An epidemic of fiscal mismanagement

The latest report from the National Audit Office (NAO) reveals an epidemic of fiscal mismanagement at all levels of government.

Taxpayer funds are not tracked properly or accounted for, but whether this is due to rampant incompetence or deliberate obfuscation is anyone’s guess.

The Auditor General’s job is to ensure the proper management of public funds, but it’s impossible to carry out that mandate fully when departments submit shoddy accounts — if they submit them at all.

The list of “main weaknesses” encountered by the NAO should alarm and infuriate taxpaying citizens.

Dispensing with internal controls…

‘Forgetting’ to publish direct orders in the Government Gazette…

Not holding Board meetings as frequently as the relevant legislation says they must be…

Failure to check invoices resulting in overpayments — even in cases where invoices were marked ‘certified correct’ by the responsible officers…

In short, a total disregard for rules meant to ensure accountability. If there’s no paper trail to audit, did anyone do anything wrong?

Failure to segregate duties, concentrating too much power in the hands of one person who can then abuse that power with abandon, was another common problem.

The Malta Film Commission is a great example. The entity tasked with marketing Malta as a good place to make movies was slammed for its lack of effective internal controls and no independent oversight of Johann Grech’s personal fiefdom. It was over €1 million in the hole in 2020 thanks to “extravagant expenditure on travel” (58% of its total budget allocation) and dining out.

Those areas fell entirely within Grech’s remit — even though he was the one doing all the travelling. What could possibly go wrong with that?

Want to know how he justified it all? Read the NAO report. See the litany of excuses under ‘Management Comments’ for the MFC, starting with “The film industry does not work that way”.

You’ll recall that before he took over as Film Commissioner, Grech was Head of Government Marketing within the Office of the Prime Minister. It won’t surprise you to learn that he was appointed by Konrad Mizzi. Isn’t it odd how every corruption scandal somehow leads back to Joseph Muscat’s Toxic Trio?

The situation is even worse when it comes to dishing out public funds.

Irregularities with overtime payments and other allowances were rampant. The Cleansing and Maintenance Division was particularly prone to overtime claims submitted without a proper record being kept of the total number of work hours recorded by employees, and with no deductions included for break times.

One foreman was paid €21,349 in overtime last year, mostly to “sanitize public roads and areas every morning on a daily basis”, but it’s ‘orrajt’ because he was a “highly trusted employee”. No one seemed to question why a regular daily task didn’t fall under regular daily work.

The lack of proper record keeping meant there was no way to see how many total work hours were recorded by specific employees during specific periods, enabling one “employee to be recorded on different overtime attendance records at the same time, resulting in an overpayment”.

Ignoring competitive hiring practices was also routine.

The Foundation for Medical Services — Neville Gafa’s old employer — was particularly beset by hiring problems that resulted in the bypassing of normal recruitment processes.

According to the NAO, “an audit at the Foundation for Medical Services revealed concerns regarding the engagement of officials whose positions do not feature in the entity’s approved human resources plan, as well as a number of irregularities in the appointment of persons on a trust basis”.

You won’t be surprised to learn that the engagement of ‘persons of trust’ without the required approval, without external calls for applications, and without proper documentation took up a large part of the Auditor General’s assessment.

The Management Comments — the response of the particular department to the NAO’s recommendations — tend to be justifications for why rules were broken.

And in the case of the Foundation for Medical Services (FMS), why they’ll continue just as they are, thanks very much: “employees currently engaged on a trust basis will continue to enjoy their current contractual employment status until their current contract is up for renewal”.

Like elementary schools with a high truancy rate, this particular department was also plagued by attendance issues: “Audit verifications carried out revealed instances of lack of control over manual attendance records, including lack of proper certification, missing leave records and paid overtime hours not reflected in the manual attendance sheets”.

One employee on the Foundation’s payroll was even found to be “undertaking duties within the Ministry for Family, Children’s Rights and Social Solidarity”. He’d been on the payroll since 2003, hired to work at Mater Dei Hospital, but he’d never carried out any duties there at all.

They finally tracked him down in February 2012 and sent him to St. Vincent De Paul Residence. But “up till the latter date, FMS was not aware of the officer’s whereabouts”.

Is it any wonder no one remembered seeing Neville Gafa when he ‘worked’ at FMS?

The abuse of direct orders is another problem that’s passed epidemic proportions and is now a proper plague.

To take just one example, the Ministry for Education and Employment was scolded for renewing the contracts of five service providers year after year, since 2013, because “due to technical or artistic reasons, or due to the protection of exclusive rights, the services may be provided only by a particular economic operator”.

Which skills were so specialised that they couldn’t possibly shop around for more competitive candidates as per the government’s own employment regulations?

Administrative support services. Telephony installation and maintenance. Inclusive education placements. And organising adventure programmes for students.

Incidentally, that indispensable adventure programme service provider was also operating a private business for profit from the school at Mtarfa (and later, from Pembroke) while earning some €381,994 from the ministry between 2015 and 2019. No reference was made to the private use of these premises in the contract, nor did it say who was supposed to pay the utility bills.

The NAO report clearly states that “direct orders are only to be used in exceptional circumstances and as a last resort”.

Unfortunately, they’re the first resort and the go-to method of rewarding supporters.

The Shift has attempted to keep track of this blatant pilfering of public funds, publishing more investigations into the misuse of direct orders than I can count. Unfortunately, this is a cow that will continue to be milked.

Given this cavalier mismanagement of public funds — and in some cases, rampant looting — is it any surprise that the Consolidated Fund plummeted like a bowling ball hurled from a tall building between 2019 and 2020?

Expenses outstripped revenue by €441 million in 2020, ending the year with a deficit of nearly €798 million.

The deficit isn’t the debt, remember. This means they spent €798 million they didn’t have in 2020 alone.

Please don’t blame the pandemic. Yes, the decline was steeper that year, but the last time the Consolidated Fund grew was between 2016 and 2017. It’s been on an increasingly steep downhill slide since then — coincidentally, the year Joseph Muscat was reelected on a mandate of corruption.

So where is all your money going?

I’ll tell you one thing, it isn’t going towards building a sustainable future.