Kaieteur News news item, Sunday 29 March 2009
Law dictates penalties for misuse of public funds
A Minister or
official shall not in any manner misuse, misapply, or improperly dispose of
public moneys, according to the Fiscal Management and Accountability Act of
As it relates to the penalty for the Minister who misuses, misapplies, or
improperly disposes of public monies the FMA specifically spells out the
penalties that should be incurred.
According to the FMA, if a loss of public monies should occur and, at the
time of that loss, a Minister or official has caused or contributed to that
loss through misconduct or through deliberate or serious disregard of
reasonable standards of care, that Minister or official shall be personally
liable to the Government for the amount of the loss; where the misconduct or
disregard of the person is not the sole cause of the loss referred to in
subsection, the person shall be liable to pay only so much of the loss as is
just and equitable having regard to the person's share of the responsibility
for the loss, if a loss of public monies should occur and, at the time of
that loss, a Minister or official had nominal custody of such moneys.
Over the past few weeks there has been significant debate as to the
decisions taken by some officials such as Chairman of the Board of Directors
Dr Roger Luncheon as it relates to the investment of some $6B in Colonial
Life Insurance Company (CLICO) Guyana.
The issue was more recently raised at the People's National Congress
Reform's first general council meeting for this year. It was pointed out
that the People's Progressive Party had mismanaged the economy and had
failed to take prudent measures to prevent the collapse of CLICO and ensure
the long-term viability of the National Insurance Scheme (NIS).
The primary factor of the current economic circumstances in Guyana was
deemed to be high unemployment and the rising cost of living.
As a result of the $6.9B investment in Colonial Life Insurance Company
(CLICO) Guyana, the National Insurance Scheme is losing close to $1M per
day, according to financial analyst and economist, Christopher Ram, who in
an invited comment told this newspaper that this was the case given that the
income stream relevant to the principal investment is no longer operational.
Mr. Ram said that the crisis in which the company has found itself in, is
having a ripple effect on the financial sector and as such the President
should refrain from reserving the CLICO Guyana issue to a mere three per
cent of the financial sector.
The economists drew reference to the fact that relevant directors, including
the Commissioner of Insurance and the Minister of Finance, violated their
fiduciary responsibilities and were in breach of the Fiscal Management and
They should be dealt with according to the provisions of the law, he said.
The economist also questioned the failure of NIS to retain the services of
an actuary to determine the true status of the entity given that a
significant amount of its status is impaired.
This is in light of the fact that as of December 31, 2007 the expenditure of
NIS far outweighed its contributions.
According to the 2007 Annual Report for the National Insurance Scheme, the
viability of the scheme is dependent on its investment returns given that
its expenditure is greater than its income from contributions.
The audited report states that for 2007 its total contributions were some
$8.06 billion whilst the total expenditure was some $8.57 billion, a
difference of $516.4 million.
The figures indicate that without the returns on investment of some $1.5
billion the company would be operating at a huge deficit.