Laptops scandal

– 1900 laptops missing; losses amount to over $300M
– Auditors: call in the police

By Ravin Singh
A FORENSIC audit into the financial operations and functioning of the One Laptop Per Family (OLPF) project has revealed that over 1900 laptops, totalling in excess of $115M are currently unaccounted for, while defective laptops have taken the total losses to over M$300.The OLPF was launched by then President Bharrat Jagdeo in January, 2011.
The audit which was conducted by Ram and McRae, Chartered Accountants, was one of many initiated by the APNU+AFC government when it assumed office last year. Published on the Ministry of Finance’s website on Friday last, the document details a comprehensive analysis of the project, outlining several recommendations which are likely to improve the status of it.
According to the audit, the project was launched by the then PPP Government in 2011.It was administered by persons in, and contracted by the Office of the President (OP). And based on discussions with management and statements made by the former President, Bharrat Jagdeo, Ram and McRae deduced that the main objective of the project was to acquire and distribute laptops to 90,000 families across Guyana.
However, the report revealed that this was not achieved. In fact, up to and including December 31, 2014, five months before the PPP was unseated from government, the project had fallen short of its target to distribute 90,000 laptops and only 58,303 were distributed; this represented 75 percent.
Further, the audit revealed that the total distribution cost amounted to $35,291,406 or three percent of the total cost of the project. The average cost of distribution per laptop was therefore calculated to be $706. On the other hand, total training cost amounted to $70,750,427 or six percent of the total cost of the project. The average cost of training per laptop was therefore $1,415.
“It is clear from the summary analysis above that 92 percent of the total cost was incurred due to indirect expenses, while only eight percent was directly attributable to the underlying objective of the project. We believe that the general expenses of the OLPF were exorbitant and could have been curtailed by management,” the audit report said.
But apart from expenditure, what was interesting to note was that during 2012, management discovered that 103 laptops totalling $5,912,200 were missing. The report further states that following investigations by the police, the services of seven employees were terminated by the Office of the President on February 22, 2013. The missing laptops however, were not recovered.
Additionally, having embarked on the audit, Ram and McRae on August 5, 2015, requested and observed a 100 percent physical inventory count and subsequently performed a reconciliation based on the documents provided.
According to the auditors, their procedures revealed that management was unable to account for an additional 1,875 laptops costing $109,168,913. Given this situation, the auditors recommended that the matter be referred to the police for a full investigation.
The report goes on to state that presently, there are 3,158 laptops in stock, costing $191,079,058 and are all damaged. However, the auditors were unable to determine whether these are beyond repair.
“It is likely therefore that of the total number of laptops acquired by purchase or grant of 55,145, some 5,136 were either stolen or are defective. In dollar terms, the actual loss to the Government Is $306,160,171,” Ram and McRae said in their report.
It was further deduced that financing of the Project was opaque and funded out of moneys received by the National Frequency Management Unit (NFMU), which was itself retaining funds otherwise payable into the Consolidated Fund.
“The project did not maintain any proper system of accounting and the only accounting done was by way of instructions to the NFMU to approve invoices for payment. There was no accounting for transactions executed on behalf of the project, nor was there any reconciliation of the records of the OLPF and the NFMU,” the report added.
Substantive testing and expenditure analysis also confirmed that $1,263,454,790 was paid by the NFMU for the administrative, employment, training and distribution expenses incurred by OLPF during the period May 9, 2011 to May 31, 2015.
This amount, the report said, was made up mainly of employment costs which aggregated to $734,625,642 or 58 percent during the period. The second largest type of expenditure was administrative expenses, which amounted to $422,787,315 or 33 percent of the total cost.
Ram and McRae also pointed out that the financial systems and internal controls governing the project were generally weak. They noted that since the project did not have a Board of Directors, the underlying principles of corporate governance should have been fulfilled by management, and there is no evidence that this was done.
“While the lower- level positions were advertised, political considerations may have influenced the appointment of the more senior staff, including two sons of a former Government Member of Parliament” the report said.