THE finance ministry is mulling over whether surcharge action is to be taken against responsible officers, in the loss of $8.6 million in overpayments by the Firearm Licensing Authority (FLA), to five former employees between May and October 2017.

This is among surcharge-related deficiencies/loss totalling over $150 million, which the Auditor General Department’s Surcharge Review Committee (SRC) considered between January and December 2021, and reported to the financial secretary, with recommendations to apply surcharge to recover losses.

The matters are outlined in the department’s 2021 annual report, which details its performance between December 2020 to November 2021, and the state of the Government’s accounts up to March 31, 2021.

A number of the matters referred to the finance ministry for surcharge consideration have been either resolved, or are in “keep in review” status, including payments to the Joint Committee for Tertiary Education (JCTE) by the education ministry totalling $124 million, the FLA case, and the Overseas Examination Commission ($1.6 million).

The report noted that the FLA terminated four employees and paid them notice pay more than the amounts ordinarily due, and that the former employees were paid gratuity, but there was no evidence that a performance evaluation was conducted to justify the amounts paid as required by the Government’s fixed-term contract guidelines.

“FLA also paid another former employee notice pay above the contracted amount and gratuity without any evidence of a performance evaluation after the officer resigned in October 2017, giving three months’ notice. However, the FLA accepted the officer’s resignation with immediate effect and paid him three months’ salary, three months’ travelling allowance and gratuity up to January 19, 2018, despite the officer’s contract only providing for one month’s notice pay and gratuity, based on positive performance evaluations after two years,” the AuGD

stated.

The AuGD first brought attention to this matter in its 2019/20 annual report.

The SRC said after reviewing documents and noting that the separation payments to the five individuals were in breach of contract guidelines, it had concluded that the case was a surchargeable offence, and the matter was reported to the financial secretary in August 2021, in accordance with the financial accountability laws.

Meanwhile, the committee found that the head of the Overseas Examinations Commission (OEC) had not ensured that control procedures were followed to safeguard public funds, by failing to withhold monies due to it by a former employee of its western office, who resigned after embezzling $543,745, paid by students for exams and other fees.

The report noted that at the time of the officers’ resignation, the individual had vacation leave payments due, totalling $148,000, and instead of using this amount to offset the loss incurred to the Government, only $40,000 was withheld, and the balance paid, in breach of government guidelines.

“A promissory note was done, as a condition to the officer’s sentence, to collect only the value of monies stolen. Based on the promissory note, the officer should have paid a sum $543,745 in 27 instalments of $20,000 and one payment of $3,745 payable no later than the last day of each month commencing November 2019,” Monroe Ellis explained.

However, the OEC only collected one payment of $20,000, and has taken no further action to recover the outstanding balance of $483,745, the report stated.

The committee says based on the charges which the Government incurred after the theft, the loss exposure has reached over $1.6 million and in June 2021, the case was referred to the finance ministry for surcharge action.

The Financial Administration and Audit (FAA) Act allows for surcharge action to recover funds lost or the value of the loss of property or other assets that have been destroyed or stolen because of negligence on the part of public officers, and for the recovery of the amount or value from the persons found to be negligent.

Monroe Ellis established the SRC in 2018, with a mandate to review activities liable to surcharge, and makes recommendations to the auditor general to report surcharge matters in accordance with the law. It also monitors surcharge notifications from the financial secretary and tracks the recovery of amounts surcharged from officers held liable.