$350M cost to taxpayers

MPs begin drawing funds under Constituency Machinery Grant


MORE details have emerged about the Constituency Machinery Grants (CMG), the monster being created to return MPs at the next national general election early next year.

Island Sun was given a comprehensive brief on the CMG following its expose last week, that donors may be unknowingly funding official corruption.

Sources told Island Sun that the National Transport Fund (NTF) co-funded by Australia, New Zealand and the Asian Development Bank (ADB) is safe.

“The NTF has a tight set of guidelines controlled by donors so it is pretty safe,” the sources said.

“In fact, the CMG was created because politicians could not get their hands on the NTF. Instead, they have targeted the Shipping Grants in the Ministry of Infrastructure Development (MID).”

In the brief over the weekend, Island Sun was provided details of how the CMG works, where the money comes from, and who will undertake infrastructure projects.

In doing so, civil contractors have been locked out from the deal, which will cost taxpayers an estimated $350 million this financial year.

The money, vired from the Ministry of Infrastructure Development appears in the Ministry of Rural Development Budget this year.

It was transferred there so that Members of Parliament can have total control over its spending.

MPs will be able to use the funds allocated to their constituencies to order heavy equipment and machinery from overseas.

These machines and equipment will then be hired out to pre-selected contractors of their choice, who may not necessarily be qualified engineers to build roads, airstrips and wharves.

And because spendings by or under Constituency programmes are exempted from tax, MPs will not pay duties on the machinery and equipment that some have already ordered for their infrastructure projects.

Sources told Island Sun on the weekend, two members of Parliament have reportedly drawn part or all of their shares of the $350 million earmarked for RCDF grants in this year’s budget.

Each Constituency would receive $7 million in RCDF grants which is being administered by the Ministry of Rural Development this financial year.

What many MPs intend to do with the money is to order heavy equipment and machinery from overseas for infrastructure projects.

Some MPs may have arranged to lease machines and equipment, although the preference is for MPs to own these expensive machines so that they could hire them out as their own to undertake Constituency work, sources said.

“Many have already placed orders as the MPs want to take total control over spendings on infrastructure projects in their constituencies. They want to do this in the period leading to the election, which is expected to be held in February or March next year,” the sources said.

“The $350 million was vired from a number of heads, particularly from the Ministry of Infrastructure Development (MID), which ended up with a zero budget for the Shipping Grants this year.

“The two MPs have engaged companies or individuals without the knowledge of MID engineers.

“The normal tender process was also avoided in granting contracts for building Constituency infrastructure projects.

“This is a great concern because without supervision by qualified engineers from the MID which is the designated authority on civil works, there is a lot of things, including safety at stake.

“For example, one of the MPs has engaged an Asian to do upgrading work on an existing airfield, using the MP’s machinery and equipment.

“The next infrastructure project would be the construction of a wharf. These two projects demand the attention of qualified engineers prior to and after construction to ensure the quality of work measures up,” the sources said.

According to sources, the other MP has built a road in his Constituency without the knowledge of the Ministry of Infrastructure Development.

“As expected, the road construction cuts through a number of customary land whose owners came to Honiara recently, demanding answers from the MID.

“MID simply told the customary landowners that the Ministry had nothing to do with the road works. They were simply advised to see their Member of Parliament,” the sources said.

Meanwhile the creation of the Constituency Machinery Grants (CMG) is reportedly adding to the severe cash flow problem being experienced by the Government.

“What is happening is this. Because MPs are exempt from paying import duties and other taxes on goods purchased in the name of their constituencies, the government is losing heaps on duties.

“This is impacting on government revenue.

“The other negative aspect is that the CMG has literally shut out infrastructure projects from civil contractors. As a result, civil contractors too are not paying any tax because they are not given any projects at all,” one businessman said.

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