An audit into the controversial Caroni Green Initiative (CGI) project conducted by Ernst and Young Service Ltd has shown that more than $9 million of taxpayers’ money has been spent on the agricultural project with farmers and citizens reaping little returns.
The project, launched on June 5, 2013, by then food production minister Devant Maharaj was proposed to Cabinet as an agricultural development plan to cultivate 5,800 acres of vegetables and root crops in three phases, over a two-year period.
It was designed to help reduce the food import bill, decrease food inflation, and allow former workers of Caroni 1975 Ltd to cultivate their unutilised two-acre plots in exchange for guaranteed payment and earnings.
At that time, Cabinet appointed Caroni 1975 Ltd as project manager for CGI and agreed that the Agricultural Development Bank (ADB) would finance the cultivation of the lands by way of a $4 million loan. Caroni 1975 Ltd invested $5,182,741.07 of its resources into CGI over the period March 2013 to January 2014.
After six months in operation CGI was scrapped and the ministry in December of 2013 took the decision to establish Caroni Green Ltd (CG), a state company chaired by Nigel Grimes to manage the controversial project, with the Government pumping $22 million into the new initiative.
The audit was leaked to the Sunday Guardian one week after Parliamentary Secretary in the Ministry of Agriculture, Land and Fisheries Avinash Singh promised to launch a separate audit into the Caroni Green project, stating that they could not account for monies invested in the project.
A perusal of the 48-page management report entitled “Procure to Pay and Contract Compliance Review” showed that Ernst and Young was engaged by Caroni 1975 Ltd to conduct an independent review of the project from January 2013 to January 2014.
The audit report dated June 27, 2014, revealed a string of problems with the project, ranging from no accountability, conflict of interest which entailed a certain manager supplying computers and software to his employers, discrepancies with contracts, spoilage of crops, duplication of work, inaccurate yield and sales recorded, crops given away and sometimes sold to individuals as opposed to institutional buyers, cash received and deposited but not accurately verified, poor land preparation, farmers abandoning their fields, and payment vouchers not being approved and signed by the authorised person for the disbursement of cash.
Another major factor that prevented the project from becoming viable was an inexperienced team, a skeletal staff, and staff not following proper policies and procedures.
Weakness identified
“Due to the low level of control consciousness, accountability is almost non-existent with CGI. From process owners to management personnel, there was no action taken in instances of non-conformance to expected procedure. Additionally, untimely and inaccurate information and poor communication are the major contributing factors to the areas of weakness identified,” the audit stated.
The project was managed by Deosaran Jagroo, former CEO of Caroni 1975 Ltd, while Kevin Singh was the CEO and chief financial officer.
It was revealed that the project’s expenditure as of January 31, 2014, was $9,182,741.07, while actual sales were tabulated at $1,797,944.47.
Of the $9 million spent, $4,178,622 was injected into land preparation; $1,565,157 for chemicals; $934,154 for seedlings; and $2,428,115 for administrative expenses.
The farmers were the least to benefit with payments of $76,693 being paid to them, while piles of harvested crops were left to rot in fields and consumers never benefited from lower food prices.
Due to the urgency to begin the project, Ernst and Young stated, a number of issues arose as CGI did not have the time to develop strategic plans, which led to ineffective decision-making.
The audit showed that seven farmers abandoned their fields because CGI did not provide proper land preparation, resulting in poor yields.
The accounting firm stated that a repayment strategy or a penalty for farmers was not outlined in the farmers’ contracts.
“It is unclear whether CGI could be successful in getting farmers to accept responsibility for the abandonment of their crops,” the report stated.
CGI had engaged 23 farmers to develop 57 fields with 20 types of crops. As of March 28, 2014, seven farmers had abandoned nine fields, comprising 111.6 acres.
It also showed that one contract issued to a farmer was different from the standard contract used to engage other farmers
The report showed discrepancies with contracts involving four farmers.
In several instances, the report stated that information was not provided for the assessment of farmers by CGI, while there were no standard documents used to record the yield or sales of crops from August to mid-October 2013.
From August to mid-February, the report stated, “rejected and spoiled produce was not consistently and accurately recorded and tracked.”
It was noted that CGI did not have proper storage facilities which contributed to regular spoilage of produce.
Goods that were not sold were stored in an outdoor shed, which had no cold storage facility.
The report showed photographs of several heaps of rotted melongene discarded in a field.
“This lack of planning and scheduling, coupled with an inadequate storage facility resulted in losses for CGI and the farmer,” the report stated.
In a bid to get harvested crops off their hands, CGI gave credit to wholesalers and farmers, sold the goods below the contract price, and gave away to individuals.
“CGI did not have the capability to take the produce to market or sell on the field. They were ill-prepared to undertake the marketing and sale of produce,” the audit stated.
While Ernst and Young noted that the responsibility for following up on payment from creditors was not delegated to a specific person, the CGI manager stated that legal action was being taken against farmers who owed them large sums of money for produce.
Ernst and Young also stated that they could not confirm that all cash received on the field was submitted to the administrative assistant, while receipt books were not restricted to authorised personnel and payment vouchers completed for the disbursement of cash were not consistently approved or supported.
It was also discovered that there were “12 payment voucher numbers missing from the sequence.”
Although the accounting firm was hired to review the project from January 2013 to January 2014, they also recorded 227 payment vouchers for the period February 2014 to May 2014 that were not pre-numbered or tracked to allow for ease of reporting, while they were unable to match the cash receipts to the bank deposit slips, as this information was not recorded.
Ernst and Young stated that “the control environment around the storage and management of cash at CGI was weak.”
The audit revealed that CGI laid no emphasis on “accountability and there was lack of documented policies and procedures and inadequate guidance.”
In conclusion, Ernst and Young recommended that CGI develop an organisational structure to be approved by a board of directors, farmers’ contracts be reviewed and amended, harvesting and cash processes be reviewed, adequate storage facilities be developed and an accounting system to track operational activities be implemented.
‘Witch hunt’
Admitting that there were inconsistencies with the project, former food production minister Devant Maharaj said if the ministry wanted to undertake another audit, it would be done at the taxpayers’ expense.
He said since CG was formed the project has yielded results.
“I don’t know if the PNM want to throw away money. The PNM continues its witch hunting exercise.”
Maharaj said he never ordered that CGI be rushed.
“That audit was commissioned by me based on the complaints I got from farmers. I was displeased with the implementation of the project.”
Maharaj said of the $22 million CG received $14 million was still in its coffers when he left office.
Maharaj has since insisted that CG has maintained a healthy financial standing, operating well within its appointed stipulations and continuing to lower the food import bill.
The company, up to August 2014, Maharaj said, harvested 290 metric tonnes of produce, some of which were supplied to the National School Feeding Programme.
Grimes: I will await the outcome of PNM’s audit
Chairman of CG Nigel Grimes said he was not privy to the first audit.
“If another audit is being contemplated by the ministry on Caroni 1975 Ltd and its project CGI, I would prefer to await the outcome of the audit before commenting.”
Singh: There was lack of accountability
Kevin Singh said he saw and read the report.
“There was a lack of policies, procedures and systems in place. There was lack of accountability. All the findings in the report are correct.”
Asked what created the problems, Singh said he preferred not to say “because I don’t know where this matter will reach.”
Singh said Jagroo who was in charge of the project no longer worked at Caroni 1975 Ltd.
“I was just the chief financial officer.”
Questioned if it was a case of the candle costing more than the funeral, Singh said if the production cost was $9 million and sales were $1.7 million “what do you expect?”
Jagroo: I was not given an opportunity to examine audit
Jagroo said after he left Caroni 1975 Ltd he was never shown a copy of the audit.
“I did not see it (audit) and nobody came to ask me any questions. I was not given an opportunity to examine its contents. I heard all of the problems, but nothing was brought to my attention. I don’t want to get into these things at all. I am a private person now.”
Rambharat: Ministry proposes to get legal advice on audit
Minister of Agriculture, Land and Fisheries Clarence Rambharat in response to a text message yesterday wrote, “I have read the final audit. There will be no further audit on CGI at this time. The ministry proposes to get legal advice on the final audit report. Caroni Green Ltd is currently under review as part of the ministry’s review of all its state companies and agencies.”
Project manager denies wrongdoing
Businessman Suren Singh has denied any wrongdoing in his supplying IT equipment to Caroni 1975 Ltd, while he worked as project manager of the Caroni Green Initiative (CGI) project.
But a 2014 audit undertaken by Ernst and Young into the project has deemed a July 2013 business transaction by Singh who manages Silver Networx as “a possible conflict of interest.”
The audit identified Singh as the project manager for CGI. The audit stated the purchases were authorised by CGI manager Deosaran Jagroo.
“The CGI manager stated that Caroni made purchases from Silver Networx in the past and was satisfied with the items. As such CGI piggybacked on this same vendor in the purchase of IT equipment,” the audit stated.
Singh defended the sale of two Dell Inspiron 3520 laptops, one Sage Quantum Peachtree accounting software, computers, server, printer and router totalling $80,300 to Caroni 1975 Ltd, under which the programme was managed, stating that he did “everything above board. It’s only a conflict of interest if you don’t state your business. All the managers knew that I supplied computers to the company.”
The laptops and accounting software were valued at $38,000 while the computers, server, printer and router were priced at $42,300.
Singh said it was not his fault if the state-owned company did not follow proper tendering procedures.
Singh said he started working at Caroni 1975 Ltd in 2007 as an IT consultant and became a supplier for the company.
In 2010, he was put on the company’s payroll.
For years, Singh said, he had been selling computers to Caroni 1975 Ltd while working there.
“I sold a lot. All their computers came from me.”
The audit stated that the Peachtree software was not utilised to record and report the sales and expenses incurred during their period of review.