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 Post subject: Shocking report on post tsunami reconstruction
 Post Posted: Sat Sep 24, 2005 12:18 am 
Quote:
AG exposes huge misdeeds

Only 13.5% of total foreign funds utilised for reconstruction of key sectors

By Gihan de Chickera and Yohan Perera
@ DM / Saturday, September 24, 2005


The Auditor General’s Department in a shocking report on post tsunami reconstruction and rehabilitation, has exposed massive irregularities and misdeeds in the management of foreign funds as well as corruption and inconsistencies in the government’s handling of tsunami aid.

The interim report for losses and damages by the tsunami disaster between December 26 and June 30 was compiled by the Auditor General and presented to Parliament this week. It highlights among other things immense deficiencies in both local and foreign fund management, irregular clearance of tsunami aid from the Airport and Harbour, disappearances in aid material and flaws in housing construction. Information for the report was gathered from Government Ministries, Departments, Public Corporations, Provincial Councils and Local Authorities

The report revealed that only 13.5 percent of the total foreign funds had been used for the reconstruction of key sectors affected by the disaster. Of the total agreed US dollars 1168.8 million in foreign funding, only 158.34 million US dollars has been spent for reconstruction in fisheries (8.2%), water and sanitation (12.3%), housing and urban development (11.2%), life support (24.5%), health (13.7%) and education (12.8%), the report said.

Locally collected funds totalled Rs 4,277,999,449 by August 17 but only Rs 1,576,318,448 or 37% of this money had been spent the report said. The Government has not maintained records on collections made by individuals and institutions and therefore the money has not been utilized for a national plan.

The report also noted that most of the money was being retained in General Deposit Accounts without being used for the intended purposes. Irregular collection of funds by Ministries, Departments and Public Corporations was also noted.

In addition to such financial irregularities, the reports also point out that no action has yet been taken to establish the National Disaster Management Council and the Disaster Management Centre.

Regarding NGO activities, the report states that even though 384 NGOs had agreed to provide funds worth US dollars 1,321 million for rebuilding work, there were instances where work had not started because MoUs had not been signed. Even in cases where MoUs had been signed, certain organizations had not started work the report stressed.

Goods worth Rs 1,010,950 issued to the Kalmunai Divisional Secretariat had disappeared, and 65 electric generators, 78 water tanks, 88 tents and a water motor issued to the same Divisional Secretariat had not been confirmed by the parties concerned, the report said. Also Rs 1,350,000 worth of dry rations allowance had been given to individuals who are not entitled to such allowance in a Divisional Secretariat in the Ampara District.

Goods received at the Bandaranaike International Airport from the date of the tsunami up to 28 December 2004 had been issued without the intervention of the Customs Department and up-to-date records of goods cleared had not been maintained by the Customs. Clearance of goods, free of duty by NGOs and various individuals, was done without supervision by the District Secretaries or the Social Services Department.

686 containers received by NGOs had been abandoned at the Colombo Port the report revealed. Further, the non availability of storage facilities at the Social Services Department and the Ministry of Relief, Rehabilitation and Reconstruction had caused delays in the clearances.

506 vehicles had been imported with duty concessions for a period of 3 months for tsunami work. Nevertheless that period had been extended up to 2008 after the expiry of that period, contrary to the provisions in the Customs Ordinance and without passing a resolution in Parliament the report stated. Also the General Treasury did not have the particulars of institutions or individuals to whom the 506 vehicles had been released, even though 207 were released to Government institutions, 290 to NGOs and 9 to other institutions.

In housing construction, only 2 percent of houses or 1055 houses of a total 48,974 damaged houses had been completed by 4 August 2005. MoUs had been signed only for 34,558 units representing 71 percent of the total requirement. Also payments for house repairs had been made without identifying the value of the damage, thus resulting in heavy expenditure for the Government. For example a sum of Rs 250,000 had been paid for the total destruction of a temporary house valued at Rs 10,000 the report stated. There were also many other weaknesses in the supply of financial assistance for damaged houses cited in the report.

The payment of the Rs 5000 allowance for daily needs of families was severely affected by the disaster because the basis of which it was made had undergone several changes. The report showed that from January to May 2005 six different circulars were released for the payment of allowance of Rs 5000.


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 Post subject: Interim Report of the Auditor General - Tsunami
 Post Posted: Mon Sep 26, 2005 10:23 pm 
Quote:
Interim Report of the Auditor General on the Rehabilitation of the losses and Damages caused to Sri Lanka by the Tsunami Disaster on 26 December 2004
carried out up to 30 June 2005

------------------------------------------

The audit of relief work done by various Government institution such as Ministries, Departments, Public Corporations, Provincial Councils , Local Authorities etc. in connection with the Tsunami Disaster, during the period 26 December 2004 to 30 June 2005 was carried out under my direction in pursuance of provisions in Article 154 of the Constitution of the Democratic Socialist Republic of Sri Lanka. The interim report containing the observations made during the course of audit examination during the period from 26 December 2004 up to 30 June 2005 is presented in pursuance of provisions in Article 154(6) of the Constitution.

2. Scope of Audit

Comments and findings in this report are based on a review of information obtained for purposes of audit and information in the accounting records and substantive tests of samples of transactions. The scope and extent of such reviews and tests were such as to enable as wide an audit coverage as possible within the limitations of staff, other resources and time available to me. The scope of audit included Disaster Prepreparedness prior to the Tsunami to mitigate the risks, Disaster Recovery Process, Foreign and Local Aid received through the Government institutions engaged in the process of relief and Rehabilitation, utilization of funds and the systems and controls of such Government institutions relating thereto.

2:1 Limitation of Scope

The scope of audit was subject to limitations due to the following matters relating to the utilization of funds and assistance.

- The absence of systems for recording assistance in the form of cash and goods/materials for providing relief and rehabilitation of people affected by the Tsunami.
- Relief provided and rehabilitation done by Non-Governmental Organizations not being covered by my scope.
- Difficulty in identification of concurrent relief measures provided jointly by the Government sector and the private sector and the duplicated /multiplied state of relief provided.
- Lack of a national level register/record to use as a base document for the supply of relief and assistance in the event of a national disaster due to the abolition of the registration of the Chief Householder System that prevailed in the past. This had rendered difficulties to the providers of relief to identify families and individuals and construct houses as well as carrying out test checks during the course of audit.


2:2 Limitation on Procuring Information for Audit

Limitations in respect of procuring information are given below.

- Information called for by my letter No. EL/S-12/Tsunami/B-07 dated 30 May 2005 in respect of funds relating to the Tsunami Disaster were not made available by the Central Bank of Sri Lanka.

- Formats BC relating to the registration of electorates lists for the year 2005 called for from the District Secretary, Ampara by letter dated 18 July 2005 were not made available.

2:3 Weaknesses in the Prepreparedness Plan to Avert or Mitigate Disaster

It was observed that the following weaknesses had been the reasons for the enormity of the disaster.

- Lack of past experience on a disaster of such massive scale.

- Inaction of the institutions responsible for forecasting of earthquakes, tidal waves, landslides, floods and such other natural disasters and warning the public of such disasters.

- Lack of a National Programme in operation for mitigating the losses and damages.
- This responsibility lies specially with the following Government institutions.

• Geological Survey and Mines Bureau
• Department of Meteorology
• Research and Observation Division of the University of Peradeniya.
• Department of Coast Conservation
• Mass Media Network
• Defense Forces.

There was no evidence to proof that any contribution made by these institutions towards the mitigation of the disaster.


2:4 Weaknesses in the Operations for Rescue of Persons affected by Disaster

The following major weaknesses were observed in connection with the operations for the rescue of persons affected by the disaster.

• Lack of trained contingent and specially the medical equipment and supplies for use in the event of disaster.

• Failure to set up groups or organizations to mitigate loss of life and damage to properties in the event of Island-wide or large scale disasters.

• Action to be taken on such occasions had not been communicated to the public.

• The relevant authorities had not been made aware of the action to be taken on such occasions.

• Lack of a proper delegation of authorities for taking on the spot decisions.

• Waste and corruption resulting from the multiplicity of decisions taken by various parties.

• Failure to communicate the decisions of the Government to the public on time.

• Reports on weaknesses of the Mass Media Network.

2:5 Summary of Damages

A few items of the summarized significant information on the damages caused by the Tsunami Disaster as appeared in the reports of the Task Force for Relief as at 01 May 2005 are given below.

Nature of Damage Number

Loss of Life 31,229
Wounded 23,189
Missing 4,093
Displaced (Persons) 499,783
Displaced Families 141,022
Families Affected 266,499
Children with Mother and Father Missing 1,071
Children with Mother or Father Missing 3,739
Partially destroyed Houses 43,361
Completely destroyed Houses 63,447
Damaged Hotels 144
Damaged Guest Houses 248
Damaged Small Scale Businesses 210
Boats and Crafts Destroyed 15,300
Destroyed Temples 98
Other Religious Places Destroyed 298
Totally Destroyed Schools 73
Partially Damaged Schools 109
Completely Destroyed Hospitals and Maternity Homes 09
Partially Damaged Hospitals 18
Dispensaries and Health Centers Destroyed 29
Partially Damaged Dispensaries and Health Centers 41

2:6 Establishment of the National Council for Disaster Management and the Disaster Management Centre.

Action had not been taken to enforce the Disaster Management of Sri Lanka Act, No. 13 of 2005 and to establish the National Council for Disaster Management and the Disaster Management Centre.

3. Distribution of Relief

3:1 Deficiencies in the Clearance of Goods

The following matters were observed during the course of test checks of the clearance of goods received as relief assistance by the Airport and the Port.

(a) Clearance of goods from Airport

- Goods received at the Katunayake International Airport from the date of Tsunami up to 28 December 2004 had been issued without the intervention of the Department of Customs. (Category of goods, number of units, etc.)

- According to a test check carried out on 04 June 2005, twenty five unclear motor vehicles had been retained in 3 storage institutions.

- Delays in clearance had resulted due to the relevant persons not presenting themselves for clearing the goods and the removal of duty concessions given by the Government.

- Instances of weaknesses such as non-recording of air freight goods, failure to issue numbers for clearance of such goods, same number issued for several consignments etc. were observed. Up to date records of goods cleared had not been maintained by the customs.

- Even though goods cleared free of duty by the Non-Governmental Organizations and various individuals should have been distributed under the supervision of District Secretaries and the Department of Social Services, there was no evidence in support of such distribution.




(b) Clearance of goods from Port

- 4,018 container loads of aid materials had been received during the period 28 December 2004 to 30 April 2005 and out of this only 2,864 containers had been cleared up to 30 April 2005.

- In view of the waiver of duty concessions by letter No.FP/T/2/3/26/6 dated 03 March 2005 of the Secretary to the Treasury, 686 containers received by Non-Governmental Organizations had been abandoned without being cleared.

- Non-availability of storage facilities at the Department of Social Services and the Ministry of Relief Rehabilitation and Reconciliation had caused delays in the clearance of goods.

- 506 motor vehicles had been imported for Tsunami Relief Works under the duty concessions for a period of 3 months. Nevertheless, that period had been extended up to the year 2008 after the expiry of that period contrary to the provisions in the Customs Ordinance and without passing a resolution in Parliament.

- It was revealed in audit that 207, 290 and 9 of those motor vehicles had been released to Government Institutions, Non-Governmental Organizations and other institutions respectively. Nevertheless, the General Treasury did not have the particulars of institutions or individuals who are using these motor vehicles.

3:2 Weaknesses in the Management of Receipt of Aid Materials

Instances of blatant violation of provisions in the Circular No. MSS 06 Tsunami 2004 of 29 December 2004 of the Secretary to the Ministry of Women’s Empowerment and Social Welfare by the Divisional Secretaries were observed. A few of the instances observed are given below.

- Disappearance of goods valued at Rs.1,010,950 issued to the Divisional Secretary, Kalmune.
- 65 electric generators, 78 water tanks, 88 tents and a water motor issued to the Divisional Secretary Kalmune had not been confirmed by the parties concerned.

4. Funds Management

Considerably large amounts of money had been received by the Government and other parties in the form of local and foreign loans, aid and donations for the recovery of losses caused by the Tsunami disaster.


4:1 Collection of Emergency Funds

According to a media announcement made by the Central Bank of Sri Lanka, a sum of Rs.11,222.1 million had been received as at 31 March 2005 by the Government, Non-Governmental Organizations and other sectors.

Rs. (Millions)

Aid received by the Government, 1,403.1
Non-Governmental Organizations and
other sectors 9,819.0
-----------
11,222.1
======

4:2 Foreign Aid

US$ (Millions)

Foreign Aids pledged 3,648

Commitments

- Foreign Aid – Loans 529
- Foreign Aid – Donations 1,161

A summary of the foreign aid agreed to be provided for six major reconstruction sectors completed and the foreign aid expenditure incurred there from as at 31 July 2005 is given below.

Sector Agreed amount Expenditure Expenditure of Foreign Aid incurred as a percentage
------- ---------------- --------------- ---------------
US$ (Millions) US$ (Millions)

Fisheries 120.50 9.90 8.2
Water and Sanitation 161.31 19.91 12.3
Housing and Urban Development 311.52 35.00 11.2
Life Support 151.10 37.00 24.5
Health 247.00 33.84 13.7
Education 177.37 22.69 12.8
----------- --------- ------
1,168.80 158.34 13.5
====== ===== ===




4:3 Local Aid

The following observations are made.

_ According to a test check made in respect of money collected locally and the utilization of such money. Up to 17 August 2005 out of collections amounting to Rs.4,277,999,449 made by 20 institutions only a sum of Rs.1,576,318,448 or 37 per cent had been spent. It was further observed that the sum of money remaining with 18 of those institutions amounted to Rs.2,692,493,216.

- Circulars had been issued by the Presidential Secretariat and the General Treasury on the local collection of funds while various Government and Non-Governmental Organizations had given publicity through the media. Action had not been taken to maintain records on such collections made by individuals and institutions with a view to utilizing those funds according to a National Plan with proper co-ordination with the intervention of the Government.

- Test checks revealed instances such as spending only a small portion of the funds collected locally for the purposes, retaining collections in General Deposit Accounts without being used for the intended purposes, etc. Out of the sum of Rs.49 million collected by two institutions Rs.37 million had been invested in fixed deposits.

- Irregular collection of funds by the Ministries, Departments, Public Corporations, etc. retention of collections and incurring expenditure.


- Even though 384 Non-Governmental Organizations registered with the Department of Social Services had agreed to provide funds amounting to US $ 1,321.2 million for rebuilding of assets destroyed by the Tsunami, instances of failure to sign Memorandum of Understanding up to date were observed. Work of certain Organizations which had signed the Memorandum of Understanding had not been commenced. It was observed in audit that it was not possible to achieve the planned targets due to legal actions taken against the Organizations.

5. Payment of Allowances

5:1 Weaknesses observed in the Supply of Dry Rations

According to the letter of the Commissioner of Essential Services dated 11 January 2005 the following quantities should be issued per individual per week under the supply of relief to individuals affected by the tsunami disaster.

Grammes

Rice/ Wheat Flour 2,800
Dhal 420
Sugar 140
Cooking Oil 140
Wheat and Soya Mixture 140

The following weaknesses were observed in the supply of the above relief.

• Wheat flour soya mixture had not been supplied as it was not included in the Ration Card.
• Supply of equal qualities of rice and wheat flour without allowing for selection according to preference, had resulted in the sale of wheat flour by those who do not use it.
• Collection of the stamp without issuing the total quantity in one occasion and non-supply of the balance later.
• An audit test check of the payment of ration allowance revealed that ration allowance totaling Rs.1,350,000 had been paid to individuals not entitled to such allowance in a Divisional Secretariat area in the Ampara District.

5:2 Weaknesses in the Supply of Cooked Meals

Expenditure on the supply of cooked meals had been incurred in contravention of the instructions in Circular No.2003/1 dated 31 December 2003 of the Director of Social Services on providing relief to persons affected by wide spread disasters and casual disasters. A few of such instances are given below.

- Payments aggregating Rs.819,510 to the Islamabad Tsunami Victims Camp in the area of the Kalmune Divisional Secretariat in contravention of circular instructions.
- Payments aggregating Rs.2,809,725 to the Al Ameen Community Development Centre in the area of the Seinthamarathu Divisional Secretariat for the supply of meals in contravention of circular instructions and an erroneous payment of Rs.2,470,885 to that Centre even though it had not supplied meals.

- Even though no damages had been caused to the people in the Mannar District, a sum of Rs.1,341,524 had been spent for the supply of cooked meals.

5:3 Weaknesses in the Construction of Houses

According to the reports made available, weaknesses observed in connection with the construction of houses are given below.

- According to the reports of the Tsunami Housing Reconstruction Unit, 48,974 houses had been damaged by the Tsunami whereas only 1,055 houses representing 2 per cent of the total required had been completed up to 04 August 2005. Similarly, Memorandum of Understanding for construction of houses had been signed only in respect of 34,558 units representing 71 per cent of the total requirement.

- In the case of rebuilding of houses by the recipient families, a sum of Rs.250,000 had been paid where the cost of repairs exceeded 40 per cent of the cost of rebuilding and Rs.100,000 in the cases where the cost of repairs were less than 40 per cent of the cost of rebuilding. The following deficiencies were observed in this connection.

• Payment of an excessive amount even for minor damages due to the payments being made without assessing the cost of restoring the houses to normal condition. (for example, Rs.100,000 had been paid for minor damages of Rs.10,000)
• Payments made without identifying the value of the damaged houses, thus resulting in heavy expenditure by the Government (For example, a sum of Rs.250,000 had been paid for the total destruction of a temporary house valued at Rs.10,000)

5:4 Weaknesses in the Supply of Financial Assistance for Damaged Houses

Even though Circular No. NDB/TH/01 dated 14 July 2005 of the Ministry of Finance and Planning had spelt out the procedure to be followed in making payments for damaged houses, actions contrary to such procedure were observed. A few of such instances are given below.

- A sum of Rs.500,000 had been paid in the area of one of the Kalmune Divisional Secretariat without establishing the eligibility.

- Weaknesses in the payment of financial assistance in the area of the Divisional Secretariat, Tangalle.

• A sum of Rs.690,000 at the rate of Rs.30,000 per house had been paid for 23 houses not approved by the Board for the Assessment of Damages.
• According to the above circular, only a sum of Rs.50,000 can be paid as the first installment. Nevertheless, contrary to such instructions, Rs.2,000,000 had been paid for 25 houses at the rate of Rs.80,000 per house.
• A sum of Rs.2,200,000 had been paid for 44 undamaged houses in the Medaketiya Grama Seva Division by assessing them as partially damaged for Rs.4,400,000.
• Approval of the payment of Rs.1,900,000 for 19 houses which had not been damaged to an extent even to be eligible to receive relief for partial damage.

• Approval of 7 houses eligible for partial damages even though eligible for full damage.

• Approval granted for the payment of a sum of Rs.1,250,000 out of Government financial assistance for 5 houses completely constructed by Non-Governmental Organizations and payment of a part of such amount.

• Allocation of 26 houses by Non-Governmental Organizations to 26 families who had not suffered any damages.


- Out of the 4,528 damaged houses in the area of the Hikkaduwa Divisional Secretariat only 1,660 houses representing 25 per cent of the total had been approved for payment up to 10 June 2005.


5:5. Weaknesses in the payment of Allowance of Rs.5,000 for the Daily Needs of the Families affected by the Tidal Wave
--------------------------------------------------------------------------------------

The following deficiencies were observed during the course of audit test checks of the payment of allowance of Rs.5,000.

- Payments had been made on different basis due to the confusion of circular instructions, thus had resulted incurring heavy expenditure by the Government.


- Circular instructions had been subjected to changes from time to time during a very short period due to the absence of a clear policy. A few of such instances are given below.

Circular Number Date of Issue Issuing Authority

MF/ST 17 January 2005 Secretary, Ministry of Finance
MF/ST 28 January 2005 Secretary to the Treasury
MF/ST 31 January 2003 -do-
NBD/SS-4 02 February 2005 Director General of National
MF/ST 09 May 2005 Secretary to the Treasury


- Divisional Secretary , Hikkaduwa had irregularly paid a sum of Rs.4,795,000 to 490 individuals.

- Even though the actual number of directly affected families in the area of the Divisional Secretariat, Negombo was 599, a sum of Rs.76,390,000 had been paid to 15,843 families. Thus due to the defects in the Circular instructions a sum of Rs.73,395,000 had been overpaid to 15,244 families who had not been identified as directly affected.

- A sum of Rs.1,140,000 had been irregularly paid to individuals who are not entitled to obtain relief and also not residents in the area of Kalmune Divisional Secretariat Muslim Division, in the Ampara District.

- A sum of Rs.410,000 had been irregularly paid to individuals who are not entitled to obtain relief and also not resident in the Kalmune Divisional Secretariat Tamil Division in the Ampara District.

- A sum of Rs.6,420,000 had been irregularly paid to 430 families in 29 Grama Seva Divisions in the area of Tangalle Divisional Secretariat without establishing their eligibility.

6. Deficiencies in the Deployment of Motor Vehicles for Tsunami Activities

The following deficiencies were observed during the course of test checks of hire of motor vehicles for Tsunami activities and the deployment of such motor vehicles.

- The Divisional Secretariat, Hikkaduwa had irregularly taken 18 motor vehicles on hire without the approval of the District Secretary and had paid a sum of Rs.1,451,148 on 30 May 2005.

- A few of the irregular activities carried out by the Divisional Secretariat, Kalamune are given below.

• A sum of Rs.1,169,650 had been paid only for the transport of motor vehicles from an institution in Wattala for Tsunami activities in Kalmune, to and from Kalamune, without utilizing them for any work. A sum of Rs.181,350 had been paid for a trip purported to have been done from Kalamune to Colombo.

• A sum of Rs.214,600 had been paid on the certification of the Woks Superintendent Kalmune, for motor vehicles not utilized for any works.

• Payment of a sum of Rs.900,387 over and above the approved amount to suppliers.

• A sum of Rs.876,940 had been paid for motor not utilized for Tsunami works.

• Reimbursement of fuel expenses amounting to Rs.602,515 had not been obtained from the suppliers.

• Advances totaling Rs.1,020,187 granted to officers for maintenance of motor vehicles had not been settled even up to 30 June 2005.



7. Systems and Controls

Special attention is needed in respect of the following areas of control.

* Planning
* Inter-Sector Co-ordination Methodology
* Identification of Implementing Agencies and Delegation
* Accounting and Reporting
* Information Systems
* Management Information Systems
* Delegation of Authorities and Functions
* Budgetary Control
* Follow up Action

(S.C. Mayadunne)
Auditor General


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