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Vanuatu Ombudsman's Reports |
REPUBLIC OF VANUATU
PUBLIC REPORT
ON THE
ILLEGAL COMPENSATION PAYMENTS TO STAFF OF
PRIME MINISTER’S OFFICE AND FINANCE DEPARTMENT
16 April 1999
99/05
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PUBLIC REPORT ON THE
ILLEGAL COMPENSATION PAYMENTS TO STAFF OF
PRIME MINISTER’S OFFICE AND FINANCE DEPARTMENT
TABLE OF CONTENTS
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PREAMBLE
'Ye have ploughed wickedness: ye have reaped iniquity, ye have eaten the fruit of lies...'
Hosea 10 v 13
SUMMARY
Towards the end of 1995 calendar year, the Council of Ministers approved illegal payments to 15 selected public servants in the Prime Ministers Office and the Department of Finance, for their contributory work in preparing the payments of compensation to those qualified under the Compensation Act No. 11 of 1994. The payments were classified as lump sum or 'ad hoc' payment. The money used to finance these payments came from the Compensation Fund. An inquiry was commenced into the matter after receipt of a complaint.
An analysis of the events and procedural activities that contributed towards concluding the payments indicate that the payments were illegal and that relevant laws, regulations and instructions governing payment of monies to public servants were not complied with nor observed.
The Leadership Code was compromised by the then Minister of Finance, Mr Willie Jimmy, who acted contrary to advice given by Attorney General. The Leadership Code was also compromised by the Director-General of Finance, Mr Jeffrey Wilfred, who had a conflict of interest when he failed to advise against the payment as he was one of the beneficiaries.
1. JURISDICTION
1.1 The Constitution and the Ombudsman Act allow me to look into the actions of the government and other organisations that the government has interests in. I can also look into defects in the law or the administration of the law, discrimination and breaches of the Leadership Code. This includes conduct of the Finance Department, the Minister of Finance, Director-General of Finance and staff of the Finance Department.
2. PURPOSE, SCOPE OF INVESTIGATION AND METHODS USED
2.1 The purpose of this report is to allow publish my findings and recommendations.
2.2 The scope of this investigation is to establish the facts about the payment of Christmas bonuses to staff of the Prime Minister’s Office and the Finance Department and to determine whether:
the conduct of the Council of Ministers in approving payment to selected public servants was proper;
Hon. Willie Jimmy’s action in signing the GPVs was proper;
the conduct of the Director-General of Finance, Jeffrey Wilfred, who was also a beneficiary to the payment, was proper;
the payments were in accordance with the standing Public Service Staff Manual rules;
the payments were in accordance with the Compensation Act of 1994.
2.3 Information used in this report was gathered by informal request, letters, interviews and through own research.
3. OUTLINE OF EVENTS
3.1 On 2nd November 1995, the Council of Ministers (CoM) approved (Decision No.116) a paper tabled by the Honourable Minister of Finance, Mr Willie Jimmy, for the payment to 15 public servants of a lump sum of VT50,000 each. According to the Finance Department’s Internal Audit’s report, this decision was made contrary to advice provided by the Attorney General not to use Compensation Funds for this purpose.
3.2 On 6th November 1995, the Secretary-General to the Council of Ministers, Mr Charlot Salwai, communicated (Appendix B) the CoM’s decision to the Honourable Prime Minister, Mr Maxime Carlot as follows, 'The Council of Minister’s Meeting No 16 of 2nd November 1995 approved:
(1) The list of claims during the civil disturbances in 1980. The list of Torba, Maewo, Ambae, Pentecost, Ambrym, Paama, Epi, Shepherds, Efate, Futuna and the adjustment list of Santo & Tanna.
(2) To authorise the Honourable Prime Minister to consider on behalf of the Council of Ministers other adjustment lists, to submit them to the Ministry of Finance.
(3) To authorise, on decision of the Prime Minister subject to the Act No. 11 of 1994, the Minister of Finance to pay a substantial amount to all the persons working in the preparation of the payment of these compensations, if there are some funds left (Commission members and administration support staff)''.
There was no evidence of approval of the payments given by the Prime Minister. The First Secretary of the Prime Minister’s Office, Ms Yvette Sam, confirmed that funds allocated were exhausted leaving some 40% of claimants not paid.
Although the Council of Ministers’ decision was subject to the Compensation Act, the Minister of Finance did not comply with Section 2 of that Act
3.3 On 21st December 1995 15 GPV’s were raised by the Department of Finance. All beneficiaries to the payments are shown on GPV’s as Appendix A. Original GPV’s from which Jeffrey Wilfred, John Luen and Jack Kallon were paid were missing from the files. Jack Kallon (Administrative and Finance Officer, Prime Minister’s Office) and John Louis (Finance Pay Officer) drew up the original list of beneficiaries combining the two lists from Department of Finance and the Prime Minister’s Office into one list. This took place at the Prime Minister’s Office. According to the two officers mentioned above, the combined list excluded Mr Jeffery Wilfred’s name. John Louis took the list to the Department of Finance and gave it to Mr Wilfred for review whilst he waited at Mr Wilfred’s office door. Mr Wilfred returned the list to John Louis within a few minutes with his name added to the list in a different ink (See list attached as Appendix D). Certified testimonies of those in receipt of the VT50,000 bonus claimed that the handwriting was that of Jeffrey Wilfred, and that he added his own name to the list and had Minister Jimmy authorise his GPV. In his statement under oath, Mr Wilfred repeatedly denied appending his name to the list of beneficiaries. However the name was added and this Office could not establish by whom.
3.4 Mr Wilfred stated that the bonus payment he and other staff received was a deserved payment. The VT50,000 payment he received was only for signing cheques late one night. He also stated that he knew that the procedure to pay overtime included the filling of some forms but he and the beneficiaries did not. In terms of the Public Service Rules, the Finance Minister has no powers whatsoever within this legislation to override any such rules even though Mr Wilfred stated 'the Minister of Finance can order even if it contravene the Public Service Staff Manual'.
3.5 Actual payment to beneficiaries was made on 28th December 1995. Funds used were derived from the Compensation Fund, account 540-101-09 against advice provided by the Attorney General’s Office.
3.6 On 17th January 1996, Internal Audit section of the Department of Finance produced a report (attached as Appendix C) on the lump sum payment identifying the irregularities about the payment. The said report was discussed with the Director-General of Finance, Mr Jeffrey Wilfred. The report was addressed to the Minister of Finance, Hon. Willie Jimmy, to enable the minister to consider the Audit’s recommendations in recovering the funds paid out and for a proper examination of staff overtime to be carried out in light of the Public Service rules. There is no evidence of action being taken by then Minister of Finance, Mr Willie Jimmy, on the recommendations. T he recommendations made by the Internal Audit section of the Finance Department were:
'(a) It would be wise to seriously reconsider the repayment of the amounts paid to avoid discrediting the Department if the information was passed to other sources.
(b) The repayment could be justified on the grounds that the seriousness of their actions having been brought to their attention, jointly involved taking that action.
(c) It would appear on the information provided that each and every Public Servant involved would at least be guilty of an offence and liable for disciplinary charges or even possible criminal charges of misappropriation of public monies. It is therefore recommended that very positive action be taken to repay the amounts as soon as possible. A proper examination of the actual hours worked in excess of normal monthly hours could be assessed and appropriate overtime approved for those entitled.
(d) The advice from Attorney General’s Office that the Compensation Act fund cannot be used for that purpose means that other funds should be used as Salary Heads to reward the staff for their efforts. This is justifiable provided the terms of the Staff Manual section 22 are followed.'
3.7 The Prime Minister’s Office staff who received these illegal payments were Yvette Sam, Jack Kallon, Melda Saiwia, Leichichi Ruru, Belinda Philips and Marie Malere. The beneficiaries from the Finance Department were John Luen, John Louis, Touriman Lilip, Juliet Faerua, Frederick Simeon, Rolline Tavoa, Flora John, Taura Sisi and Jeffery Wilfred.
3.8 One recipient of the illegal payment, Mrs Rolline Tavoa, on 6 May 1998 reimbursed fully the funds paid to her during which time she was on leave on her island. Mrs Flora Kalsal has arranged for VT5,000 to be deducted from her fortnightly salary towards her receipt of the VT50,000. Staff members, Taura Sisi, John Luen and Touriman Lilip have indicated that they will return the funds paid to them, whilst Juliet Faerua and John Louis were prepared to settle the amounts they received if directed by their Head of Department or the Public Service Commission. Jack Kallon was of the view that the Minister responsible for approving such payment should refund the money while Melda Sawia and Leichichi Ruru indicated that they were presently unemployed and unable to repay. There was no response from others.
3.9 On 8 April 1999 we were made aware that one of the recipients of the illegal payments, Mrs Marie Malere has started refunding the money to the Department of Finance. She has refunded VT5,000.
4. RESPONSES FROM THOSE INVOLVED
4.1 The Working Paper or extracts were sent to the following people for comments and responses:
- Miss Yvette Sam
* Mr Jack Kallon
- Miss Melda Saiwia
- Mrs Leichichi Ruru
- Mrs Belinda Philips
- Mrs Marie Malere
* Mr John Louis
- Mrs Touriman Lilip
- Miss Flora John
* Mr Willie Jimmy
* Mr Jeffrey Wilfred
- Mr John Luen
- Mr Frederick Simeon
- Mrs Juliet Faerua
- Mr Taura Sisi
- Mrs Roline Tavoa
4.2 Responses were received from only those marked with an asterisk (*). The others have not forwarded any comments to our office and we will assume that they agree with the facts and documents set out in my report.
Reponses
4.3 Mr Jack Kallon who was former Administrative and Finance Officer in the Prime Minister’s Office, stated that in the four (4) years in office political appointees worked many times during weekends, public holidays and into late night, but have not claimed for overtime and unsocial hours. He further stated that if it was a bonus been given by the Minister who authorised the payment of the bonus he (Minister) should refund the money. (Appendix E).
4.4 Mr John Louis in his reply stated that, since everyone who participated in the preparation and of their dedication in processing the payments they deserved to be paid. He thought that the payments were for additional duties carried out. If something was wrong with the payment it is not their problem because the Council of Ministers has decided so in the first place. He only found out that Mr Jeffery Wilfred’s name was included in the list when he started writing up the General Payments Vouchers (GPVs). That according to the Staff Manual Mr Jeffrey is not entitled to such payments but since it was a Council of Ministers’ decision, everyone who participated in the preparation of the payments deserved to be paid. (Appendix E).
4.5 Mr Willie Jimmy who was the former Minister of Finance replied that he was acting on the Council of Ministers decision when he signed the General Payment Vouchers (GPVs); and that the Council of Ministers’ decision No.116 of 02.11.95 is self explanatory on the matter. (Appendix E).
4.6 Mr Jeffery Wilfred the former Director of Finance Department stated in his reply that, Mr John Louis did not confirm that he actually saw him writing his name in the list and that he denied writing his name. Also that there is spelling error on his name. He did not authorise the General Payment Vouchers (GPVs) nor saw the Minister of Finance to sign the GPVs.
As far as he is concerned the GPVs were legally authorised meaning that the accounting officer who signed the GPVs was sure that there was funds available. Also that the GPVs that were signed by the Minister of Finance is proper and is in line with Financial Regulation section 151 since the Council of Ministers has already given approval. Under Section 157(1) the Director of Finance can refuse to make any payment but, the Minister of Finance has the authority and can overrule the director’s decision.
Nowhere did he ever state that these were bonus payments. The term 'bonus' came only from the internal audit and the Ombudsman.
If the current Minister of Finance decides that the money must be refunded, they will accept that decision. (Appendix E).
Comments
4.7 The comments made by Mr Kallon about overtime is not founded. Under the Public Service Staff Manual (chapter 4-22) only public servants in categories 1 to 17 of the Public Service Salary Scales’ are eligible for overtime payment. However those on categories 10 - 17 are eligible but with prior approval of their respective ministers. Political appointees terms and conditions are set out in the Official Salaries Act. There is no mention of overtime for political appointees.
4.8 Under section 4.18 to 4.23 the Public Service Staff Manual, public servants are eligible to claim overtime if they work beyond the normal working times of the Public Service. That is:
7.30 AM - 11.30 AM
1.15 PM - 4.30 PM
In order to get payment for overtime the necessary and appropriate forms has to be completed first by the officers. Those officers who are on category 10 to 17 of the Public Service Salary Grades have to have the prior approval of their Minister (Staff Manual Section 4.22).
In the case of Mr Louis he did not complete an overtime form nor follow the procedures set out in the Public Service Staff Manual.
In his certified testimony with the office of the Ombudsman on 23 October 1998 Mr Louis stated that while waiting he heard Mr Jeffrey Wilfred say that he had included his name in the list. His statement that he only found out Jeffrey’s name when he was writing up the GPVs is in contradiction to his statement on 23 October 1998 under oath.
4.9 The former Minister of Finance Mr Willie Jimmy stated that he was acting on the Council of Ministers’ decision No.116 of 2 November 1995.
The Compensation Act No.11 of 1994 set it out very clearly in Section 2 that:
All monies borrowed under Section 1 shall be paid into a Compensation Fund and sums paid thereout shall be exclusively for the purposes of making ex-gratia payments in circumstance referred to in Section 3 in accordance with the provisions of this Act.
The funds used from the Compensation fund and paid to staff of the office of the Prime Minister and Department of Finance contravenes the Act. The Council of Ministers’ decision, in part, 'to pay a substantial amount to all the persons working in the preparation of the payment of these compensations, if there are some funds left (Commission members and administration support Staff)', contravenes the Act.
4.10 After all the comments from Mr Wilfred this does not alter the fact that he was one of the ones who got paid from the Compensation fund. As a director of a department at the time he should be in a better position to know the Public Service rules governing overtime. Directors of departments are not eligible for overtime as set down in section 4.22 of the Public Service Staff Manual.
5. RELEVANT LAWS AND REGULATIONS
5.1 CONSTITUTION OF THE REPUBLIC OF VANUATU
CONDUCT OF LEADERS
66. (1) Any person defined as a leader in Article 67 has a duty to conduct himself in such a way, both in his public and private life, so as not to-
(a) place himself in a position in which he has or could have a conflict of interests or in which the fair exercise of his public or official duties might be compromised;
(b) demean his office or position;
(c) allow his integrity to be called into question; or
(d) endanger or diminish respect for and confidence in the integrity of the Government of the Republic of Vanuatu.
(2) In particular, a leader shall not use his office for personal gain or enter into any transaction or engage in any enterprise or activity that might be expected to give rise to doubt in the public mind as to whether he is carrying out or has carried out the duty imposed by subarticle (1).
DEFINITION OF A LEADER
5.2 COMPENSATION ACT NO. 11 OF 1994
2 PURPOSE OF THE BORROWING
All moneys borrowed under section 1 shall be paid into a Compensation Fund and sums paid thereout shall be exclusively for the purpose of making ex-gratia payments in circumstances referred to in section 3 in accordance with the provisions of this Act.
3 CLAIMS FOR COMPENSATION
Any person or legal personal representatives of any person -
(a) who was injured or lost his life during the civil disturbances in 1980;
(b) whose property was damaged, requisitioned or acquired during the civil disturbances in 1980;
(c) who was injured or lost his life during the civil unrest in 1988;
(d) who was a member of the New Hebrides Defence Force;
(e) who has been unfairly imprisoned without an order of the court;
(f) who is a former member of the National Council of Chiefs whose term of office ended on 16th December 1992,
may, subject to the provisions of this Act, apply to be paid compensation from the Compensation Fund in respect of any of the matters referred to in paragraphs (a), (b), (c), (d) (e) and (f) of this subsection.
5.3 STAFF MANUAL OF THE PUBLIC SERVICE (January 1988)
9. GENERAL CONDUCT
9.7 All officers are prohibited from receiving gifts or presents in the course, or as a result, of their duties or by virtue of their official position, whether in the shape of money, goods, free services, passages, or other benefits, and are prohibited from giving such gifts and presents. This regulation not only applies to the officer himself, but also to his family, and the officer will be held responsible for its observance by members of his family. This regulation does not apply to cheap promotional goods such as calendars and diaries.
4.22 All officers in categories 1 to 17 of the Public Service salary scales, except for Heads and Deputy Heads of Departments, shall be eligible for overtime, but in the case of officers in categories 10 to 17 the prior approval of their Minister is required to make the officer eligible. The Minister’s approval shall specify the officer by name and title of post, and if appropriate shall specify the type of work which may qualify for overtime payments and any other restrictions which may apply in any particular case, and a copy shall be sent to the Minister responsible for the Public Service.
6. FINDINGS
6.1 Finding 1: The conduct of then Minister of Finance, Willie Jimmy, in approving the Illegal Compensation payments was contrary
to law. The bonus payments did not comply with the conditions of the CoM decision and they were in violation of the Compensation
Act of 1994. Further, the payments were contrary to Public Service rules.
6.1.1 Under the Compensation Act No. 11 of 1994, there was no provision of ad hoc payments such as those paid or any other payments other than those covered in the said Act. The Compensation Fund was established exclusively to fund ex-gratia payments. In accordance with section 3 (1) of the Compensation Act, there was no provision to pay government staff to prepare the compensation payments. Further the money allocated to meet claimants’ requests was not sufficient so that 40% of them remain unpaid to date. In effect, the money used to pay staff of the Prime Minister’s Office and Finance Department were funds established to meet claimants’ requests under the Compensation Act and should not have been used.
6.1.2 The Staff Manual of the Public Service (subsection 9.7) prohibits public servants to receive gifts and presents for the services they rendered during the course of delivering their official duties other than their own wages and salaries. In accordance with Section 4.22 of the Staff Manual of the Public Service Mr Wilfred as Finance Head of Department was not eligible for any overtime payment.
6.1.3 The payments did not comply with the conditions of Council of Ministers decision as the Council of Ministers stated that the payments were to be made on decision of the Prime Minister subject to the Act No.11 of 1994.
6.2 Finding 2: Former Director-General of Finance Department, Mr Jeffery Wilfred’s conduct amounts to breaches of the Leadership Code.
6.21 Mr Jeffery Wilfred’s receipt and acceptance of the payment placed him in a position where he could have a conflict of interest (section 66 (1)(a) of the Constitution) between his position as beneficiary of the payment and his official responsibility as Finance’s Director-General to ensure the lawfulness of the payments. Furthermore, by permitting the processing of the illegal payments, he brought his integrity into question (Section 66(1)(c) of the Constitution), particularly since his position requires him to be familiar with or make himself aware of the legality of all government payments.
6.22 Although, Mr Wilfred continuously stated during his interview with me that he deserved the payment I find that his acceptance of the payment was contrary to section 9.7 and 4.22 of the Public Service Manual rules. Heads of Departments are not eligible for overtime.
6.3 Finding 3: The conduct of the then Minister of Finance, Willie Jimmy, was in breach of the Leadership Code.
6.3.1 As Minister of Finance, Hon. Willie Jimmy had direct responsibility for the management of government's assets and liabilities and the supervision, control and direction of all matters relating to the financial affairs of government. His responsibility for the payments which were not properly authorised as required by the Council of Ministers’ decision is contrary to law (Compensation Act of 1994) and contrary to public service rules diminish respect for and confidence in the integrity of the Government of the Republic of Vanuatu (section 66(1)(d) of the Constitution).
6.3.2 Mr Jimmy's failure to act upon receipt of the Internal Audit's report is tantamount to negligence to accept criticism and responsibility.
7. RECOMMENDATIONS
7.1 Recommendation No. 1: That the Minister of Finance take action to recover the illegal payments totalling VT750,000 from the individuals who received them and from Hon. Willie Jimmy who had overall responsibility for ensuring that the payments were lawful.
Recommendation No. 2: That the Minister of Finance to formally acknowledge and thank those individuals who have taken steps to return the amounts voluntarily and ensure that such acknowledgment is placed in their personal files.
Recommendation No.3: That the Director of Finance Department ensure that the Public Service Rules regarding overtime is complied with in the future.
Recommendation No 4 That the Minister of Finance is to consider asking those in the Department who were involved in the preparation of the compensation payments to complete the required overtime forms and submit them for payment, And that a proper examination of the actual hours worked in excess of normal monthly hours be assessed and appropriate overtime approved for those entitled.
Recommendation No 5 There should be a mandatory requirement for the responsible authority to act on an Internal report of the Finance Department and that either the law or the procedures be amended to ensure that such future reports are not ignored.
Dated the 16th day of April 1999
Marie-Noelle FERRIEUX PATTERSON
OMBUDSMAN OF THE REPUBLIC OF VANUATU
8. LIST OF APPENDIXES
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