Sat | Jan 19, 2019

Editorial | Make Petrojam the line in the sand

Published:Tuesday | December 11, 2018 | 12:00 AM

Prime Minister Andrew Holness' announcement that he will order a forensic audit of Petrojam will be embraced by people, among whom this newspaper is counted, who value accountability in the management, and use, of taxpayers' money.

Yet, Mr Holness needs to bring greater clarity to his intent. For the general interpretation of the prime minister's remarks at his press conference yesterday is that this deeper analysis of the operations and finances of the oil refinery will be limited to the findings of the auditor general, Pamela Monroe Ellis, that is the five-year period, up to 2017-18 in which the company could not account for more than 600,000 barrels of oil, or 44 per cent of the 1.5 billion barrels of the amount it used in its normal operations.

 

Sharper focus

 

We understand the PM's sharper focus on that issue. On the face of it, it is a real big-ticket discovery in Mrs Monroe Ellis' rummage through the muck and sleaze with which, the public now knows, this state-owned company is covered. However, the proposed forensic review should go deeper.

Indeed, the auditor general placed a price tag of J$5.2 billion on that leakage, which, in any currency, is a lot of cash sloshing around with which to fuel malintent and misbehaviour. Or, as Mr Holness put it: "Some people have said it's stolen oil; it's missing oil."

We draw no specific conclusion on the matter but are concerned by several facts, not least the auditor general's observation that Petrojam's reported unaccounted-for losses rose by 60 per cent, between 2013-14 and 2017-18, or from 115,793 barrels of oil to 184,951. This translated to a near-doubling of its annual average unaccountable oil loss, as one of its key performance indicators, from 0.4 per cent of production to 0.7 per cent.

Indeed, this growth in the average loss, as a ratio of production, was one of the issues that the Jamaican Government's minority partner in Petrojam, Venezuelan oil company, PDVSA raised concern in its own internal audit earlier this year. Indeed, Howard Mollison, who served as Petrojam's general manager in 2015-16 when the loss fell below the industry norm of 0.4 per cent to 0.31 per cent of production, believes that this matter demands "investigation and explanation". Writing in this newspaper on Sunday, Mr Mollison noted that "even the smallest deviation from the figure (the industry standard) represents significant sums of money".

A forensic review, it might be hoped in some quarters, might arrive at a figure for the loss smaller than the headline figure tabled by the auditor general, based on Mrs Monroe Ellis' own analysis of Petrojam's internal data, even though the company had not shown, according to her report, that it had done the work to identify and cauterise the sources of the leaks.

In any event, it wasn't only via leaks in the operational process that money drained from Petrojam. Indeed, the auditor general's report is replete with the cases of nepotism, binge spending on parties for managers and their friends, corporate giveways, and end-runs around procurement rules, allowing for the award of contracts for which assurance of value for money was, at best, dodgy.

Mr Holness has spoken of clawing misappropriated money. This can't be just for J$127,000 cakes. If companies acted in cahoots with public officials to rip off taxpayers, those, too, are acts of corruption for which all parties should be held accountable. That's why there is cause for a deeper and wider forensic audit.

We should draw a line in the sand at Petrojam.