Audit report shows how covid-19 funds were spent by MHMS, NDMO & MID in 2020


Millions of dollars of public funds were squandered and misused in 2020, a report from the Office of the Auditor General (OAG) published yesterday has suggested.

OAG investigated how three ministries procured goods and services using covid-19 funds from April to December, 2020.

They are the Ministry of Health and Medical Services (MHMS), The Ministry of Infrastructure Development (MID) and National Disaster Management Office (NDMO) under the ministry of environment, climate change, disaster management & meteorology (MECDM).

The OAG in publishing the thematic audit report yesterday also called on the national government to strengthen its procurement processes.

$90 million was spent by MHMS, NDMO and MID in 2020. They used the disaster relief fund to spend on goods, services and works to support the response to the pandemic.

MHMS spent $26 million, MID – $14.9 million and NDMO – $49.5 million.

However, the report found that most of these spendings were made though “truncated procurement process”.

When the state of public emergency was declared on March 25, 2020, government’s normal procurement procedure was replaced by the use of Bid Waiver system – an alternative procurement system which was used in exceptional circumstances in which ‘observing the normal requirements would result in detriment to the people or assets of the Solomon Islands’.

The bill waiver system was abused. For example, some works were completed and paid for before the bill waiver was approved and contracts signed in ‘cart-before-horse’ style.

Since the tender process was absent, conflicts of interest were not declared. There was high risk of nepotism, wantok business and offering contracts to family members, relatives, friends or associates.

Bloated prices of goods and services popped up which ate away the covid-19 funds.

For example, $400 for one pillow and $130 for one blanket, provided to the national referral hospital (NRH), seen in an invoice of $99,500 dated May 25, 2020.

Documents were missing, which would have provided information to prove that public funds were well spent.

In many cases, documents show that amounts have been manipulated by hand. For example, a payment voucher made out for a $11,089 payment was manually changed to $110,089.

Some businesses which were not registered under the Company Haus were awarded contracts.

Imprest account system was abused. Close to $12 million was used up by way of imprest payment.

An imprest raised by the MHMS is the largest recorded at $225,900. This contradicts the rule of the imprest system, which is meant for ‘small, frequent payments that it is not practical or convenient to pay through Treasury’.

Transparency, accountability and inclusiveness was lacking.

The objectives of these audits were to assess whether these agencies managed covid-19 procurement in accordance with relevant laws, policies and regulations of Solomon Islands Government. These include the Public Financial Management Act 2013, the Interim Financial Instructions currently in force and the Solomon Islands Government Procurement and Contract Manual [PCAM].

In the thematic report Auditor General David Dennis said it is a consolidation of all three audits undertaken which are individually tabled to Parliament.

“Our assessment recognised some common themes across the three ministries which provided an opportunity for all ministries including Ministry of Finance and Treasury (MoFT), to address these findings together in a consistent and sustainable manner and improve the level of internal control in Government procurements.

“Whilst the individual audit reports provide recommendations directed at the auditee, this thematic report focuses on suggested inputs from MoFT,” he said in the report.

However, Dennis said it is important to acknowledge the extraordinary circumstances created by covid-19 which heightened the inherent risk for expediting procurements and delivery of services at the expense of following established procedures.

“It is my view however that the existence of an urgent requirement should mean that controls are applied with urgency, and not discarded.

“The common themes include the lack of transparency and required documentation, including the inability to provide my office with full documentation to review transactions, indicating a major failure of accountability and this is an area that all Ministries need to address,” he said.

Dennis said there are also areas in which noncompliance, potential fraud and lack of accountability could together impact the efficient emergency procurements to deliver required and effective services expected during a crisis situation.

He hoped that the recommendations in the thematic report would assist the Government, in particular the Ministry of Finance and Treasury (MOFT), as well as the three ministries involved to strengthen their procurement processes both in emergency and normal operations.

All three ministries and MoFT have been provided with copies of the audits and offered the opportunity for further briefings and discussions with the OAG. 

“I intend to follow up on the findings and commitments made in response to our recommendations, through future audits of each of these Ministries.”

The OAG is one of the key accountability institutions established under the Solomon Islands Constitution which requires the Auditor General to audit and report on the public accounts of Solomon Islands, including all Ministries, offices, special funds, courts and authorities of the Government, and of the government of Honiara City and of all provincial governments.

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