Editorial | PM slips on Petrojam audit

Every so often, Everald Warmington, the government frontbencher, reminds us that he has a potentially useful mind. As he did on Tuesday at a sitting of Parliament’s Public Accounts Committee (PAC), when he joined with opposition members in ridiculing the idea that the management, and presumably the board of Petrojam, could have drafted the terms of reference for a forensic audit into the more than J$5.2 billion unaccounted for petroleum at the oil refinery.

“How can Petrojam prepare terms of reference to investigate themselves?” asked an incredulous Mr Warmington. “We need to have a system that is totally transparent. Even if Petrojam puts together a good document for the terms of reference, there are people out there who are going to have doubts or question the process.”

Of greater incredulity than having this observation come from Mr Warmington, whose reputation is that of being rude and flippant, is that Prime Minister Andrew Holness, with his phalanx of advisers, as well as his permanent secretary (PS), Sancia Bennett Templer, appears to have neither appreciated nor understood this fact, which, fundamentally, is about conflict of interest.

Petrojam has been a focus of public attention in recent months for the managerial tawdriness that has seemingly afflicted the institution. Nepotism and favouritism, and hiring and promotions, appear to have run amok.

Procurement rules appear to have been routinely breached. Projects and their costs were poorly managed. And a sense of permissiveness extended to high-chested living, with the big spending on parties where US$1,000 cakes were supped upon.

All the above doesn’t include the findings by the island’s auditor general that over a five-year period, Petrojam could not account for more than 600,000 barrels of oil, valuing J$5.2 billion, with the annual loss over the period jumping by 60 per cent, from 115,793 barrels in 2013-14 to 184,951 in 2017-18.

At the end of the period, Petrojam’s unaccounted for/non-revenue loss was 0.75 per cent of production, nearly twice the industry average of 0.4 per cent. The company failed to plug the leak despite spending nearly US$1 million on efforts to deal with the problem.

OUT OF THE LOOP

It is understandable that this is the issue, among the many things that are worth attending to at Petrojam, that Prime Minister Holness chose to make the subject of a forensic audit when he assumed the energy portfolio after Dr Andrew Wheatley realised that his place in the Cabinet was no longer tenable.

In the circumstances, Mr Holness, as the minister with responsibility for energy, now owns what happens at Petrojam. Mr Warmington, as a junior minister in the Office of the Prime Minister (OPM), would be expected to have been clued in to what is taking place at OPM, but given his declaration at the PAC session, he appears to have been out of the loop with regard to Petrojam. It was shocking, therefore, when PS Bennett Templer revealed that the terms of reference for the forensic audit ordered by the prime minister had been developed by the Petrojam management.

“Petrojam will proceed to market to procure a consultant to undertake that audit of oil losses as soon as we have completed the procurement process,” Mrs Bennett Templer said.

To some ears, that sounds like leaving the cat to guard what’s left of the butter. Whatever the reason, the assignment of drafting the audit’s terms of reference was given to managers of Petrojam, some of whom were there during the scandal. This represents a huge faux pas by the Government, which ought to have been recognised by Mr Holness.

There may be merit in the Opposition’s suggestion that the Integrity Commission and the Major Organised Crime and Anti-Corruption Task Force should be involved in drafting the terms of reference. Whoever does it, they should be available for public scrutiny before final settlement. That should happen quickly.