FSM Audit shines spotlight on Public Projects

By Bill Jaynes The Kaselehlie Press February 9, 2015 Pohnpei, FSM—

See also Speaker Halbert’s response at the bottom of the page.

“People want progress. People deserve better,” wrote Haser Hainrick, the FSM’s National Public Auditor in his cover letter on an inspection of the Congress of the FSM’s Public Projects and Social Programs that was released today. The letter also served as the press release that went out today to all of the office’s media resources in the Pacific. They also hand delivered a hard copy of the complete inspection to The Kaselehlie Press office before the day was over . By the next morning, the PDF copy of the audit was pervasive on social media.

The audit inspection (2015-04) lists four findings and provides several examples under each heading:

1. Lack of definitive parameters led Congress to appropriate $1.6 million for all sorts of activities and programs under “Public Projects” which did not yield any meaningful and lasting benefits.

2. $685,650 Public Projects lacked transparency and,

3. At least $93,381 CFSM funds were spent for badly constructed and unimplemented projects, unused materials and equipment, and unaccounted expenditures.

4. Over $200,000 worth of expenditures appeared not in compliance with laws and regulations. The audit said that some items had been referred to OPA’s Compliance Investigation Division. The full 63 page inspection including allottee and administrative responses can be downloaded at http://www.fsmopa.fm. The press release listed examples of the waste of public funds although the press release’s examples weren’t nearly as specific as the actual content of the inspection. They included:

1. Buying sacks of rice, cases of chicken and turkey tail, ramen, coffee, sugar, etc.

2. Buying cigarettes from a store owned by a senator with justification that “these are the best tasting cigarettes.”

3. Financial assistance to help students pay their old school debts. However, during our fieldwork we collected evidence that students abandoned their classes, did not perform well, expelled, and etc. In essence, this funding is rewarding poor performers and not only competes but sets out to defeat the intent of the already established governments’ scholarship programs.

4. Growing crops in the backyard which is clearly for personal consumption.

5. Fishing projects supposedly to support export based on suspected receipts and for a fishing market that did not exist.

6. Vehicles bought and used more for personal needs than for any public purpose.

7. Stocking owned retail stores with rice and other inventories under the guise of exporting local produce to outof- state markets.

8. Building and renovating personal residences with public funds.

9. Funerals

10. Airline tickets

11. Old debts incurred for equipment parts that were discarded years ago because they were of the wrong sizes, not fit, and therefore were wasted in the garbage dump.

12. Yearly recurring expenses for municipalities and agencies that did not receive any budget scrutiny and lacked public hearings via which their strategic plans for the future should have been required in order to evaluate how these entities should operate as going-concern and their expected performance outputs to yield public benefits. Lacking any such plans, they don’t care because comes next year and the years thereafter and they will still receive government hand-outs, hence continuing to grow the attitude of government dependency.

We asked Mr. Hainrick if he had intentionally delayed the release of the audit for maximum effect on Election Day.

“Some people will think that the timing was influenced by the upcoming elections. No, that was not the case. It was a long review…If this was a normal audit with the auditee located in one place to exit with,” he wrote, referring to the process of exit interviews after an audit, “we could have probably issued the final report [at the] end of October or early November last year.” He wrote that the audit team had a “pre-exit draft” in October of 2014.

Hainrick wrote that during the first meeting with Congress in December, Speaker Halbert wanted all of the Senators to be present for the exit meeting and so the parties agreed to another meeting.

Speaker Halbert wrote on behalf of the FSM Congress that during that December meeting, the report seemed to focus on only a couple of the states of the FSM and that the members present then asked OPA to provide other examples covering the other states. He acknowledged that OPA provided examples from the other states in January and that he had disseminated the findings to Congressional delegations for all four states and gave them opportunity to respond to the findings as they wished.

Hainrick wrote in his response to our question about timing that a meeting with Congress was set for January 30 but that on January 29 OPA received a phone call from Congress to cancel the meeting. On January 30, Hainrick sent a letter to Speaker Halbert asking for a written response from Congress informing them that OPA would issue the final report with or without a response after February 6. He wrote that he received Speaker Halbert’s response on February 5. Over the weekend, OPA incorporated the responses into the audit and released it on the 9th.

In his response to the audit, Speaker Dohsis Halbert wrote that the understanding of Congress is that “an audit report is supposed to compare an actual performance against some kind of standard, usually the law. This report does not identify any kind of standard, but just mentions non-compliance. The question is non-compliance to what?”

“Absent such recommendations and given the confusion between appropriation and implementation,” the Speaker wrote, “the audit report looks uncomfortably like the political criticism that the Executive levies at Congress. From the Executive, such criticism is expected because that is the nature of our check-and-balance system. However, from an audit report it becomes less comprehensible,” he wrote and concluded with thanks to the auditor for the tremendous work they had undertaken.

“It is a constitutional requirement in this government that the Office of the National Public Auditor should be independent,” Hainrick wrote in his letter and the office’s press release on the audit. “The public should know, and I hereby advise, that neither the Congress nor the President has influenced the dependence or the objectivity of our work. The conclusions reached in our audits are strictly based on an unbiased and objective evaluation of the audit evidence, guided by a high degree of ethics in discharging our duties and responsibilities…Any claims otherwise should be shunned as without basis,” Hainrick wrote.

The Congress speaker called the logic “faulty” that caused the auditor to point out examples where the implementation of the projects “fell far short of the apparent intent of the appropriations [in order] to show that the appropriations were unsound.” He wrote that Congress does not deal with implementation of projects.”The allottee is the person legally responsible for implementation. To that extent any deficiency for implementation should be addressed to the allottees to respond to.”

Hainrick responded, “Both appropriation (in the form of project selection for CFSM funding) and implementation problems were separately identified in the report (under Finding 1) and ONPA did not make any logical inference from the implementation problems to show that the related appropriations were unsound.”

The audit says that the auditors requested for formal management responses from many of the allottees, two administrative officials, and from Chairman Isaac Figir and Speaker Halbert. It said that the Allottees were replaced in Chuuk’s Election Districts one through four so OPA was not able to discuss the audit findings or request management response from those Election Districts.

Several but not all of those people from who OPA had asked for responses did provide formal responses. The formal responses OPA received came from Francis Itimai, Secretary for the Department of Transportation, Communications, and Infrastructure; Evelyn Adolph, Director of FSM’s Office of Statistics, Budget and Economic Management, Overseas Development Assistance and Compact Management (SBOC); Kensley Ikosia, Secretary for the Department of Finance and Administration; Johnson S. Elimo, Governor of the State of Chuuk; James Rosokow, Project Coordinator for Northwest Island Development Authority-Chuuk’s Election District Five; Senator Isaac V. Figir, Chairman of the 18th Congress Standing Committee on Ways and Means, and Speaker Dohsis Halbert.

Their responses were made part of the 61 page audit which is available for free download at www.fsmopa.

Speaker Halbert’s Response

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