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Paulwell eager to have police probe PCJ

Published:Tuesday | April 20, 2010 | 12:00 AM

The Petroleum Corporation of Jamaica (PCJ) seems set to call in the police to probe allegations of financial mismanagement in the wake of a recent forensic audit.

That decision could not come too soon for former Energy Minister Phillip Paulwell, under whose watch the suspected irregularities took place.

"It needs to go to the police. It needs to be brought before the police," Paulwell, the opposition spokesman on energy and information and communications technologies, told The Gleaner yesterday.

Paulwell said while he had not seen the audit report, he found the handling of it strange.

"It is my understanding that this forensic audit was completed in October 2009, and there has been a full response from the management. Neither has been put to Parliament, neither has been sent to me, and it is my understanding that neither has been sent to the police," Paulwell said.

"I would expect that those things would have been done."

However, sources close to the PCJ told The Gleaner that it was likely the Fraud Squad would be called in and much of its probe would focus on contracts granted by the PCJ and payments made without due process.

It is expected that the police will pay close attention to a contract valued at more than $5 million granted to a security firm for work done in the North East St Elizabeth constituency of embattled former Junior Minister Kern Spencer.

It is believed that the security firm was contracted after a charity, headed by persons close to Spencer's political organisation in the constituency, requested a grant from the PCJ. However, there are indications that persons who headed the charity were also directors of the security firm.

The auditors were unable to find any contracts or documents to justify the expenditure.

According to the auditors, "The invoices were vague and brief, with some indicating that the work was done in Santa Cruz or at the Santa Cruz Community Centre."

The person in charge of security at the PCJ also said he was not aware of the services provided by the security company and had not authorised the payments.

Spencer is already before the courts on charges relating to the Cuban light-bulb distribution project, which was also financed by the PCJ.

The PCJ executive was fired in the wake of the light-bulb scandal. Former director of administration, Rodney Salmon, also figures prominently in the latest audit.

Salmon, former financial controller Henoy Russell, and an executive assistant, were found to have received honorariums totalling almost $2 million, with no clear documentation as to who had approved the payments.

Unusual signing

The auditors say a memo signed by the former PCJ board chairman approved the payment, but this was unusual as it should have been approved by the group managing director.

The auditors also found that statutory deductions were not made from the payments and the approval was handled by Salmon and Russell, who both signed the cheques.

The police are also expected to probe what the auditors described as a "cash-skimming scheme" at the company's canteen, which resulted in more than $3 million going missing over a one-year period.

The audit, conducted by the Canadian firm Papineau Consulting and auditors from the Ministry of Mining and Energy and the Auditor General's Department, covered the period April 1, 2006 to March 31, 2007.

It was ordered by then Energy Minister Clive Mullings in the wake of allegations of financial irregularities at the PCJ.