Auditor General: NSWMA paid $millions to undocumented contractors

An Auditor General Department (AuGD) report has revealed the payment of millions of dollars by the National Solid Waste Management Authority (NSWMA) to third parties for work projects for which they were not the named contractors.   

The report, tabled in the House of Representatives on Tuesday, said the NSWMA has commissioned an investigation into the matter.  

The report says over the last five years, the NSWMA paid $5.5 billion to contractors under its special projects and seasonal works programme.  

But it says weaknesses in internal controls increased the risk of individuals with ill-intent manipulating the system.

One such was the removal of a security feature on NSWMA's cheques by the operations manager and the accountant, making them payable to anyone.  

KEY FINDING:

Of note, NSWMA's internal auditors revealed in a report, dated November 2020, that 165 cheques written to 154 contractors totalling $32 million for desilting works were lodged to two bank accounts belonging to an individual who was not party to these contracts. The desilting works were undertaken in December 2019 and January 2020 in parishes covered by MPM. Following the internal audit review, NSWMA reported the anomalies to the relevant law enforcement authority and relocated the accountant and procurement officer at MPM to its head office and did not renew the contract for the regional operations manager.   

The AuGD's review of works done between January 2019 and December 2019, revealed the anomalies were more widespread.  Of 399 payments sampled, it found 297 additional suspicious cheques totalling $67 million, written to 132 individuals, increasing NSWMA's risk exposure to $99 million.   

Contracts for special projects and seasonal works which typically exceeded $200, 000, were being submitted for sums just below that figure following implementation of new control measures for contracts above that threshold.  

KEY FINDING :

In a memorandum dated October 25, 2018, NSWMA Executive Director issued a directive that effective October 29, 2018, all purchase orders valuing $200,000 and above are to be approved by the Executive Director. Thereafter, irrespective of the location of the works, we noted that in many instances, the scope of work covered approximately 3.7 kilometre of roadways valuing just under $200,000 using the standard rate of $53,000 per kilometre. Prior to this, the value of special projects and seasonal works normally exceed this threshold. 

In November 2021, the NSWMA announced that it had called in the Major Organised Crime and Anti-Corruption Agency to probe irregularities uncovered by an internal audit.

The irregularities involved payments of more than $30 million, according to “preliminary” estimates by the public cleansing agency.

The abnormalities include “glaring concerns” about the disbursement and encashment of cheques and were confined to the NSWMA subsidiary, Metropolitan Parks and Market, that covers the corporate area. 

Three people including a senior employee were reportedly separated from the agency.

The NSWMA is currently headed by Audley Gordon. The board chairman is Dennis Chung. The agency falls under Local Government Minister Desmond McKenzie's portfolio.

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