessment on all its divisions to determine its vulnerability to fraud and then develop a plan to address its risk profile. The current internal auditor does not have the skill base to conduct such an important assessment.

5.6 Annual Accounts We believe from our assessment of the accounting system at NDIA, sufficient records exist for the preparation of draft financial statements for years ended December 31, 2011 December 31, 2014. We advocate strongly as mentioned earlier in our report that all draft accounts should be prepared on an accrual basis using International Financial Reporting Standards.The subvention received from the Government each year should be treated as revenue.

NDIA as an entity incorporated by an act of Parliament should present a full set of audited accounts at the end of each calendar year. This means statement of income, statement of financial position, statement of cash flow and a summary of its basis of accounting and its accounting policies. A full set of accounts will be more meaningful to the board, management and any government agency that wishes to assess management in a comprehensive way.

Page | 111

The cash reporting system is totally inadequate as it summarizes the receipts and expenditures for the years and changes in cash balances. NDIA has significant asset base, makes investments each year in construction, purchases machinery and equipment and other assets and has substantial liabilities and other accruals at the end of each year. This is not captured by the accounts prepared on a cash basis.

5.7 TrainingMany of the weaknesses could be addressed through a combination of initiatives and we strongly advocate that members of management should continue to update their knowledge particularly in areas that will improve their competences in managing their departments.

We recommend that the Board immediately consider training programs in the following areas:

5.7.1 Construction fraudIn this course, managers will be exposed to the following:

Identify various phases of the construction process and their associated fraud risks. Recognize fraud schemes common to the construction industry. Discern the advantages and risks related to different types of construction contracts Determine the maneuvers used by fraudsters to undermine the bidding process.

5.8 Corporate Fraud PreventionIn this course, managers will be exposed to the following areas:

Page | 112

Identify components essential for an effective corporate governance system Identify respective duties of individuals responsible for the corporate governance structure. Determine why effective corporate governance is necessary NDIA. Determine best practices that can be implemented within NDIA to improve corporate governance

5.9 Contracts and Procurement FraudIn this course, managers will be exposed to the following areas:

Identify essential components of an enforceable contract. Compare public and private procurement. Identify the red flags and risk factors of contracts and procurement fraud. Recognize the characteristics and common forms of procurement fraud schemes. Recognize measures to detect and prevent fraud schemes that target procurement processes. Determine the appropriate measures to take in investigative efforts to unravel procurement schemes.

5.10 Communication

There should be greater communication between the Executive Management and the members of the Board. Several material matters that we have identified in the body of the Report were not brought to the attention of the Board. We believe that the members of the new board should establish guidelines to

Page | 113

promote communication between executive management and the Board on all issues of a material nature.

Page | 114

No.

NDIA No.

Date of Acq.

Description Model No. Serial No. Location

Value at Remarks

Region Village 1 Jan. 2014 31 Dec. 2014

0 22 RB Dragline 22 RB 39215 4 Hope Canal1 1 2006 Short boom -

Excavator320CL CAT SBN01395 4 Hope Canal

2 2 2006 Excavator 320CL CAT SBN01397 6 Manarabisi3 3 2006 Excavator 320CL CAT SBN01419 3 St. Lawrence

4 4 Excavator KOBELCO SK210 YQ0842761 4 Lusignan Decommission5 5 2006 Excavator 320CL CAT CA032CJSBM01380 6 No. 52/74 Cattle Pasture6 6 2006 Excavator 320CL CAT SBN01381 3 Hogg Island7 7 2006 Excavator 320CL CAT SBN01418 6 Cromorty8 8 2006 Excavator KOBELCO SK210 YQ8U2762 4 Lusignan9 9 2006 Excavator 320CL CAT SBN01391 4 Lusignan

10 10 2006 Excavator 320CL CAT 320CAFBN-02274 4 Hope Canal11 11 2009 Excavator 320CL CAT SBN02564 5 No. 7 Village, West

Berbice12 12 2009 Excavator KOBELCO SK210 Y009-U3779 6 Kilcoy 34,101,94213 13 2006 Excavator KOBELCO SK210 YQ08-U2763 5 Perth, Mahaicony14 14 2009 Excavator KOBELCO SK210 YQ09U3721 3 Boeriseri, Water

Conservancy34,101,942

15 15 2006 Excavator 320CL CAT CLSBN01390 6 Mibicuri16 16 2006 Excavator 320CL CAT CTSBN01388 6 Speculation, Canje17 17 2006 Excavator 320CL CAT CKSBN01393 6 No. 63 Village18 18 2009 Long boom-

ExcavatorKOBELCO SK210 YQ0943720 2 La Union 34,101,942

19 19 2011 Excavator DX225 LCA DWBHEBK0V70050079 4 Hope Canal20 20 2009 Long boom-

ExcavatorKOBELCO SK210 YQ09U3722 4 Lusignan 34,101,942

21 21 2006 Excavator 320CL CAT CHSBN01385 6 Tarlogie22 22 2011 Excavator DX225 LCA DWBHEBROJ70050080 5 Soesdyke23 23 Short Boom

ExcavatorNew Holland ZEF107MLN5LA03861 2 Anna Regina RDC Decommission

24 24 Short boom-Excavator

New Holland A4056 2 Anna Regina RDC Decommission

25 25 2006 Short boom -Excavator

32CL CAT SBM01396 2 Windsor Castle, Essequibo

26 26 2009 Long boom-Excavator

DX225 LCA DWBHEBKOH700550099 4 Lusignan Decommission

Page | 115

Annex 1

NDIA – Machinery & Equipment as at December 31, 2014

27 27 2009 Long boom-Excavator

DX225 LCA DWBHEBK0070050100 4 Hope canal

28 28 2009 Long boom-Excavator

312CL CAT CBA09360 4 Huntley, Mahaica 24,343,200

29 29 2010 Bull Dozer D6R XL 4ZF20443 4 Hope Canal 45,954,00030 30 2009 Long Boom -

ExcavatorKOBELCO SK210 YQ6344117 2 La Union

31 31 2009 Loan boom-Excavator

312CL CAT OBA03959 4 Hope canal 26,367,000

32 32 2010 Bull Dozer D6R XL 4ZF20477 2 Anna Regina RDC 45,954,00033 33 2010 Long boom-

ExcavatorDX225 LCA DHKCERAH90005848 4 Hope Canal 31,700,000

34 34 2010 Long boom-Excavator

DX225 LCA DHKCEBACH90005849 2 Hampton Court 29,797,000

35 35 2010 Long boom-Excavator

320DL CAT CAT03200PKGF02847 4 Hope Canal 35,914,500

36 36 2010 Long Boom -Excavator

DX225 LCA DHKCEBACSA0006062 2 State Farm, Essequibo 29,797,000

37 37 2010 Short boom- Excavator

DX225 LCA DHKCEBACLA0006059 5 Drill 29,797,000

34 38 2010 Long boom- Excavator

DX225 LCA DKHCEBACLA0006058 4 Paradise 29,797,000

39 39 2010 Long boom-Excavator

DX225 LCA DHKCEBACLA0006049 4 Hope Canal 29,797,000

40 40 2010 Long boom-Excavator

DX225 LCA DHKCEBACSA0006061 2 Hampton Court 29,797,000

41 41 2010 Long boom- Excavator

DX225 LCA DHKCESCEA60006064 4 Mocha, East Bank Dem. 29,797,000

42 42 2010 Long boom - Excavator

DX225 LCA DHKCEBACSA0006060 3 Wakenaam 34,700,000

43 43 2010 Long boom - Excavator

DX225 LCA DHKCEBACSA0006063 4 Hope Canal 29,797,000

44 44 2010 Long boom-Excavator

320DL CAT CAT0320DLKEF64462 4 Hope Canal 35,914,500

45 45 2010 Long boom-Excavator

320DL CAT CAT0320DTKGF04435 4 Hope Canal 35,914,500

46 46 2010 Long boom - Excavator

320DL CAT KGF04487 4 Hope Canal 35,914,500

47 47 2010 Long boom-Excavator

DX225 LCA DHKCEBACSA0007440 3 Namyraack 31,300,000

48 48 2012 Short boom-Excavator

140 Hyundai HHIHN06UB0003735 3 Leguan 21,500,000

49 49 2012 Long boom - Excavator

DX225 LCA DHKPEVACC90006795 3 La Grange 31,300,000

50 50 2012 Long Boom Excavator

DX225 LCA DHKCEBACAB00008016 4 Hope Canal 29,797,000

51 51 2011 Short boom- 140 Hyundai HHIHN406KB0003875 4 Cane Grove 21,500,000

Page | 116

Excavator52 52 2011 Bull Dozer D6R LGP CAT THX00652 4 Hope Canal 44,505,00053 53 2011 Long boom-

ExcavatorDX225 LCA DHKCEBACTB0008506 4 Hope Canal 29,797,000

54 54 2011 Bull Dozer – C Frame

D6R LGP CAT 8TM00742 6 Bush Lot 32,000,000

55 55 2011 Bull Dozer D6R LGP CAT 8TM00889 3 Philiphidia, West Demerara

32,000,000

56 56 2011 Mini Excavator DX 60 R 50594 4 Clonbrook, East Coast Dem.

14,000,000

57 57 2011 Bull Dozer D6R LGP CAT BNC00127 5 MMA/ADA 32,000,00058 58 2011 Bull Dozer D6R LGP CAT 8TM006224 3 Harlem, West Demerara 32,000,00059 59 2011 Bull Dozer D6R LGP CAT THX11717 6 Whim, East Berbice 44,505,000

60 60 2012 Long boom- Excavator

KOBELCO SK210 YQ12 - 09015 4 EDWC 55,490,450

61 61 2012 Long boom - Excavator

KOBEOLCO SK210 YQ12 - 09016 4 EDWC 55,490,450

62 62 2012 Long boom - Excavator

KOBELCO SK210 YQ12 - 09023 4 EDWC 55,490,450

No. NDIA No.

Date of Acq.

Description Model No. Serial No. Location Value at RemarksRegion Village 1 Jan. 2014 31 Dec.

201463 63 2012 Long boom-

ExcavatorKOBELCO SK210 YQ12 - 09029 4 EDWC 55,490,450

64 64 2012 Long boom- Excavator

KOBELCO SK210 YQ12 - 09036 4 Flagstaff 55,490,450 To be repaired

65 65 2012 Long boom- Excavator

KOBELCO SK210 YQ212 - 09039 4 EDWC 55,490,450

66 66 2012 Long boom- Excavator

KOBELCO SK210 YQ12 - 09046 4 Hope Canal 55,490,450

67 67 2012 Long boom- Excavator

KOBELCO SK210 YQ - 09048 4 EDWC 55,490,450

68 68 2013 Excavator Hyundai R220LC HHKHZ614AD0003677 Guysuco 31,300,000 Not NDIA Property

69 69 2013 Excavator Hyundai R220LC HHKHZ614CD0003698 Guysuco 31,300,000 Not NDIA Property

70 70 2013 Excavator Hyundai R220LC HHKHZ614CC0001416 Guysuco 31,300,000 Not NDIA property

71 71 2013 Excavator Hyundai R220LC HHKHZ614EC0001432 Guysuco 31,300,000 Not NDIA Property

72 72 2013 Excavator Hyundai R220LC HHKHZ614VD0005332 Guysuco 31,300,000 Not NDIA Property

73 73 2013 Excavator Hyundai R220LC HHKHZ614PD0005292 Guysuco 31,300,000 Not NDIA Property

Page | 117

74 74 2013 Excavator Hyundai R220LC HHKHZ614ED0005322 Guysuco 31,300,000 Not NDIA Property

75 75 2013 Excavator Hyundai R220LC HHKHZ614ED0005322 Guysuco 31,300,000 Not NDIA Property

76 76 2013 Excavator Hyundai R220LC HHKHZ402TD0000242 Guysuco 24,500,000 Not NDIA Property

77 77 2013 Excavator Hyundai R220LC HHKHZ402ED0000240 Guysuco 24,500,000 Not NDIA Property

78 78 2013 Mini Excavator Hyundai R55 - 9 HHKHM903CD0003256 No. 9 Village, West Berbice

12,700,000

79 79 2013 Mini Excavator Hyundai R55 - 9 HHKHM903TD0003257 6 Whim, East Berbice 12,700,00080 80 2013 Excavator DOOSAN DX 140 No number available Ministry of Public Works 27,000,000 Not NDIA

Property81 81 2011 Long boom -

Excavator312BL CAT 9FS00688 6 Whim, East Berbice 16,000,000 Fisheries

82 82 2013 Mini Excavator DX 60R CE AAI-050 833 5 Dundee 13,000,00083 83 2013 Mini Excavator DX 60R CE AAI-050 834 5 Jonestown 13,000,00084 84 2013 Excavator DX35Z CE AAA-0059 15 5 No. 53 Village, West

Village9,800,000

85 85 2014 Mini Excavator R55-9 HHKHM903PD0003311 6 No. 72 Village, East Berbice

12,956,000

86 83 2014 Mini Excavator R55-9 HHKHM903KD0003312 6 Letter Kenny, East Berbice

12,956,000

87 87 2014 Mini Excavator R55-9 HHKHM903JD0003313 6 Whim, East Berbice 12,956,00088 88 2014 Mini Excavator R55-9 HHKHM903CD0003314 6 New Forest, Canje 12,956,00089 89 2014 Mini Excavator R55-7 HHKHM80KC0003782 6 Nigg, East Berbice 12,956,00090 90 2014 Mini Excavator R55-9 HHKHM903CE0003329 6 No. 77 Village 12,380,00091 91 2014 Mini Excavator R55-9 HHKHM903HE0003336 6 Plegt Anker, East Bank,

Berbice12,380,000

92 92 2014 Mini Excavator R55-9 HHKHM903LE0003335 6 Cromorty 12,380,00093 93 2014 Mini Excavator R55-9 HHKHM903PE0003343 6 Fyrish 12,380,00094 94 2014 Mini Excavator R55-9 HHKHM903EE0003334 4 Enmore 12,380,00095 95 2014 Mini Excavator R55-9 HHKHM903TE0003342 6 No. 45 Village, East

Berbice12,380,000

96 96 2014 Mini Excavator R55-9 HHKHM903KE0003330 2 Rishmond, Essequibo 12,380,00097 97 2014 Mini Excavator R55-9 HHKHM903CE0003332 2 Good Hope, Essequibo 12,380,00098 98 2014 Mini Excavator R55-9 HHKHM903KE0003327 2 New Forest, Canje 12,380,000

99 99 2014 Mini Excavator R55-9 HHKHM903EE0003337 2 Johanna Cecilia, Essequibo

12,380,000

100 100 2014 Mini Excavator R55-9 HHKHM903PE0003326 3 Parfaith Harmonie 12,380,000101 101 2014 Mini Excavator R55-9 HHKHM903JE0003328 3 Parfaith Harmonie 12,380,000102 102 2014 Mini Excavator R55-9 HHKHM903AE0003333 6 Cumberland, Canje 12,380,000103 103 2014 Mini Excavator R-9 HHKHM903TE0003339 4 Mon Repos 12,380,000104 104 2014 Mini Excavator R55-9 HHKHM903CE0003338 4 Mon Repos 13,380,000105 105 2014 Mini Excavator R55-9 HHKHM903EE0003340 4 Jonestown 12,380,000106 106 2014 Mini Excavator R55-9 HHKHM903CE0003341 3 Parfaith Harmonie 12,380,000

Page | 118

107 107 2014 Mini Excavator R55-9 HHKHM903TE0003325 5 Bath Settlement 12,380,000108 108 2014 Mini Excavator R55-9 HHKHM903JE0003331 5 Bath Settlement 12,380,000109 109 2014 Mini Excavator R55-9 HHKHM903KE0003344 3 Parfaith Harmonie 12,380,000

Page | 119

No. Name on Registration

Description

Vehicle Registration

Engine No. Chassis No. Type Date of Acq Colour Location Remarks

1 Drainage & Irrigation

Nissan PGG 862 224-977861 JNICBUD222-0000328 Pick-up 23-Dec-1997 Silver Lusignan-NDIA workshop

2 Ministry of Agri.

Nissan PGG 7242 Z24-949906 JN1CBUD2270002426 Pick up 16-Sept-1999 Silver Lusignan-NDIA workshop

3 Ministry of Agri.

Toyota PGG 53 3L-4346X35 LN106-015441 Pick up 21-Oct-1997 White Lusignan-NDIA workshop

4 HarrychandTulsi

Toyota PTT 1209 Pick up Dark grey Lusignan-NDIA workshop

5 Lowbed TLL 1696 1W9A11021JS061062 Trailer 16-May-2008 Yellow Lusignan-NDIA workshop

decommissioned

6 Tractor Unit

GLL 1859 P-20123 E446047 Leyland 27-May-2008 Green Lusignan-NDIA workshop

7 Ministry of Agri

Nissan PGG 7243 Z24949651 JNICGND227-0002399 Pick up 15-Sep-1999 Green & Silver

8 Ministry of Agri

Toyota PKK 8812 2KD-7366886 MROFR22G-800635135 Pick up 16-Nov-2007 Dark Green NDIA head office

9 Ministry of Agri

Nissan PMM 8672 QD322-80580 JNICJUD22Z0-098392 Pick up 2-Sept-2010 Blue NDIA head office

10 Ministry of Agri

Nissan PMM 8830 QD32283337 JNICJUD22Z0110413 Pick up 7-Sept-2010 Silver Essequibo – Reg.2

11 Ministry of Agri

Toyota PFF 1581 34-0690596 JN65-0019919 Pick up 3-Sept-2001 Grey Reg. 6

12 Agri Sector Min.

Nissan PFF 1978 224-938179 JNCBUD2170-449016 Pick up 19-Jan-1996 Black & Grey Lusignan-NDIA workshop

13 Ministry of Agri

Daihatsu Applau

PFF 1779 459074 TDAA1018000697201 Motor Car 21-Dec-1995 Green NDIA head office

14 Ministry of Agri

Nissan PJJ 8406 KA24895668 SN1CDUD2220033790 Pick up 15-Nov-2005 Blue

15 Mohamed Yunas

Toyota PSS 314 2KD-U388254 MROFR22G600764586 Pick up 3-Dec-2013 Silver Reg. 6

16 Ministry of Agri

Nissan PRR 2270 YD25-472092T MNTVCUD40Z0050350 Pick up 20-Feb-2013 White NDIA head office

17 Ministry of Agri

Toyota PKK 443 5L-5643419 JTGBK295600019562 Jeep-Land 10-May-2006 Green NDIA head office

18 Ministry of Agri

Toyota PGG 56 14Z-0224652 H2J80-0034066 Land Cruiser

31-Oct-1997 White NDIA Head office

19 Ministry of Agri

Toyota PGG 54 3L-4345336 LN106-0154348 Pick up 21-Oct-1997 White MMA-Reg. 5

20 Ministry of Agri

Toyota PGG 55 3L-4341858 LN106-0154297 Pick up 21-Oct-1997 White NDIA head office

21 Ministry of Agri

Great Wall

PMM 8257 1005485460 LGWDBG177AB634265 Pick up 18-Aug-2010 Silver NDIA head office workshop

Page | 120

Annex 2

NDIA – Motor Vehicles as at December 31, 2014

22 Nissan PKK 9205 YD25-637408 VSKJVWR512-0033516 Jeep-Path Finder

16-Dec-2007 Grey Min of Natural Resources

23 Nissan PFF 1748 Z2A-939574 WNYD21-051607 Path-Finder

19-Jul-1995 Dark Grey Reg. 6

No.

NDIA No. Description

Vehicle Registration

Engine No. Chassis No. Type Date of Acq

24 Ministry of Agri

Toyota PRR 9329 2KDA211973 MR0FR22G300762276

Pick Up 28-Oct-2013

25 Ministry of Agri

Toyota PRR 9448 2KDA110922 MROFR22G000757536

Pick Up 30-Oct-2013

26 Ministry of Agri

Nissan PTT 1577 VD25575788T MNTVCVDUD4020610416

Pick Up 15-Jan-2015

27 Ministry of Agri

Nissan PJJ 8405 KA2484009 INICDUD222008306

Pick Up 15-Nov-2005

28 Fyuse Construction

Toyota PSS 946 2KDU392964 MROFR22G500765034

Pick Up 18-Dec-2013

Page | 121

No. NDIA No.

Date of Acquisition

Description Discharge Capacity

ENGINE Location VALUE AT Remarks

Brand Model No. Serial No.

1 Jan, 2014

31 Dec, 2014

1 6 Hydro Flow Mobile pump-24’ diameter

20 John Deere 6068 TF 250 T 060 68T 704331

Herstelling, EBD

2 Axial Flow Drainage Pump

200 Cummings VTA-28 9 25388581 Bagotville, WBD

56,700,000 India Line of Credit

3 Axial Flow Drainage Pump

200 Cummings VTA-28-P 25388578 Windsor Forest, WCD

56,700,000 India Line of Credit

4 14 Hydro Flow Drainage Pump

120 Cummings 4200 DS 5860/7/85 Bagotville, WBD

5 Hydro Flow Drainage Pump

120 Stanleytown

6 John Deer 6125 John Deer 6125 RG 6125 HO 62458

Stanleytown

7 Hydro Flow Drainage Pump

40 Caterpillar 3306 Blankenburg, WCD

8 2 Hydro Flow Drainage Pump

40 Caterpillar 30SD - 250 8075 Pliasance, ECD

9 3 Hydro Flow Drainage Pump

80 Cummings AOCS – 1005 – HM - 1197

53807 Lusignan, ECD

10 Hydro Flow Drainage Pump

120 Cummings VTA-28-P 10377 Lusignan, ECD 55,755,000 India Line of Credit

11 5 Hydro Flow Drainage Pump

Caterpillar T6ED 052 038 4R00B1

99D13 Buxton, ECD

12 Axial Flow Drainage Pump

Cummings VTA-28-P 35291 Paradise, ECD 56,700,000 India Line of Credit

13 7 Hydro Flow Drainage Caterpillar T6ED 052 Enmore, ECD

Page | 122

Annex 3

NDIA – Pumps as at December 31, 2014

Pump 038 4R00B114 8 Hydro Flow Drainage

PumpJohn Deere PY 100 M 9742094 Hope, CBD

15 Axial Flow Drainage Pump

John Deere 6125 HF 070 RG 612 HO 63126

Greenfield, ECD

No. NDIA No.

Date of Acq.

Description Discharge Capacity

ENGINE Location VALUE AT Remarks

Brand Model No. Serial No.

1 Jan, 2014 31 Dec, 2014

16 Axial Flow Drainage Pump John Deere 6125 HF 070 RG 6125 HO 63017

Greenfield, ECD

17 Perkins Perkins LD22724U856874J

Supply, Mahaica, ECD

18 Irrigation and Drainage Pump (dual purpose)

120 Cummings VTA-28-P 35290 Pine Ground, Mahaicony Creek

55,755,000 India Line of Credit

19 Hydro Flow Drainage Pump 120 Cummings VTA-28-P 35290 Three Friends, Essequibo Coast

55,755,000 India Line of Credit

20 Axial Flow Drainage Pump 150 John Deere 6125 HF 070 RG 6125 HO 61765

Anna Regina, Essequibo Coast

21 Axial Flow Irrigation Pump – Deutz 4 Cylinder engine V-Block

Deutz Dawa Pump Station, Tapakuma

Conservancy21 Axial Flow Irrigation Pump – Deutz 4

Cylinder engine V-BlockDeutz Dawa Pump

Station, Tapakuma Conservancy

21 Axial Flow Irrigation Pump – Deutz 4 Cylinder engine V-Block

Deutz Dawa Pump Station, Tapakuma

Conservancy21 Axial Flow Irrigation Pump – Deutz 4

Cylinder engine V-BlockDeutz Dawa Pump

Station, Tapakuma Conservancy

22 Hydro Flow Drainage Pump 80 John Deere 1975F 51018F010

Lima, Essequibo Coast

23 Hydro Flow Drainage Pump 120 Cummings VTA-28-P 35294 Lima Essequibo Coast

55,755,000 India Line of Credit

24 Hydro Flow Drainage Pump 40 Caterpillar 3306 64Z34274 Devonshire Castle, Essequibo Coast

25 Hydro Flow Drainage Pump 40 Caterpillar 3306 64Z28277 Devonshire Castle, Essequibo Coast

26 Hydro Flow Drainage Pump 40 Caterpillar 3306 64Z30657 Hampton Court, Essequibo Coast

Page | 123

No. NDIA No.

Date of Acq.

Description Discharge Capacity

ENGINE Location VALUE AT Remarks

Brand Model No. Serial No.

1 Jan, 2014 31 Dec, 2014

28 Axial Flow Drainage Pump 120 John Deere RG 6125 RG 6125H 061763

Cozier, Pomeron River

29 Axial Flow Drainage Pump 80 John Deere 6105HF001 0004385 Seawell/ Palmyra, East Berbice

30 Axial Flow Drainage Pump 80 John Deere 6081HF001 RG6081H17529

No. 43 Village, East Berbice

31 Hydro Flow Drainage Pump 40 Caterpillar 3000 7881 Eversham, Corentyne

32 Hydro Flow Drainage Pump 40 Caterpillar 3306 Whim, Corentyne33 16 Hydro Flow Drainage Pump 40 Perkins Whim, Corentyne34 Hydro flow Drainage Pump- Vacuum

priming pump20 John Deere 163427 Kildonon, Crentyne

35 Hydro Flow Drainage Pump 120 Cummings 12032320 YCEXL0855AAA

Kildonon, Corentyne

36 Hydro Flow Drainage Pump 40 Caterpillar 8079 B 30SD/250 No. 19 Village, Corentyne

37 Hydro Flow Drainage Pump 80 John Deere 6081HF001 RG 6081 H164128

Borlem, Corentyne

38 Axial Flow Drainage Flow John Deere 6081HF001 RG6031H165812

Liverpool, Corentyne

39 Axial Flow Drainage Pump 110 John Deere 6125HF070 RG6125H062552

Manarabisi, BBP

40 Axial Flow Drainage Pump 120 Toudeer 6125AF1775 RG6125A062320

Manarabisi, BBP

41 Hydro Flow Drainage Pump 40 Caterpillar 3306 64228260 Manarabisi, BBP42 Axial Flow Drainage Pump 120 Caterpillar 3406 6TB20108 Mibicuri, BBP

Page | 124

No. NDIA No.

Date of Acq.

Description Discharge Capacity

ENGINE Location VALUE AT Remarks

Brand Model No. Serial No.

1 Jan, 2014 31 Dec, 2014

43 Axial Flow Drainage Pump 120 Caterpillar 3406 6TB20109 Mibicuri, BBP44 Axial Flow Drainage Pump 120 John Deere 6125AFM75 RG6125A0

62764Mibicuri, BBP

45 10 Hydro Flow Drainage Pump 80 John Deere 6125HF070B, C,D,E

Mibicuri, BBP

46 Hydro Flow Drainage Pump 120 Cummings VTA-28-P Mibicuri, BBP 55,755,000 India Line of Credit

Page | 125

No. NDIA No.

Date of Acq

Description Size Location

1 Jan, 2014

Remarks

No. NDIA No.

Pump Houses1 Pump House 5 Pine Ground,

Mahaicony River2 Pump House 3 Windsor Forest3 Pump House 3 Canal No. 1 Polder4 Pump House 6 No. 19 Village, East

Berbice5 Pump House 4 Paradise, Enterprise6 Pump House 6 Eversham7 Pump House 6 Gangaram8 Pump House 2 Lima9 Pump House 6 Rose Hall

10 Pump House 4 Plaisance11 Pump House 4 Lusignan12 Pump House 4 Lusignan13 Pump House 4 Greenfield14 Pump House 2 Dawa, Tapakuma15 Pump House 2 Cozier, Pomeroon

River16 Pump House 6 Seawell, East Berbice17 Pump House 6 Borlem, East Berbice18 Pump House 6 Liverpool, East Berbice

Fuel Tanks1 Fuel tank on concrete base 1,000 1G

diesel4 Flagstaff, EDWC

2 Fuel tank on concrete base 400 1G gas 4 Flagstaff, EDWC

Page | 126

Annex 4

NDIA – Pump Houses and Fuel Tanks as at December 31, 2014

No. NDIA No.

Date of Acq

Description Size Location

1 Jan, 2014 Remarks

No. NDIA No.3 Fuel tank inside pump

station5 Pine Ground, Mahaicony

River4 Fuel storage tank 4 Lusignan, NDIA compound5 Built in fuel tank 6 Manarabisi, BBP6 Fuel tank 22,000 gal 6 Manarabisi, BBP7 Fuel tank 7,500 gal 6 Mibicuri, BBP8 Fuel tank 7,500 gal 6 Mibicuri, BBP Decommissione

d9 Fuel tank 12,000 gal 6 Mibicuri, BBP

Page | 127

No. NDIA Date of Acquisition

Description Brand/Size Serial No. Location

1 Jan, 2014

Remarks

Region VillageGenerator

1 Generator 60 HZ MDG 3600CLE 4 Paradise, ECD not marked2 Generator Lister-pitter 4901047LPW3A08

16 Manarabisi, Black Bush

Polder3 Generator – AC

SynchronousOlympian 096139/10 6 Manarabisi, Black Bush

Polder4 Generator Premier LT- 168F 6 Mibicuri, BBP

Water Pump1 Water Pump Hondi 188139210467 6 Manarabisi, Black Bush

Polder2 Water Pump Parker 934-67492-G 6 Mibicuri, BBP3 Water Pump Power Max XP652WP 6 Mibicuri, BBP

Page | 128

Annex 5

NDIA – Generatorsas at December 31, 2014

No. NDIA No. Date of Acquisition

Description Brand/ Size

Serial No. Location 1 Jan, 2014

Remarks

Boat1 Aluminum boat Flagstaff, EDWC not marked2 Aluminum boat Flagstaff, EDWC Not marked

Engine1 Tohatsu 20 HP 069042XF Flagstaff, EDWC not marked2 Tohatsu 50 HP 069046XF Flagstaff, EDWC Not marked3 Marina - outboard 40 HP not seen Flagstaff, EDWC Not working, not marked4 Marina - outboard 25 HP not seen Flagstaff, EDWC Not working, not marked

Marina - outboard 55 HP not seen Flagstaff, EDWC Not working, not markedYamaha - outboard 40 HP not seen Flagstaff, EDWC Not working, not marked

Page | 129

Annex 6

NDIA – Boats and Enginesas at December 31, 2014

No. NDIA No.

Date of Acquisition

Description Location 1 Jan, 2014

Remarks

1 1 Pontoon Belfield, ECD 39,875,000 2007/20082 3 Pontoon with 1 house La Union, Essequibo Coast 57,599,2503 Pontoon with machine # 64 Flagstaff, EDWC 90,452,500 Purchase under JICA – JICA - ¥36,181,0004 Pontoon with machine # 63 Flagstaff, EDWC 90,452,500 Purchase under JICA - ¥36,181,0005 Pontoon with machine # 66 Flagstaff, EDWC 34,000,000 ASDU. 2009.

Pontoon # 2 Dredge with machine # 34 & 40

Hamptoon Court, Essequibo Coast

50,843,500 2009

Pontoon Hope Canal, ECD Not repairable. Lease from DHBPontoon Hope Canal, ECD Not repairable. Lease from DHBPontoon Hope Canal, ECD Not repairable. Lease from DHB

Page | 130

Annex 7

NDIA - Pontoons as at December 31, 2014

No.

NDIA No.

Date of Acquisition

Description Quantity Brand Location 1 Jan, 2014

RemarksRegion Village

1 Grease Gun 1 62 Spade 1 63 Vice 1 Model G No. 38 64 17 – piate battery 5 Power Master 65 Grease gun 1 667

Page | 131

Annex 8

NDIA – Tools as at December 31, 2014

NO ACTIVITIES 2011 2012 2013 2014 2015

                       

    Budget Actual Budget Actual Budget Actual Budget Actual BudgetActual to

June

1 Employment Cost 70,451,000 87,221,872 87,221,000 94,689,993 102,571,000 90,312,885 102,571,000 114,709,653 71,918,500 75,612,592

i

Materials, Equipment & Supplies 5,000,000 5,663,888 7,000,000 7,147,059 7,000,000 6,281,227 7,000,000 3,535,522 3,250,000 1,611,946

ii Fuel & Lubricants 275,000,000 299,845,334 290,000,000 305,633,349 295,000,000 293,656,419 296,000,000 452,792,424225,000,00

0146,701,55

0

iii

Rental &Maintenance of Buildings 3,400,000 6,870,347 5,000,000 4,121,852 5,000,000 274,844 5,000,000 3,196,692 2,500,000 754,171

1vMaintenance of Infrastructure 455,425,000 443,514,239 460,868,000 515,674,427 475,000,000 623,047,452 526,997,000 533,426,672

275,000,000

191,327,924

 

Maintenance of Drainage and Irrigation works

vTransport, Travel and Postage 2,248,000 11,080,999 5,000,000 15,360,591 5,000,000 16,627,482 7,000,000 11,153,302 5,500,000 6,566,964

vi Utility Charges 2,500,000 3,861,180 2,500,000 6,836,918 2,500,000 8,261,835 5,000,000 6,925,285 3,500,000 2,722,897

viiOther Goods and Services Purchased 84,105,000 243,984,303 105,411,000 327,597,817 116,971,000 204,106,365 126,971,000 120,213,124 80,353,500 97,369,769

Page | 132

Annex 9

NDIA – Budgeted and Actual from January 1, 2011 – June 30, 2014

 

(service and repairs to pumps and equipment and other miscellaneous expenditure).

viiOther Operating Expenses - 103,567,000 324,713,334 137,000,000 276,359,809 145,693,000 270,258,864 151,000,000 347,022,631

150,000,000

157,133,376

 

(operating costs of pumps and equipment                    

  Total 1,001,696,000

1,426,755,496

1,100,000,000

1,553,421,815

1,154,735,000

1,512,827,373

1,227,539,000

1,592,975,305

817,022,000

679,801,189

2011

JanuaryFebruar

y March April May June July AugustSeptemb

er OctoberNovemb

er December

Fuel Ordered 117,797

167,455

1,764,777 123,292 118,569 118,682

151,172 78,678 160,839

136,542 124,424 118,929

Fuel Issued 111,357

166,518

3,084,302 122,488 117,380 168,050

150,508 77,808 110,046

150,658 123,743 134,743

Variance 6,440 937 (1,319,524) 804 1,188

(49,368) 664 870 50,793

(14,116) 681

(15,814)

2012

Page | 133

Annex 10.1

NDIA – Fuel Ordered and Received – for years ended December 31, 2011 -2012

JanuaryFebruar

y March April May June July AugustSeptemb

er OctoberNovemb

er December

Fuel Ordered 187,716

168,151 158,938 81,593 131,127 151,919

118,150 93,638 100,774

113,533 147,011 134,078

Fuel Issued 517,265

166,967 165,356 80,953 144,981 113,745

117,294 93,060 87,995

112,625 146,556 133,209

Variance

(329,549) 1,184

(6,418) 640

(13,854) 38,174 856 578 12,779 908 456 869

2013

JanuaryFebruar

y March April May June July AugustSeptemb

er OctoberNovemb

erDecembe

r

Opening Stock 20,985 13,664 284

14,920 - - 948 1,132 1,451 - 1,470 11,853

Purchases 97,552 90,226

81,146

99,873 94,403 88,853 101,887 106,050 80,490 106,170

121,706

118,811

118,537

103,890

81,430

114,793

94,403

88,853

102,835

107,182 81,941

106,170

123,176

130,664

Less: Fuel Issued (110,177)

(105,014)

(94,889)

(126,566)

(112,497)

(103,246)

(124,294)

(128,819) (116,952)

(121,791)

(117,090)

(123,259)

Page | 134

Annex 10.2

NDIA – Fuel Purchased and Issued – for the year ended December 31, 2014

Variance 8,360

(1,124)

(13,459)

(11,772)

(18,094)

(14,393)

(21,459)

(21,638) (35,011)

(15,621)

6,087

7,405

Analysis of Variance

Positives 2,812 11,553 933

11,716 1,021 948 1,119 1,451 914 86 7,138 14,114

10,811 284 - 1,678 - 2,246 13 - - 1,470 166 410

400 - - - - - - - - 142 6,725

334 - - - - - - - - 4,408 - 14,357

11,837

933

13,394 1,021

3,194

1,132

1,451 914

1,556

11,854

21,249

Negatives (5,073)

(2,080)

(4,971)

(9,012)

(4,093)

(7,369)

(12,481)

(14,570) (26,989)

(12,514)

(1,548)

(2,434)

(230)

(4,810)

(3,351)

(973)

(2,958)

(1,680)

(1,228)

(122) (2,781)

(355)

(1,411)

(412)

(694)

(371)

(115)

(4,348)

(1,731)

(380)

(883)

(97) (142)

(2,209)

(754)

(4,393)

- (1,51

0) (92

2) (1,63

9) (243

) (75

5) (1,84

4) (1,16

5) (102) (178)

(1,217)

(435)

- (3,484)

(3,894)

(1,895)

(2,459)

(2,869)

(4,047)

(5,534) (627)

(205)

(258)

(2,126)

- - (717)

(5,943)

(3,894)

(717)

(753)

(980) (3,176)

(65)

(54)

(1,562)

- - (706) -

(2,625)

(2,397)

(320)

(191) (1,101)

(435)

(525)

(844)

- - - - (1,114)

(1,420)

(1,034)

(452) (576)

(769) -

(1,331)

Page | 135

- - - - - - - (409) (691)

(448) -

(307)

- - - - - - - - (1,189) - - -

Variance 8,360

(418)

(13,743)

(10,416)

(18,095)

(14,393)

(21,458)

(22,070) (36,462)

(15,621)

6,087

7,405

2014

January February March April May June July AugustSeptember October November December

Opening Stock 20,133 - 129 - 471 1,444 3,190 1,672 - - - -

Purchases 137,801 130,498 138,369 133,834 112,377

142,817 131,561 130,065 122,294 135,177 85,920 114,416

157,934

130,498

138,498

133,834

112,848

144,261

134,751

131,737

128,823

135,177

85,920 114,416

Less: Fuel Issued

(148,050)

(143,853)

(153,633)

(148,532)

(120,640)

(161,886)

(152,304)

(145,475)

(122,294)

(149,585)

(109,175) (151,950)

Variance 9,884

(13,355)

(15,135)

(14,698)

(7,792)

(17,625)

(17,553)

(13,738) 6,529

(14,409)

(23,255) (37,534)

Analysis of Variance Positives 7,980 6,269 8,283 4,553 4,262 274 1,673 3,240 5,742 995 2,300 -

129 129 - 560 1,444 2,722 - 1,634 64 128 794 - 22,502 181 - 471 132 468 - 295 558 - 416 - - - - - - 296 - - - - 30,611

6,579

8,283

5,584

5,838

3,760

1,673

5,169

6,364

1,123

3,510 -

Negatives (860)

(2,606)

(2,148)

(9,588)

(7,431)

(10,555)

(1,100)

(10,317) (7,533)

(9,743)

(6,322) (4,720)

(538)

(269)

(1,242)

(410)

(15) (302)

(10,711)

(717) (1,492)

(459)

(15,122) (10,690)

(615)

(2,907)

(4,304)

(4,356)

(499)

(307)

(102)

(486) (37)

(200) (922) (16,672)

(4,535)

(3,074)

(1,382)

(2,946)

(3,151)

(3,510)

(538)

(3,766) (204)

(1,787) (307) (2,254)

(2,872)

(703)

(2,587)

(2,587)

(2,356)

(3,101)

(973)

(1,178) (2,498)

(1,300)

(3,252) (576)

Page | 136

(779)

(461)

(71)

(396)

(153)

(3,022)

(2,792)

(957) (1,050)

(189)

(839) (1,138)

(127)

(716)

(336) -

(25)

(588)

(1,844)

(1,281) (80)

(1,854) - (1,012)

(8,972)

(9,197)

(11,348) - - -

(460)

(246) - - - (471)

(1,430) - - - - -

(679) - - - - -

- - - - - - (26) - - - - -

Page | 137

NDIA Machine   2013 2014 2015 Machine

# Description   Hour

s Fuel Hours Fuel Hou

rs Fuel                   9 320 Excavator  

216

2,767

528

5,412

- -

12 SK201 Excavator  

234

2,998

- -

- -

20 SK201 Excavator  

160

2,050

- -

- -

38 DX225 Excavator  

168

1,435

128

1,640

- -

41 DX225 Excavator  

62 794

- -

- -

42 DX225 Excavator  

173

2,216

- -

- -

48 Hyundai Excavator  

119

1,524

6

77

- -

51 Hyundai Excavator  

208

2,664

- -

- -

65 SK201 Excavator  

279

3,574

- -

- -

4 Kobelco Excavator  

- -

184

1,886

- -

6 320 Excavator  

- -

36

461

112 1,435

8 SK201 Excavator  

- -

269

3,057

- -

28 312 Excavator  

- -

144

1,845

- -

40 DX225 Excavator  

- -

171

2,191

- -

52 D6RXL Bulldozer  

- -

200

4,556

- -

3 320 Excavator  

- -

- -

63 807

10 320 Excavator  

- -

- -

152 1,947

45 320 Excavator  

- -

- -

200 2,562

                 

  TOTAL  

1,619

20,022

1,666

21,124

527 6,751

  Rate per litre     216  

199   175

                 

  Dollar Value     $ 4,324,758  

$ 4,203,600   $1,181,397

  No. of months sampled         1

Page | 138

Annex 10.3

NDIA – Fuel Issued to machines classified as not working

Quantity: Litres

5 3

  Values based on sample checks    

$ 9,709,756        

Vehicle Description

2011   2012   2013   2014

             

PGG 802 2,992.28  

1,248.29   -   -

PKK 3794 182.51   -   -   -

PMM 3792 36.57   -   -   -

PKK 442 103.52   -   -   -

PNN 2283 95.00   -   -   -

PGG 8830 63.36   -   -   -

PNN 1043 117.38   -   -   -

PNN 8257 125.00   -   -   -

PGG 8184 48.21   -   -   -

PNN 2070 285.60  

1,313.86   -   -

PJJ 55 120.00   -   -   -

PHH 1043 77.40   -   -   -

PMM 6582 204.50   -   -   -

GDD 4022 204.50   -   -   -

CF 7399 171.87   -  

24.24  

65.59

PKK 2986 -   123.70   -   -

PGG 8672 -   242.11   -   -

PGG 2184 -   93.47   -   -

PPP 2630 -   3,583.06  

111.64  

180.00

PGG 6159 -   13.00   -   -

GMM 6911 -   2.00   -   -

PHH 6962 -     -   -

Page | 139

Annex 10.4 - NDIA – List of unauthorized vehicles that received fuel for the years ended December 31, 2011 -

38.97

PKK 7243 -   40.65   -   -

PFF 1571 -   2.00   -   -

GMM 9932 -   3.00   -   -

PC 3973 -   3.00   -   -

PMM 117 -   43.00   -  

63.02

CE 7399 -   7.50   -   -

CF 7385 -   19.00   -   -

PMM 7512 -   70.01   -   -

CF 7396 -   22.47   -   -

PLL 5063 -   496.52   -   -

PMM 7515 -   20.00   -   -

PSS 6 -   -   -   1,238.95

PMM 8812 -   -   -   54.06

PGG 1779 -   -   64.84   -

PGG 7248 -   -   44.79   -

Total Litres 4,827.70  

7,385.61  

245.51  

1,601.62

               

Dollar value 989,679

1,521,436

56,958

350,755

Page | 140

Page | 141

2015

January February March April May June July AugustSeptemb

erOctobe

rNovemb

erDecemb

er Total

Opening Stock 8,339 6,470 -

9,647 3,362 4,981

5,394 - -

- - - 8,339

Purchases 217,840 198,840

37,800

27,600 27,725 209,440

18,400 - -

- - - 737,645

226,179 205,310

37,800

37,247 31,087 214,421

23,794 - -

- - - 745,984

Less: Fuel Issued

(219,709)

(207,260)

(28,153)

(33,885)

(26,106) (209,027)

(21,524) - -

- - -

(743,714)

Closing Balance

6,470

(1,950)

9,647

3,362

4,981 5,394

2,270 - -

- - - 2,270

2014

January February March April May June July AugustSeptemb

erOctobe

rNovemb

erDecemb

er Total

Opening Stock 6,957 6,765

2,495

5,159 2,938 -

2,545 - -

1,539 4,881 - 6,957

Purchases 20,700 197,940

27,600

18,400

207,140 32,200

18,400

200,240 29,140

36,800 209,440 36,300 1,034,300

27,657 204,705

30,095

23,559

210,078 32,200

20,945

200,240 29,140

38,339 214,321 36,300 1,041,257

Less: Fuel Issued (20,892)

(202,210)

(24,936)

(20,621

(214,323

(29,655) (22,408)

(206,606

(27,601) (33,458

(216,376)

(30,796) (1,049,882)

Page | 142

Annex 10.5 – Analysis of Fuel

Ownership: NDIA – Sub Office Whim – Period Jan 2013 to July 2015

Monthly Fuel Consumption Report

) ) ) )

Closing Balance

6,765

2,495

5,159

2,938

(4,245) 2,545

(1,463)

(6,366) 1,539

4,881

(2,055) 5,504

(8,625)

2013

January February March April May June July AugustSeptemb

erOctobe

rNovemb

erDecemb

er Total

Opening Stock 5,395 6,384

6,143 5,625

703

4,224

2,963 - -

1,872 1,374 - 5,395

Purchases 188,900 29,900

25,300 193,350

24,025

13,800

4,600

13,800 20,700

13,800 197,940 23,000 749,115

194,295 36,284

31,443 198,975

24,728

18,024

7,563

13,800 20,700

15,672 199,314 23,000 754,510

Less: Fuel Issued

(187,911)

(30,141)

(29,665) (199,059)

(20,504)

(15,061)

(9,558)

(14,331) (18,828)

(14,298)

(204,449) (24,324)

(768,129)

Closing Balance

6,384

6,143

1,778 (84)

4,224

2,963

(1,995)

(531) 1,872

1,374

(5,135) (1,324)

(13,619)

Page | 143

Fuel Reconciliation

Machine Status

Machine Description Report Report Variance

(Fuel Issued) (Fuel

Issued) June

7 1,12

5 1,35

0 (22

5)

2/17 4,72

5 4,27

5 45

0

4/15 2,06

3 2,02

5 38

  7,91

3 7,65

0 26

3

July

7 67

5 1,35

0 (67

5)

2/17 2,92

5 2,02

5 90

0

4/15 2,02

8 32

8 1,70

0

  5,62

8 3,70

3 1,9

25

August

7 1,57

5 3,37

5 (1,80

0)

2/17 4,05

0 2,25

0 1,80

0

4/15 2,29

5 2,27

8 17

3/21 1,44

9 1,44

9 -

  9,36

9 9,35

2 1

7

September

7 2,25

0 2,17

0 80

2/17 2,95

3 2,72

8 22

5 4/15 - - -

3/21 2,47

5 2,47

5 -

  7,67

8 7,37

3 30

5

Grand Total 30,58

8 28,07

8 2,5

10

Page | 144

Annex 10.6

NDIA – Comparison between fuel reconciliation report and machine status report for the year 2013

Annex 10.7Region #6

NDIA – Sub Office Whim – Spare Parts as at August 31, 2015

Item Number

Description of Spares Unit Amount

1 Mini Excavator Inner Air Filter Each 102 Mini Excavator Outer Air Filter Each 103 Kobelco Hydraulic Element Filter Each 44 Air Filter- Inner- RS 3717 Each 45 Air Filter- Inner- RS 3517 Each 46 Kobelco Outer Air Filter Each 17 Kobelco Inner Air Filter Each 18 Mini Excavator Bucket RAM Seal Kit Each 29 320 Bucket RAM Seal Kit Each 510 Exhaust Pipe Each 111 320 CL Bushing Each 612 O-Ring Kit Each 113 Mini Excavator Pilot Filter Each 814 Mini Excavator Hydraulic Filter Each 815 320 CL Fuel Filter Each 1716 CAT Fuel Filter Each 217 320 CL Hydraulic Pilot Filter Each 1918 320 CL Hydraulic Return Filter Each 1019 Hyundai Fuel Filter Each 620 BF 720 Filter Each 921 CAT Engine Head Each 122 320 CL Pin Each 123 CAT Fuel/Water Separator Filter Each 2024 320 CL Hydraulic Element Filter Each 825 Kobelco Fuel Element Filter Each 426 Mena Oil Filter Each 527 Donaldson Hydraulic Filter Each 828 Kobelco Fuel Filter Each 829 Perkins Fuel Filter Each 830 Perkins Oil Filter Each 231 BT 7237 Filter Each 232 John Deere Oil Filter Each 333 John Deere Fuel Filter Each 234 CNH Fuel/Water Separator Filter Each 435 Luberfiner Filter LFP 440 F Each 136 Lubefiner Filter LFP 3191 Each 137 Doosan Top Roller Each 338 Soosan Bottom Roller Each 2

Page | 145

Page | 146

Annex 11.1

NDIA – Hope Canal – June 2011 to May 2015.

Fuel supplied by NDIA to Hope Canal

Months 2011 2012 2013 2014 2015  Hrs Lts Hrs Lts Hrs Lts Hrs Lts Hrs Lts

January - -

- 50,000

2,816 37,668

3,248 45,356

2,704 37,510

February - -

- 40,000

2,760 36,951

3,640 50,457

2,776 38,272

March - -

- 30,000

2,456 33,057

4,176 57,483

3,856 53,902

April - -

- 30,000

3,392 43,452

3,720 51,721

2,632 35,790

May - -

- 30,001

2,720 34,843

2,816 39,582

624 7,993

June - 24,000

- 20,210

3,272 43,829

4,492 62,328

- -

July - 14,052

- 10,000

3,773 50,406

4,400 60,990

- -

August - 35,580

- 34,000

4,615 61,720

3,864 53,486

- -

September

- 42,050

- 16,370

4,425 59,087

2,880 39,684

- -

October - 50,138

- 48,000

4,604 61,330

3,840 53,019

- -

November - 35,050

- 55,540

3,437 45,882

2,032 27,306

- -

December - 20,000

- 26,000

2,828 38,380

3,952 55,570

- -

Total - 220,870

- 390,121

41,098 546,605

43,060 596,982

12,592 173,468

Fuel Consumptionper annum

43,953,130

77,243,958

118,066,464

118,799,362

30,321,802

Fuel consumption per hour 0 0 13 14 14

Year January February March April May June July August Septemb

er October Novemb

er 2011 - - - - - 24,000 14,052 35,580 42,050 50,138 35,050

2012 50,00

0 40,000 30,000 30,00

0 30,001 20,210 10,000 34,000 16,370 48,000 55,540

2013 37,668 36,951 33,056

43,452 34,843 43,829 50,406 61,720 59,087 61,330 45,882

2014 45,356 50,457 57,483

51,721 39,582 62,328 60,990 53,486 39,684 53,019 27,306

2015 37,510 38,272 53,702

35,790 7,993 - - - - - -

Total                      

Page | 147

No. NDIA No.

Date of Acquisition

Description Model No. Serial No. LocationRegion Village

0 22RB Dragline 22RB 39215 4 Hope Canal1 1 2006 Short boom-Excavator 320CL CAT SBN01395 4 Hope Canal10 10 2006 Excavator 320CL CAT 320CAFBN-02274 4 Hope Canal19 19 2011 Excavator DX225 LCA DWBHEBK0V70050079 4 Hope Canal27 27 2009 Long boom- Excavator DX225 LCA DWBHEBK0070050100 4 Hope Canal29 29 2010 Bull Dozer D6R XL 4ZF20443 4 Hope Canal31 31 2009 Long boom - Excavator 312CL CAT OBA03959 4 Hope Canal33 33 2010 Long boom- Excavator DX225 LCA DHKCERAH90005848 4 Hope Canal35 35 2010 Long Boom - Excavator 320DL CAT CAT03200PKGF02847 4 Hope Canal39 39 2010 Long boom- Excavator DX225 LCA DHKCEBACLA0006049 4 Hope Canal43 43 2010 Long boom- Excavator DX225 LCA DHKCEBACSA0006063 4 Hope Canal44 44 2010 Long boom- Excavator 320DL CAT CAT0320DLKEF64462 4 Hope Canal45 45 2010 Long boom- Excavator 320DL CAT CAT0320DTKGF04435 4 Hope Canal46 46 2010 Long boom- Excavator 320DL CAT KGF04487 4 Hope Canal50 50 2012 Long boom- Excavator DX225 LCA DHKCEBACAB0008016 4 Hope Canal52 52 2011 Bull Dozer D6R LGP CAT THX00652 4 Hope Canal53 53 2011 Long boom- Excavator DX225 LCA DHKCEBACTB0008506 4 Hope Canal66 66 2012 Long boom- Excavator KOBELCO

SK210YQ12-09046 4 Hope Canal

Grand Total

Annex 11.2 – Machinery and Equipment Allocated to Hope Canal Project.

Page | 148

Activity Contract Amount(USD)

Terms of Payment Amount Amount Paid

Date of Payment

Balance on

Contract

Fixed Pumps

2,124,000

1,784,000(pump parts)

340,000(pumps)

10% advance10% on design submission

70% on shipment70% on shipment10% on acceptance

212,400212,400

1,248,800

238,000

212,400

424,800

749,347*

17/3/12

31/3/14

949,853MobilePumps

1,566,000 10% advance10% on design submission70% on shipment

10% on acceptance

156,000156,600

1,096,200

156,600

313,200700,000396,200156,600

1,566,000

17/3/1210/1/1326/4/13Sept 2013

0

Spares 180,000 10% advance10% on design submission

70% on shipment10% on acceptance

18,00018,000

126,00018,000

36,000

126,000*

17/3/12

31/3/1418,000

Technical Support

67,000 50% advance

25%+15% with works in progress

10% on work completion

33,500

(16,750+10,050)

26,800

6,700

33,500 17/3/12

33,500

Freight from India

56,000 50%+50% advance (28,000+28,000)

56,000

20,0008,000

22,000*

10/1/1326/4/1331/3/14 6,000

Insurance 7,000 50%+50% advance 3,500+3,500)7,000

3,000500

2,000*

10/1/1326/4/1331/3/14 1,500

TOTAL 4,000,000 4,000,000 2,991,147

1,008,853

Summary of Payments (USD):1st payment (10% advance less technical support, 50% T/Support,

10% design) - 807,500 - Paid 17/3/12

2nd payment (70% on shipment of mobile, + freight/insurance) 723,000 - Paid 10/1/13

3rd payment (70% on shipment of mobile, + freight/insurance 404,700 - Paid 26/4/134th payment (10% on acceptance of mobile pumps) 156,600 - Paid in Sept 20135th payment (70% on shipment of pump parts/ spares/ Freight/insurance 899,347* - Paid 31/3/2014Total Payments to date 2,991,147*Paid by EXIM Bank 31/3/14. Payment of $126,000 recommended but no spares received.

Page | 149

Annex 12

Status Reports on Supplies from Surendra Engineering Ltd.