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THE INQUEST

Report on the audit of the management of the Ebola funds - May to October 2014

February 13, 2015 By Audit Service Sierra Leone

EXECUTIVE SUMMARY

WHY WE CONDUCTED THE AUDIT?

The audit was undertaken in order to ascertain whether allocations and donations received directly by the GoSL in the fight against the Ebola Virus Disease were utilised with due regard to economy and efficiency and that internal controls were observed accordingly.

Traditionally, the audit of any institution’s finances would normally take place when an activity for which funds have been provided have been completed and financial statements are submitted for auditing purpose. However, due to the public emergency the country is facing, following the Ebola outbreak, there is a sudden surge in the inflow of funds specifically for that purpose from the government and other generous individuals and institutions. In this regard, it is not unusual for Supreme Audit Institutions such as the Audit Service Sierra Leone (ASSL), to carry out audits as and when such funds are being disbursed. Generally, this is to ensure that funds are fully and solely directed to the cause at hand and where there are anomalies, these are promptly dealt with. As such, since the Ministry and the NERC have been in charge of the management of the Ebola Response Funds which are public funds, the ASSL conducted a real time audit.

SUMMARY OF SIGNIFICANT FINDINGS

There were inadequate controls over the disbursement of funds. For instance, payments which exceeded Le14 billion were made from the Emergency Health Response and Miscellaneous Accounts without any supporting documents to substantiate the utilisation of such funds. Further payments which exceeded Le11 billion were made from the same accounts without adequate supporting documents such as receipts, invoices, delivery notes, etc.

In the absence of a well coordinated sensitisation plan to raise awareness on Ebola and its prevention, the auditors observed an overwhelming number of requests from various individuals, Non-Governmental Organisations, parliamentarians etc, for sensitisation activities to be carried out in different parts of the country. The audit team found that payments were made to the Member of Parliament (MP) for constituency 93 in Goderich to carry out sensitisation activities even though an amount had earlier been paid to all seating members of parliament for similar activities. Furthermore, an amount of Le161 million was given as loan to Health For All Coalition (HFAC) for scaling up of the response to the Ebola fight. Of utmost concern was the fact that the total loaned amount was made in the name of Charles Mambu instead of HFAC, the organisation which he represents. In addition, the loan was not documented and the repayment terms were not agreed between the ministry and HFAC.

Withholding taxes of Le526 million and US$70,500 were not deducted and paid over to the National Revenue Authority from payments to various suppliers and contractors.

Several weaknesses were observed in the payment of incentives to healthcare workers. For instance, incentive payments to the sum of Le26 billion were made to various hospitals in the country for which returns were not produced to substantiate that such payments were made to healthcare workers.

Furthermore, a spot review of incentive payments at the Connaught Hospital revealed that the Republic of Sierra Leone Armed Forces and the Sierra Leone Police security personnel were included on the list of workers to receive hazard payment even though funds had been transferred to both forces to meet the deployment of their officers.

Procurement procedures were not followed for a number of contracts undertaken by the Ministry.

There was a complete disregard for the law on public procurement in an emergency situation. For instance, contracts were entered into without any clear guidelines on the specification of items required. Furthermore, contracts were badly drawn up as if to allow for additional costs to be incurred thereby preventing a transparent, competitive and cost effective procurement. For instance, the contract in respect of the purchase of 20 ambulances for a contract sum of US$1,050,000 was inappropriately entered into as specific areas relating to the inspection, transportation and delivery of the ambulances were excluded in the Special Conditions of the contract. Consequently, additional costs of $60,590 and Le39,330,000 were incurred in respect of air freight, daily subsistence allowance and airfare for the ambulances bought by the Ministry of Health and Sanitation. In addition, contracts worth over Le1 billion in respect of food for quarantined homes were awarded to various suppliers without regard to the provisions of the procurement regulation in relation to procurement in an emergency.

The Ministry [of Health] failed to produce any documentation for contract agreements that amounted to Le17 billion (including Le12.7 billion for the purchase of 50 vehicles and ambulances, Le2.7 billion for the construction of the Port Loko Treatment Centre).

A review of the donations register and bank statements of the Health Emergency Response Account (No. 003001118285030109) held at the Sierra Leone Commercial Bank (SLCB), revealed that a number of donations totaled at Le1,670,000,000 were retuned dishonoured.

MANAGEMENT OF THE FUNDS BY THE MINISTRY OF HEALTH AND SANITATION

– DISBURSEMENT

WITHDRAWALS FROM THE EBOLA EMERGENCY OPERATIONS AND MISCELLANEOUS ACCOUNTS WITHOUT ANY SUPPORTING DOCUMENTS

FINDING

Withdrawals which amounted to Le15,815,495,120 from the Health Emergency Response Account (A/C:003001014138030145) and Le453,571,500 from MoHS Miscellaneous Account (A/C:003001115131030175) held at the Sierra Leone Commercial Bank were without any supporting documents.

RISK

Monies that have been set aside for the purpose of combating the Ebola outbreak may have been used for unintended purposes, thereby slowing the government’s response to eradicate the virus.

RECOMMENDATION

The Director of Financial Resources (DFR) should ensure that payments from initiation to completion are supported by the relevant supporting documents; and these should be numbered and cross referenced so that in cases of missing documents, such documents can be easily traced.

The DFR should ensure that the relevant supporting documents are submitted within seven (7) days of the receipt of this report. Otherwise the whole amount should be disallowed and surcharged in accordance with Section 12(b) of the Audit Service Act of 2014.

MANAGEMENT’S RESPONSE

The recommendation of the Auditor General in respect of the disbursements of Le15,986,695,120 and Le453,571,500 has been strictly adhered to. However, the above disbursements were done in an emergency situation during an unexpected outbreak of the Ebola disease in Sierra Leone. Most of the funds were disbursed to the District Medical Officers. I attach herewith letter of request to all District Medical Officers and other doctors who received the above amounts for liquidations and for onward submission to the Auditor General’s Office for further verification.

AUDITOR’S VERIFICATION

Of the total amount of Le 15,815,495,120 withdrawn from the Health Emergency Response Account without any supporting documents or explanation, during verification supporting documents to the sum of Le 1,964,950,000 were submitted and verified. This means that the Ministry has failed to account for the sum of Le 14,304,116,620 (i.e. Le 13,850,545,120 from the Health Emergency Response Account and Le 453,571,500 from Miscellaneous Accounts).

The letter referred to above by the Permanent Secretary was neither attached to his response, nor was it produced during audit verification.

Therefore, the sum of Le 14,304,116,620 stands unaccounted for by the Ministry.

PAYMENTS FROM THE EBOLA EMERGENCY OPERATIONS AND MISCELLANEOUS ACCOUNTS WITHOUT ADEQUATE SUPPORTING DOCUMENTS

FINDING

Payments totalled Le7,513,682,150 and Le4,752,087,500 were made from the Health Emergency Response Account and Miscellaneous Accounts respectively, operated at the Sierra Leone Commercial Bank were without adequate supporting documents; such as retirement details, invoices, receipts etc. to substantiate the utilisation of those funds.

RISK

Monies that have been set aside for the purpose of combating the Ebola outbreak may have been used for unintended purposes, thereby slowing the government’s response to eradicate the virus.

RECOMMENDATION

The DFR should ensure that the relevant supporting documents are submitted within seven (7) days of the receipt of this report. Otherwise, the whole amount should be disallowed and surcharged in accordance with Section 12 (b) of the Audit Service Act of 2014.

MANAGEMENT’S RESPONSE

The recommendation of the Auditor General has been strictly adhered to. The relevant documentation…will be submitted for audit verifications.

AUDITOR’S VERIFICATION

During verifications, the Ministry provided supporting documents that were previously not made available, for the sum of Le573,753,000. This means that the Ministry failed to provide adequate supporting documents for expenditures from both accounts which totalled Le 11,692,016,650.

LOAN TO HEALTH FOR ALL COALITION (HFC)

FINDING

It was observed that amounts which totalled Le421,800,000 were disbursed from the Ministry’s miscellaneous account as loan to Health for All Coalition for the scaling up of the current Ebola outbreak with the understanding that it will be immediately repaid when funds are received from UNICEF. Further scrutiny of the payment documents revealed that six (6) cheques totalled Le360,900,000 of the total payment disbursed between 9th June to 10th July were made in the name of Charles Mambu instead of Health for All Coalition (HFAC).

In addition, documentary evidence showing repayment terms and conditions for the loan were neither submitted for audit inspection; nor were such terms and conditions stated in the request letters signed by Charles Mambu on behalf of Health for All Coalition. It was noted that up to the time of writing this report, the repayments of such loans had not been made.

RISK

Disbursing amounts meant for the fight against the epidemic in the name of an individual rather than the beneficiary organisation creates leeway for such payments to be converted to personal use; thereby leading to fraud.

In the absence of the relevant repayment terms and conditions, the Ministry might not be able to recover the total amount loaned to Health for All Coalition.

RECOMMENDATION

It is recommended that the Permanent Secretary (PS) and the DFR should give adequate explanation for this discrepancy within seven (7) days of the receipt of this report. The PS should also ensure that the ministry desists from such practices and that all further payments be addressed in the name of the beneficiary organisations and not individuals.

It is also recommended that the PS submit to the Audit Service within seven (7) days an approved repayment terms and conditions for the recovery of the loan given to the Health for All Coalition for audit inspection; and also implement the necessary measures to recover the funds within the shortest possible time.

MANAGEMENT’S RESPONSE

The total amount of Le421,800,000.00 was not the amount disbursed as loan to Health for all Coalition. The amount was only Le70,000,000 on the instruction of the former Minister of Health and Sanitation on the Information that it will be refunded by UNICEF. The balance of Le351,800,000 was disbursed for an emergency sensitisation programme nationwide. The recommendation of the Auditor General to desist from such practices and that all further payments be addressed in the name of the beneficiary has been strictly adhered to. In addition, documentary evidence of such amount to Charles Mambu which amounted to Le360,900,000 in respect of Health for all Coalition will be produced for audit inspection.

AUDITOR’S VERIFICATION

During the course of the verification exercise, we confirmed that the total amount disbursed was Le360,900,000 and according to the payment vouchers, they were all paid in the name of Charles Mambu instead of HFAC.

We further confirmed that Le200,000,000 was for Ebola sensitization campaigns and the balance of Le 160,900,000 was a loan to HFAC. The Ministry provided retirement details from HFAC for the full amount of Le360,900,000 including the loan amount.

We therefore note that:

1. the Ministry has failed to provide adequate explanation of the reason for the payment to Charles Mambu and not directly to HFAC;

2. the Ministry has failed to provide the details of the loan agreement with HFAC; and

3. there was no evidence provided to us, to confirm that the loan amount of Le160,900,000 was repaid by HFAC to the Ministry.

DUPLICATED EBOLA COMMUNITY SENSITISATION PAYMENT TO THE MEMBER OF PARLIAMENT FOR CONSTITUENCY 93

FINDING

Given that approximately Le63 million was earlier paid within the current year to each Member of Parliament for constituency sensitisation on the Ebola outbreak, we noted that an additional amount of Le110,640,000 was paid to the Honourable Member of Parliament for Constituency 93 on 22nd August 2014, in respect of daily subsistence allowance (DSA) and fuel to facilitate the same community sensitisation in the Goderich area. It was further observed that retirement details for the said amount were not submitted for audit inspection.

RISK

Duplication of effort for the same activity within the same constituency could create the avenue for the misuse of much needed funds. The additional amount could have been utilised to combat the Ebola epidemic in other affected areas.

This could also create the avenue for individuals to exploit the limited resources meant for the fight against the epidemic, thereby hindering the early response to the outbreak.

RECOMMENDATION

It is recommended that the PS and the DFR should provide adequate explanation for honouring this request within seven (7) days of the receipt of this report. In addition, the relevant returns including the community sensitisation report on the outcome of the activity for the said amount should be submitted by the recipient for audit inspection within seven (7) days of the receipt of this report. Failing which, the total amount should be refunded to the Emergency Operations Account and evidence of payment forwarded to the Audit Service for verification.

MANAGEMENT’S RESPONSE

Le110,640,000 was paid to the Member of Parliament of Constituency 93 on 22nd August 2014 on the instructions of the former Minister of Health and Sanitation during the emergency Ebola outbreak. However, the above amount was paid before the pronouncement of government to give approximately Le63 million to each Member of Parliament. In addition, the relevant documentary evidence for Le110,460,000 have been requested from the Member of Parliament of Constituency 93 and will be submitted for audit inspection.

AUDITOR’S VERIFICATION

During the course of the verification exercise, the audit team confirmed that the payment of Le110,460,000 by the Ministry to the Honorable Member was indeed on the 22nd of August 2014. However, the team further confirmed that the payment of Constituency Development Fund which was later converted for Ebola sensitisation, to Honorable Members by Parliament was on the 18th August 2014.

We therefore note that the Ministry’s payment was made three days after the payment by Parliament for the same activity. This indicates that due diligence was not conducted by the Ministry before payment was effected. In addition, the relevant retirement details were not made available for verification and therefore the auditors could not eliminate the possibility of a “double dip” by the Honorable Member. In conclusion, this matter is unresolved.

PAYMENTS FOR SERVICES THROUGH THE ICT DIRECTOR OF THE MINISTRY, RATHER THAN THE SERVICE PROVIDERS

FINDING

Amounts which totalled Le171,360,000 were paid directly to the ICT Director, for radio and television programmes for the Ebola epidemic rather than directly to the various service providers.

RISK

Disbursing amounts in the name of an individual rather than the beneficiary organisation creates the leeway for such payments to be converted into personal use.

RECOMMENDATION

It is recommended that the PS and DFR should give adequate explanation for this occurrence; and that the ministry desists from such practices. In future, the DFR should ensure that payments be made in the names of the beneficiary organisations and not individuals.

MANAGEMENT’S RESPONSE

The recommendation of the Auditor General has been strictly adhered to. However, the ICT Director requested for all the radio programmes and it was his responsibility in an emergency period to make sure that the advertisement on radio was adequately broadcast. Furthermore, the ministry accepted to desist from such practices in future.

AUDITOR’S VERIFICATION

Although the Director was responsible for managing the radio programmes, it does not mean that the various service providers could not have been paid directly. We further observed that the Director failed to provide retirement details, therefore the issues is un resolved.

WITHHOLDING TAXES NEITHER DEDUCTED NOR PAID OVER TO THE NATIONAL REVENUE AUTHORITY (NRA)

FINDING

Inconsistencies were observed for a number of procurement activities agreed on between the MoHS and the suppliers; with some not having any provision for the deduction and remittance of the 5% withholding tax to the NRA. As such the Ministry failed in its obligation to withhold the 5% tax estimated at Le525,721,555.36 and US$70,500 respectively.

RISK

This may lead to the loss of public funds.

RECOMMENDATION

The DFR should ensure that all payments above Le500,000 must attract withholding tax deduction at 5%; and these should be paid over to NRA.

The DFR should also ensure that the amounts in question are recovered from the various suppliers within seven (7) days of receipt of this report. Failing which the PS should refund the amounts in question and evidence of payment forwarded to the Audit Service for verification.

MANAGEMENT’S RESPONSE

Audit recommendations are taken in good faith and steps will be put in place to improve on the process of deducting 5% withholding taxes and pay immediately to National Revenue Authority (NRA). However, letters have been written to all concerned and will be produced for audit inspection.

AUDITOR’S VERIFICATION

Samples of letters written to the various suppliers and contractors by the Permanent Secretary were produced for audit verification. However, recoveries of the amounts in question have still not been done. Therefore, the matter should be referred to the National Revenue Authority for necessary action and the Auditor General be advised of any action taken.

INCENTIVE PAYMENTS TO HEALTH CARE VOLUNTEERS /CASUAL WORKERS

FINDING

Payments which amounted to Le25,500,900,000.00 were made between the period to 31st October 2014 in respect of “hazard pay” to healthcare workers in various hospitals nationwide for which supporting documents such as claim sheets and paid-up vouchers were not submitted for audit inspection.

RISK

Monies may have been used for purposes not related to combating the Ebola epidemic, thereby leading to a delay in eradicating the virus quickly and stemming possible loss of lives.

RECOMMENDATION

The DFR and concerned medical superintendents should ensure that the relevant supporting documents are submitted within seven (7) days of the receipt of this report. Otherwise, the whole amount should be refunded and evidence of payment into the Emergency Operations account forwarded to the Audit Service for verification.

MANAGEMENT’S RESPONSE

The recommendation of the Auditor General has been strictly adhered to. However, the Ministry of Health and Sanitation had written to all Medical Superintendents and the District Medical Officers to submit the relevant supporting documents for audit inspection. The documents will be ready for further verification.

AUDITOR’S VERIFICATION

The letter referred to above by the Permanent Secretary was neither attached to his response, nor was it produced during audit verification.

During audit verification, the Ministry provided supporting documents for the sum of Le4,618,900,000. However, supporting documents for the balance of Le20,882,000,000 were not produced for audit verification. Therefore this matter is resolved.

OBSERVATIONS ON FUNDS TRANSFERRED TO FOUR (4) EBOLA HOLDING CENTRES, BOMBALI DISTRICT

– OVERSTATEMENT OF LE216,800,000 IN RESPECT OF INCENTIVE PAYMENTS TO HEALTHCARE WORKERS

FINDING

Review of the expenditure returns including the claims sheets for an amount of Le571,200,000 transferred revealed the following observations:

1. The serial numbering of the names of healthcare workers provided by the Makeni Government Hospital was distorted with gaps in the numbering of the entitled beneficiaries. The serial numbering jumped from 109 to 200 (91 places/counts), and also from 209 to 300 (91 places/counts). It was observed that these gaps were repeated throughout the list at various intervals and by various counts.

2. The anomaly in the list submitted for payments being overstated by 271 names amounted to Le216,800,000.

RISK

There is a risk of possible misappropriation of these funds.

RECOMMENDATION

The Medical Superintendent (MS) should also ensure that the relevant supporting documents are submitted within seven (7) days of the receipt of this report. Otherwise, the Le216,800,000 should be refunded and evidence of payment into the ministry’s Emergency Operations account forwarded to the Audit Service for verification.

MANAGEMENT’S RESPONSE

The Ministry of Health and Sanitation had earlier written to the Bombali District Medical Superintendent requesting for an adequate explanation on the above issue. The Medical Superintendent replied with relevant supporting documents which will be produced for audit inspection.

AUDITOR’S VERIFICATION

The Ministry failed to produce the letter referred to above together with the relevant supporting documents. The matter should be referred to the appropriate authority.

CONNAUGHT HOSPITAL

– PAYMENT OF INCENTIVES TO UNAUTHORISED HEALTHCARE WORKERS

FINDING

Review of the expenditure returns provided by Connaught Hospital revealed the following observations on funds transferred:

1. Casual and volunteer workers received incentives of Le144,800,000 without contract or temporary appointment letters. See Appendix “A8” for details.

2. Le61,200,000 was paid as incentives to hospital staff who were without approved PIN codes.

3. Unauthorised and unapproved payments that amounted to Le41,800,000 were made to security guards of a private security company, as incentives.

4. Incentive payments made without recipients’ signatures acknowledging receipt of such funds amounted to Le3,200,000.

RISK

Monies may have been used for purposes not related to combating the Ebola epidemic, thereby leading to a delay in eradicating the virus quickly and stemming of possible loss of lives.

RECOMMENDATION

The Hospital Care Manager should ensure that the relevant supporting documents are submitted within seven (7) days of the receipt of this report. Otherwise, the whole amount of Le252,200,000 should be refunded and evidence of payment into the Ministry’s Emergency Operations account forwarded to the Audit Service for verification.

MANAGEMENT’S RESPONSE

The above issues occurred during an emergency outbreak of Ebola Virus Disease (EVD) in Sierra Leone. Casual and volunteer workers were recruited during the emergency period. However, the Hospital Care Manager will submit the relevant supporting documents for audit verifications.

AUDITOR’S VERIFICATION

The Ministry/Hospital Care Manager failed to produce the relevant supporting documents. The matter should be referred to the appropriate authority.

ROKUPA GOVERNMENT HOSPITAL

– UNCLAIMED INCENTIVE PAYMENT OF LE1,800,000 IN RESPECT OF HEALTHCARE WORKERS

Review of the expenditure returns revealed the following observation on funds transferred:

An amount of Le3,400,000 rather than Le5,200,000 in respect of unclaimed incentives were returned or paid into the Health Emergency Response Account at Sierra Leone Commercial Bank as per the bank paying-in-slip. It was observed that the difference of Le1,800,00.00 was not refunded.

RISK

There is a risk of possible misappropriation of these funds.

RECOMMENDATION

The MS should ensure that the outstanding amount of Le1,800,000 is paid back into the Health Emergency Response Account within seven (7) days of the receipt of this report; and forward evidence of payment to the Audit Service Sierra Leone for verification. Otherwise the appropriate authority would be informed.

MANAGEMENT’S RESPONSE

The Medical Superintendent is going to be contacted immediately for the outstanding payment paid back into Health Emergency Account and receipt or evidence of payment be produced for audit verification.

AUDITOR’S VERIFICATION

The Ministry failed to provide evidence of the refund; therefore this matter should be referred to the appropriate authority.