JMA concerned about audit findings at FCJ

Date: June 15, 2016

JMA Immediate past president Brian Pengelley (left) converses with president of the Rotary Club of Kingston Effiom Whyte during the club’s weekly luncheon meeting yesterday. (Photo: Garfield Robinson)

The Jamaica Manufacturers’ Association (JMA) says it is very concerned about the auditor general’s report of questionable use of public funds by the Factories Corporation of Jamaica (FCJ), and has called for “consequences to those involved” if the findings are true.

“Should these reports prove to be correct, then we believe this represents a reckless disregard akin to gross negligence and misuse of the public coffers, and a blatant indifference to the trust placed in the FCJ,” the JMA said yesterday in a release.

The Auditor General’s Department (AGD) last week tabled a report in Parliament from a regulatory audit of the FCJ, in which several alarming breaches of government guidelines were detailed, including spending on multimillion-dollar projects which have been delayed or were not completed. The auditors have also recommended that the FCJ should recover funds paid to attorneys for services which were reportedly not delivered.

Pointing to revelations in the report, such as the $190.2 million incurred by the FCJ for the development of 200 acres of land as part of the Caymanas Economic Zone, expenditure for which the AGD said there is no evidence of benefit; as well as the failed redevelopment of the Garmex Free Zone and Commercial Complex despite the $64 million spent for tender documents and technical designs, the JMA lamented that all this is taking place at a time when “demand for the availability and provision of suitable spaces for the productive sector is not being met, particularly for our micro and small manufacturers. This has been a continued concern of the association and the over 400 members we represent”.

The association stressed that the slow rate of response by the FCJ for spaces for the productive sector is unacceptable, and said that it will continue to demand transparency and accountability in the management of public resources.

“Such practices must not be allowed to persist as we continue to safeguard the future of Jamaica,” the association insisted.

The audit team said it found that the FCJ’s working capital turnover (current assets minus current liabilities) ratio declined between 2010 and 2015, an indication that the corporation “did not use its working capital efficiently to generate income”.

The AGD pointed out that the decline occurred despite an increase in revenue over the review period.

The audit, which covers the financial years 2010/11 to 2014/15, also found that the FCJ paid five board members remuneration totalling $25 million for employment in key managerial positions. “We noted that prior to the decision to engage these five members, FCJ sought legal advice from the company secretary (an attorney on the board) whose opinion supported the action,” the report said.

In addition, the AGD said the FCJ engaged two consultants for $15.2 million between December 2011 and October 2015 to perform operational tasks in the human resource and accounting units. This, the report said, was “despite FCJ’s expression of concern that the units did not have the necessary competencies and skills to perform”.

“We found no evidence that the corporation did all it reasonably could to strengthen the capacity of these units,” the document stated.

Furthermore, the audit discovered that the FCJ, despite concerns about the competence of a senior officer who was engaged on contract, still extended the person’s contract three times, whilst engaging a consultant to perform duties that this senior officer should have carried out.