By Politico Investigation team
An audit carried out on the Sierra Leone Broadcasting Corporation (SLBC) by the auditing firm KPMG in Freetown says the entire system of control there, including the accounting and procurement mechanisms established by the Sierra Leone Broadcasting Corporation (SLBC), is generally “very inefficient or non-existent.”
The report, leaked to Politico, reveals among other things that “sufficient and appropriate audit evidence is lacking” for “property, plant and equipment amounting to 11 Billion Leones,” adding that the corporation has maintained an “unhealthy” cash management system.
According to the report, the procurement process of the SLBC satellite uplink was seriously flawed. It says the Board of Trustees approved on 18 November, 2010 the option of the SLBC to own a satellite uplink purchase for which “was to consist of the main backbone for the SLTV costing US$ 188,450, a backup system for the television channel costing US$ 111,825, and other charges including freight totaling US$ 97,230.”
The report says “three quotation invoices were considered in selecting the consultant of the Satellite uplink” but instead of the consultant assisting the SLBC to select “a credible supplier based on proper transparent procurement procedures, it turned out that the consultant invoiced the corporation for the supply of the equipment in his own name (Transtech International Limited).” The report says that payments were also made to this same consultant for the equipment. It notes that another payment was made to Transtech International Limited for a backup uplink satellite and transmitter, which amounted to Le 692 Million, but were neither supplied to the corporation nor was the money refunded to the corporation.
Politico has reliably learnt that Transtech International Limited is owned by Momoh Conteh who has just been indicted by the Anti-Corruption Commission in connection with the illegal logging deal unearthed by the Qatar-based Al-Jazeera television channel.
KPMG notes that the SLBC and its management are “clearly in breach of the Public Procurement Act 2004, and the failure of the consultant to deliver as contracted may be tantamount to fraud.” It therefore recommends that the “entire procurement process relating to the purchase of the satellite uplink should be thoroughly investigated” to be followed by “appropriate” and “corrective action.” The report adds that the Corporation may be able to recover some of the money spent, which would “have been saved had the proper procurement procedures been followed and competitive bidding carried out.”
The KPMG report also highlights other serious financial malpractices within the Corporation. It says staff of the SLBC were acting as third parties/payees by receiving cheques on behalf of third parties.” For instance, it records 11 transactions carried out with contractors and suppliers amounting to almost Le 23 Million but with cheques for those third parties written in the names of SLBC staff.
Meanwhile, the report also points out that SLBC Board of Trustees are paid monthly salaries amounting to Le 40 Million per month, which is “unusual” because members of the Board “are not executive directors involved in the day-to-day operations of the Corporation,” adding that Board members receive sitting fees even if they did not attend board meetings.
Festus Minah, acting chairman of the SLBC Board of Trustees, dismissed the allegations relating to Board members collecting sitting fees without attending meetings. He told Politico that the Ministry of Information and Communication approved the salary for Trustees in line with Board members of other Commissions, adding that their salary has now been reduced by 20%. Asked if the Board was aware that the SLBC management did not follow procurement procedures in the purchase of the satellite uplink and that money had been paid to Transtech International Limited for equipment it was never supplied, Mr. Minah answered in the affirmative. He said upon assuming the position of Acting Chairman of the Board, he put together a reconciliation document that acknowledged that the SLBC management did not follow proper procurement procedures. He said the Board had to invite the procurement authority and the Anti Corruption Commission to review the whole process. He said the reconciliation document also made it clear that the contractor should supply equipment the SLBC has already paid for.
Elvis Gbanabom Hallowell, Director General of the SLBC told Politico that the KPMG report contains a lot of “inadequacies”. Asked what his reaction was to the allegations in the report, Mr. Hallowell said they were not allegations but a result of findings which the SLBC management had already responded to, adding that they (SLBC) were yet to hear from the KPMG since. He would not comment further.
The KPMG report is a 61-page document that looked at the financial well-being, or otherwise, of the SLBC for the year 2010 “in accordance with International Standards on Auditing.” The purpose of the audit was “to enable the KPMG express an opinion as to whether or not the financial statements give a true and fair view of the financial position of the Corporation as at 31 December 2010, and its financial performance and cash flows for the same year, in accordance with International Financial Reporting Standards and in the manner required by the Sierra Leone Broadcasting Corporation Act.” The report is one of three investigations commissioned by both the Government of Sierra Leone and the UN on the corporation. Below is the full Executive Summary of KPMG report
KPMG’s grim report on SLBC
Executive summary
There are a number of factors responsible for the present situation at the Sierra Leone Broadcasting Corporation. These have been discussed in detail in the audited report. We however summarise below the salient issues:
Control environment
The whole system of control, financial and otherwise established by the corporation to safeguard its assets and ensure the completeness, accuracy and reliability of its records were generally found to be very ineffective or nonexistent.
Included in the audited financial statement are the following for which sufficient and appropriate audit evidence is lacking:
- Property, plant and equipment amounting to Le11 billion.
Several of the assets received from UNDP amounting to Le322 million were not so tagged for identification purposes.
Certain costs were incurred for some vehicles but we were unable to review third party supporting documents for them as none was made available to us for review despite several requests.
In-appropriate disposal procedures for certain vehicles by the corporation, thus leading to inaccurate recording of revenue on disposals, no supporting documents are available to back up these transactions.
No fixed assets register is being maintained for all fixed assets of the corporation.
Title deeds to some land and buildings occupied by the corporation for business were not made available for our review and the whole of the assets of the corporation are not insured.
- Cash management
The cash position of the corporation is unhealthy.
The Board of Directors receives sitting fees and are so paid even if they did not attend board meetings. In addition the Board of directors are paid monthly salaries, totalling to Le40 million per month. This is very unusual as they are not executive directors and are not involved in the day to day operations of the corporation.
Certain expenses were made amounting to Le290 million for which we were not provided with any details on expense, forms, vouchers etc. These were described as refurbishment of the office building (Le96 million), other payments (61.9 million) and repairs to vehicles and equipment (Le132.3 million).
Other payments made as was evident from proforma invoices and cash receipts were completely omitted from the corporation’s books.
These were largely described as expenses on fuel and oil amounting to Le9.7 million. The corporation is reliant on overdraft facility from the bank.
Revenue amounting to Le1.9 billion could not be supported as no comprehensive documentation was maintained by the corporation in recording revenue from TV birthday and immemorial, adverts and programs, radio adverts and program and public notices and obituaries.
The amount accounted for is therefore incomplete and inaccurate in the absence of credible underlying documentation of such incoming revenues to the corporation.
An amount of Le441 million is being described as suspense creditors as no supporting documents could be provided for such transactions. Subvention from the Government of Sierra Leone could not be sufficiently verified.
Direct operating costs and administrative expenses amounting to Le8.9 billion could not be substantially verified with invoices, bills, expense forms and other forms of approved/authorised expenditure. In short it is difficult to ascertain whether all these costs were so incurred for the benefit of the corporation
- Human Resource Management
No documented recruitment policy or procedure are in place and staff recruited in October 2011 did not follow any laid down recruitment procedures. Whilst some salaries paid to freelancers ranged from Le40,000 to Le300,000 from 1 January 2010 to 30 September 2010, we observed that substantial amount ranging from Le878,000 to Le1,124,249 were paid to freelancers recruited in October 2010.
Management did not provide to us the basis for such differences.
Staff at the regional offices responsible for accounting and financial operations lacked the basic accounting skills and experience required for running these offices.
Documentation on employees’ files were largely incomplete and certain employees have no files maintained for them by the corporation.
There is not on record a complete listing of all staff that left the employment of the corporation and these will definitely impact on the payroll costs.
- Financial statement preparation
Material omission were noted as the following were not included in the management accounts prepared for audit purposes.
- Donor funded expenditure
- Returns from Kailahun radio station
- Bo station returns
- Valuation of take-over balances on property and equipment from SLBS
- Use of station’s facilities
For all regional offices, standard rates or charges for services are not so utilised, but lower rates are used leading to loss of funds on the corporation.
