Explicit acts of nepotism - Auditor general releases stinging report on PCJ and Petrojam
Auditor General Pamela Monroe Ellis has released a damning report on the operations of the Petroleum Corporation of Jamaica (PCJ) and its affiliate, the state-owned oil refinery Petrojam, pointing to "explicit acts of nepotism" at both entities and deficiencies in human-resource recruitment and management practices.
In a 113-page report tabled just before Parliament adjourned last evening, Monroe Ellis charged that while Petrojam has policies that guide its recruitment and employment, its application of these policies was not always consistent.
"For example, we found instances where two individuals closely connected to employees of Petrojam were employed, despite being rejected by the interviewing panel," the report said.
Petrojam's records indicated that it recruited 76 new employees between January 2015 and May 2018.
"We assessed the recruitment processes for a sample of 25 individuals recruited within that period, and found inconsistencies in the selection process. For example, we found no evidence that Petrojam advertised the vacancy for 13 positions, including sensitive positions such as the general manager and manager, refinery and optimisation. This was in breach of Sections 4 and 5 of the Recruitment Policy, which requires job vacancies to be advertised internally and externally," the report continued.
Petrojam's General Manager Floyd Grindley resigned in July 2018.
EMPLOYED UNQUALIFIED SIBLING
In outlining the explicit acts of nepotism, the auditor general said the manager of human resources employed her sibling in the position of instrument and electrical technician, although the individual was rejected by the interview panel on May 10, 2017, on the basis of lack of experience and qualification. "This engagement was an explicit act of nepotism," the report said.
In addition, the audit further said Petrojam's recruitment and promotion activities were not guided by an approved staff listing from the Ministry of Finance and the Public Service.
At the same time, the auditor general revealed that at the PCJ, from a sample of 27 officers, her department found that 11 of the related posts were filled without being advertised, and there was no evidence that PCJ interviewed or conducted any other assessment for eight of the officers.
A breakdown shows that in 2015, the posts of geologist and legal officer were filled without being advertised and there was no evidence that the candidates were interviewed or assessed for the positions. In March 2016, a procurement specialist was recruited and the job was advertised. However, no evidence was found to prove that the candidate was interviewed or assessed for the job.
In 2017, a senior human resource officer, business intelligence support officer, LNG consultant and a secretary (legal and procurement) were recruited, but the positions were not advertised.
In 2018, five senior positions were filled, including business development consultant, LNG administration assistant, PCJ-IP programme support and digitisation officer, who were recruited, but there was no evidence that these positions were advertised.
"Our investigations revealed inconsistencies in the application of the Human Resource Policy with the hiring of a human resource officer/HR specialist and the business intelligence support officer," the report read.
"While we observed that Ministry of Finance and the Public Service approved salaries and benefits for PCJ, there was no evidence that the ministry approved the performance incentive and the reimbursement of gym fees to employees."
In addition, the report continued, PCJ paid travelling allowances to 29 officers without the approval of the finance ministry. This resulted in unapproved payments totalling $48.4 million over the 2015-16 to 2017-18 period.
The audit also found deficiencies in the award of sponsorships by the PCJ.
Of a sample of 36 sponsorship awards valuing $39.7 million, over the period 2015-16 to 2017-18, the auditor general observed that only 18 sponsorships valuing $22.9 million were approved by the board of PCJ.
As a result of the delegated function, the chairman approved 12 sponsorships valuing $15.2 million. However, 10 of these sponsorships valuing $11.6 million were not subjected to ratification by the board.
"This approach was inconsistent with good governance, given the value of the sponsorships and the board's accountability for the outcome of any delegated function and enabled an overextension of the authority of the chairman," the report noted.
MAIN FINDINGS OF AUDITOR GENERAL’S REPORT ON OPERATIONS OF THE PETROLEUM CORPORATION OF JAMAICA (PCJ)
- High levels of accountable and unaccountable oil losses
- Management’s override of the procurement guidelines
- Poor management of capital investment project and consultancy arrangements
- Inconsistent recruitment and employment practices
- Weakening financial position
- Inadequate oversight and monitoring of Petrojam operations
WHAT THE AUDITOR GENERAL ALSO FOUND
- No action to cauterise cash-flow leaks
- Project cost overruns
- No value from consultancy arrangements
- Procurement practices undermined value for money objective
- Questionable spending on donations and non-business events
CONCLUSION AND RECOMMENDATION
The boards of PCJ, Petrojam and all public bodies should develop a framework document in keeping with the Corporate Governance Framework, to strengthen the governance and management arrangements in their respective entities, over which they have been charged with governance responsibilities.