$b CEPEP fiasco – No audits completed at state company since 2009

MEMBERS of the Public Accounts Enterprises Committee of Parliament were left disturbed on Wednesday by the Community-Based Environmental Protection and Enhancement Programme’s (CEPEP) failure to complete audits of $1.5 billion spent between 2015 and 2021.

This was blamed on the inability to retrieve documents from a private auditor after CEPEP’s server crashed in 2015.

During an inquiry into CEPEP for the financial years 2009-2014, the committee’s chairman, Wade Mark, along with several other members, advised CEPEP’s board to take the auditor to court.

The documents belong to CEPEP and are the property of the Government. The committee felt the auditor acted unethically by refusing to hand over the documents.

Mark also criticised CEPEP for operating and spending without doing an audit. In his opening remarks he said, “I think CEPEP has gone rogue…You have to spend close to $300 million or thereabouts in 2023, and you’re telling this committee and the taxpayers of TT and the Parliament of TT that you have spent $1.5 billion, or close to that, and you are only in the process of auditing accounts for 2015-2021.

“I want to tell this CEPEP company that this is not satisfactory. It is not acceptable. And we’ll have to take strong action.”

Mark also said it was “fundamentally wrong” that the matter had not been reported to the police, no hard copies were stored – in keeping with statutory requirements – and after so many years, the 2015 audit is expected to start in 2023.

He called for a forensic audit into CEPEP’s operations and the intervention of the Attorney General.

In CEPEP’s defence, its CEO Keith Eddy told the committee the situation was not the company’s fault.

CEPEP’s data server went down just before the September 7, 2015 general election, and the company lost all its financial information.

A report on the server crash was submitted to the JSC after a previous sitting. CEPEP also reported the incident to the Finance Ministry, but not to the Fraud Squad.

Only after a new board was appointed in 2016 were attempts made to retrieve the lost data. It took three years to recreate the computerised financial system and source a new auditor.

CEPEP admitted it had no filing system of hard-copy documents stored to track the company’s spending.

At Wednesday’s sitting, several members of the JSC said they believed this was sabotage, because CEPEP’s current board was also in the dark as to what had happened to the physical documents or why there was no filing system then.

The company’s only option was to approach the previous auditor for documents to retrieve the lost data so that auditing for 2009-2014 could start. But that auditor refused to hand over the information to the new auditor.

CEPEP accessed its bank statements but was unable to provide other documents – such as receipts – to the auditors to detail how its funds were spent. Without the 2009-2014 data, the audit cannot go forward.

However, while it worked on a plan to retrieve the lost data, CEPEP was able to have all its management accounts completed up to 2021. All its monthly and quarterly reports due to the Ministry of Finance and Rural Development and the Local Government Ministry have been submitted.

CEPEP operates on a $500 million subvention from the Government.

The company pays 350 contractors and approximately 120 employees at its head offices.

On the missing figures, Eddy said, “The auditors required to get 2015 signed off, because if you don’t have that balance going forward, everything else that follows could be erroneous.

“So we had to make do and jump over (sic) a number of hoops to try to figure out a way in which we can actually move the audit forward with having 2015 signed off. Had we got those working papers, these audits would have been completed. The auditor refused…

“This will never happen to us again,” he declared.

To ensure this, CEPEP now has a new, off-site server and daily, weekly and monthly backups of data are made to the cloud. Staff are also required to scan and file hard-copy documents for record-keeping. The company’s financial audits should resume in July and the backlog should reportedly be cleared in a year.

But JSC member Keith Scotland told the board, “You need to be bullish with the auditor to retrieve the working papers. It gives this committee no joy to chastise CEPEP.”

Narine Charran, deputy permanent secretary at the Ministry of Finance, said the ministry did not have the tools to investigate a server failure and that was why an investigation could not be done.

Ministry of Rural Development and Local Government permanent secretary Desdra Bascombe said her ministry didn’t see the need to investigate because the issue was between the auditor and CEPEP. The ministry’s role is to monitor, not to intervene in the company’s operations.

Although Bascombe proposed litigation against the auditor, Eddy said he felt it was unnecessary at this time, since the company had found an alternative.

He said a consultant was hired to chart the way forward and now CEPEP is ready to go full speed ahead. In fact, he said he has plans to bring the start date of the audit forward from July.

He also told the committee CEPEP would go after the auditor to get the documents back.

No response yet from line ministers

At the time of the server failure, CEPEP fell under the Ministry of Public Utilities. The UNC’s Nizam Baksh then headed that ministry. Newsday was unable to reach Baksh for comment. The PNM’S Ancil Antoine became Public Utilities Minister soon after the incident. He could not be reached for comment either on Wednesday afternoon.

In 2016, the Prime Minister reassigned CEPEP to the Ministry of Rural Development and Local Government. Rural Development and Local Government Minister Faris Al-Rawi could not be reached for comment.