Sat | Dec 5, 2020

Editorial | Get the UDC and others accountable

Published:Thursday | October 22, 2020 | 2:19 PM

IT WOULD be almost reckless if Prime Minister Andrew Holness was kept in the dark that the Urban Development Corporation (UDC) was four years behind in its annual financial reports and that this has caused the auditor general to suspend a performance review of the agency. For if indeed the prime minister was ignorant of the situation, it raises questions about the sustainability of the policy of transparency and good governance, which he promised would be the hallmark of his new administration after his party’s thumping victory in last month’s general election.

It ought not to require reminding that the UDC is a major QUANGO, sufficiently strategic to have been brought within the fold of the Ministry of Economic Growth and Job Creation, the super ministry led by the prime minister. Four months ago, in July, this newspaper, based on tabulations posted on the website of the Cabinet Office, highlighted that only 10, or six per cent, of 163 public bodies were current with their financial statements. The UDC was among the laggards.

Furthermore, at the time of that report, Mrs Pamela Monroe Ellis had already pulled the plug on the special audit, which, while not publicly declared, could hardly have been a secret. However, according to Mr Holness’ permanent secretary, Audrey Sewell, the PM, even up to this week was unaware of the event. By now, he might have received the promised update.

That the auditor general had to halt a review of the UDC because of, among other things, a lack of “audited financial statements, annual reports, valuation reports” and the transfer of land related to the North-South Highway, is significant on a number of fronts. Based on its unaudited projections for 2020-21, the UDC sits on more than J$57 billion in assets. It was expected, before the onset of COVID-19, to have income of J$2.9 billion, 16 per cent more than the previous year. However, its expenditure was projected at J$3.2 billion, which, if that held, would be seven per cent above that of 2018-19. That would have resulted in a loss of J$231.5 million, which, according to finance ministry data, would be 55 per cent lower than the previous year’s.

The UDC deals in a lot of cash and controls tremendous amounts of taxpayers’ assets, for which it is obligated to be accountable. In fact, the Public Bodies Management and Accountability Act gives QUANGOs “not more than four months” after the end of the financial year to submit their annual reports, “including audited financial statements,” to their ministers for tabling in the Parliament. In the case of the UDC, the minister is Prime Minister Holness. The latest report tabled for the UDC, which was considered by the Cabinet 22 months ago, was for the 2015-16 financial year.

NOTHING TO HIDE

We appreciate the assertion by UDC Chairman senator Ransford Braham that the agency has “nothing to hide” and that the delay in having audited accounts was, in part, due to a backlog of information and the need for updating. That backlog developed, however, is because the UDC did not do what was required to stay current. And this happened at an institution that could afford the financial professionals to keep the accounts up to date, failing which they should be called to account.

By not keeping its books current and audited, the UDC robbed its owners, the taxpayers of Jamaica, of a timely analysis of whether the corporation used its resources efficiently and if it implemented best-practice proposals from a review by the auditor general eight years ago. Such failings, as is clear from the Cabinet Office’s tracking of financial reports, is not a problem only of the UDC. More than 90 per cent of QUANGOs are not timely with their filings.

The accountable officers of recalcitrant institutions can be taken to court and fined for these failures, in cases led by the attorney general (AG). When we previously made this observation, Marlene Malahoo Forte, the AG, pointed out that referrals have to come first from the finance minister. In that case, Dr Nigel Clarke must get on with it.

More important, though, is for Prime Minister Holness to be aware and pay attention to the situation if he is serious about a new era of transparency and accountability in the Government and in governance. A good place to start is with those agencies that are his immediate responsibility – like the UDC.