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'Auditors unaware of security challenges' - Potopsingh stands ground in reply to PCJ report

Published:Tuesday | April 27, 2010 | 12:00 AM

Daraine Luton, Senior Staff Reporter

FORMER GROUP managing director of the Petroleum Corporation of Jamaica (PCJ), Dr Ruth Potopsingh, has declared that auditors who questioned why the state-owned entity was paying for her security are ignorant of local conditions.

The auditors, in a special audit report of the PCJ, questioned the provision of security services for Potopsingh and the special-projects manager at the corporation.

The auditors said they were unable to ascertain the basis for payments identified that were being made by the PCJ.

"We enquired as to the justification for such expenditure to the benefit of these senior officials and requested a copy of a security-risk assessment or a justification report to warrant such continuous PCJ expenditures. We were advised that no such assessment had been prepared and there was no justification prepared," the auditor said.

However, Potopsingh, in her written response to the audit, charged that the "auditor is clearly unaware of the local environment and the security challenges it poses".

She said the "same reason which justifies a minister of government having personal security justifies senior employees having the same".

The audit report did not give details of the amount of money that was being spent to provide security services for the two senior officers. However, it said the services were being provided by three security firms. The audit also said an examination of the minutes of the PCJ board of directors meetings did not indicate any approval of the expenditure on security.

Serious security issues

However, Potopsingh has charged that the chairman of the board was in charge of security and made security decisions regarding senior officers on behalf of the board.

In castigating the auditor, she said the team appeared not to be au fait with crime levels in Jamaica.

"The auditor fails to take into account the generally high-security risk in Jamaica, evidenced by high murder rates, hijackings and car theft," Potopsingh said. "PCJ is not unaffected and is, in fact, a high-risk area given the high level of illegal operations in the petroleum trade."

Her response highlighted the death of a PCJ investigator in 2004 and the murder of a senior employee and his wife at their home recently. She claims that PCJ employees have been threatened over the years and have been subject to persons "demanding money or food from the inner-city areas, who know senior management by name and face because of our exposure to the public".

Blatant errors of fact

Potopsingh was fired last week as group managing director of the PCJ after the audit turned up several irregularities at the state-owned agency.

The audit report was tabled in Parliament last Tuesday by James Robertson, the minister of mining and energy. It has been referred to the Public Accounts Committee for consideration. The police have also been called in to investigate the claims made by the audit team.

Potopsingh has said the audit, to a large extent, "lacks credibility and reliability". She said there are several blatant errors of fact and that useful information was omitted or ignored by the audit team.

The special audit report was undertaken by Neil Papineau Consulting Inc of Canada, which was supported by internal auditors at the Ministry of Mining and Energy and auditors from the Auditor General's Department.

It examined five months of PCJ expenditure for the fiscal year 2006-2007 to determine whether spending had been managed with prudence and probity and whether the expenditures had been reasonable and appropriate.


  • ... Error-filled report

DR RUTH Potopsingh has taken the gloves off in her written response to the special audit of the Petroleum Corporation of Jamaica (PCJ).

The former PCJ group managing director has dismissed several of the findings of the audit team and charged that there appears to be "a deliberate attempt to smear or discredit her".

"To a large extent, the audit report lacks credibility and reliability as there are several blatant errors of fact," Potopsingh said.

The forensic audit of the operations of the PCJ has uncovered contract irregularities, poor management of the PetroCaribe Development Fund, and a cash-skimming scheme, among others.

Gravely compromised

However, Potopsingh, in her point-by-point rebuttal of the charges, said the auditors were either not clear on the operations of the organisation, or did not use all available information to come to their conclusions.

Potopsingh said the report is "gravely compromised by what appears to be the deliberate presentation of partial information, omission of vital data, even though the auditor had (has) the same files with the information", which she used to prepare her 26-page response.

Among the charges rejected by Potopsingh is the claim that the PCJ failed to properly fulfil its responsibilities to appropriately manage the PetroCaribe Development Fund with prudence and probity.

However, Potopsingh said the assertion was made despite "documented records of spreading the risk and eight identified financial institutions, detailing principal amounts, interest rates and maturity dates".

She claimed the prudent management of the fund resulted in gross interest earning for the period February 2006 to July 2007 in the amount of $445 million.

Not irregular

The audit report claims that billions of dollars of PetroCaribe funds were invested under the PCJ's name, with no distinction between the PCJ investment and that which belonged to PetroCaribe. It also said that some of the interest earned from the investment of PetroCaribe funds was kept by the PCJ and deposited either in a main bank account, or into the account of the PCJ canteen.

The report said that since 2002, the PCJ had been operating a canteen for free or for a very small charge. It said the PCJ paid the canteen $9 million in the 2006-2007 fiscal year for lunch and catering services and that in excess of $3 million of PetroCaribe funds were improperly transferred into the canteen account.

However, Potopsingh has said it was not unusual for meals from canteens in many government agencies to be subsidised. She said the payment of the money to the PCJ canteen was not irregular.

She, however, conceded that there were issues with the canteen, noting that in September 2008, when a group financial officer was appointed, one of the first tasks she assigned him was to "investigate the state of the accounts of the canteen".