GOV’T ASKED TO RECOVER OVER D164M ‘UNJUSTIFIABLY’ PAID TO SECURIPORT
Full audit report on controversial airport passenger levy
The National Audit Office has advised the Gambia government to recover D164, 053,036.00 paid to Securiport towards the arrears of revenue claimed to have been accrued from 1 October 2019 to 31 August 2020 when the project could not commence due to nonenforcement of agreed security fee collection by government.
The NAO report on the award of contract to Securiport for the administrative and management of immigration security services at the Banjul International Airport highlighted that discussions between auditors and government officials revealed that the delay was caused by engagements with the international aviation body, IATA, to request a code to be embedded in air tickets which was however denied due to The Gambia being considered as an expensive destination.
According to the audit report, Securiport relied on one of the provisions of the contract which requires the government to make payment to the company for any failure in enforcing the collection of the security fee.
But the auditors said there is a risk that public funds were spent on paying arrears for which the Government had no obligation to pay thereby causing financial loss to the Government.
“Government should stop paying any arrears to Securiport until legal advice is sought from the Attorney General and the ministry of justice. If the legal opinion is in favour of the government, measures should be made to recover the D164, 053,036.00 paid to Securiport, and when that is done, the money should be paid back to the Consolidated Revenue Fund and details furnished to the National Audit Office for verification,” the auditors’ report stated.
The report added that the government should not have agreed to pay any accrued arrears to Securiport for late commencement of the project because failure to secure the IATA code to start the operations of the project is not good reason to pay any arrears to Securiport as this is outside of government’s control.
According to the management response, Securiport has, on several occasions, indicated to NAO that government pays the funds into their operational account, and they are free to disburse their funds as they deem fit and that government is not and has not taken any liability for a Securiport loan registered at GT Bank.
Securiport also insisted that NAO cannot just limit itself to analyzing the parts of the contract that suits them and ignore other parts.
“The contract needs to be viewed as a whole and as initiated by both parties. It has further been explained, on several occasions, that there is no issue regarding the breakdown of the accrued arrears as the MoF, MoI and GCAA representatives verified these figures and then the instruction was forwarded to MoF from SG office acknowledging the debt to be paid,” Securiport argued.
According to the auditors, a review of the cash collection on dollar bank account (201/126736/2/1/1) shows instances where monies totalling USD207,600 equivalent to D10,948,824.00 was transferred to the Operational dollar account (201/126736/2/1/0) of Securiport for use even before the sharing of revenue.
“This suggests a deliberate attempt by Securiport to suppress and to divert cash collections to personal accounts. There is a risk that Securiport withdraws from the cash collection account at their discretion without seeking any approval from GCAA. This is a deliberate breach of contract by Securiport and there is a risk that these collections were diverted to other accounts other than the collection account,” the auditors queried.
But according to Securiport, the deposit slips are recorded in a file which serves as the basis for the slips of the Government and Securiport shares.
“Therefore, there is an effective control and assurance of the amount due to GCAA as per the percentage split. Securiport has the right to transfer part of its share, and this does not open a way for suspicion. It was without any wrong intention. All the transactions are duly tracked on the bank statements, so no diversion is possible,” the company noted in their response to the auditor’s query.
However, the auditors maintained that it is inappropriate for Securiport to transfer monies collected from the security fee to their operational account before sharing takes place as stated in Section 126.96.36.199 (ii) of the contract document.
The NAO added that an amount of D4, 025,040.00, USD 16,765.00 and CFA 21,500.00 respectively were made from security fee and deposited to the operational account of Securiport instead of the cash collection account.
The auditors argued that there is risk that the cash collections are understated thus denying the government its share of revenue.
This, the auditors added, is a deliberate breach of contract by Securiport and there is a risk that these collections were used by Securiport for their operational expenses or diverted to other accounts for private use.
“This suggests that there is no monthly bank reconciliation performed by the Officials of Securiport,” the NAO report added.
The NAO demanded that Securiport provide a plausible explanation for depositing security fee collection to accounts other than the cash collection account or reverse and deposit back to the cash collection account and subsequently transfer Government share of revenue due on these collections as stated in the contract.
“We recommend that the Government of The Gambia through the GCAA and Ministry of Finance engage Securiport to ensure that Government share of revenue is paid in full,” the auditors stated in their report.
Reacting to these findings, Securiport said the depositing of the monies into the operational account instead of the cash collection account is simply a human mistake on the account numbers which are similar.
But according to auditors, if it was a human mistake as claimed by Securiport, these monies would have been reversed and paid back to the cash collection account without any delay. “However, this was not done, therefore, the finding remained unresolved,” the auditors noted.
The auditors further revealed that discussions with staff of Securiport and personnel at GCAA confirmed that diplomatic and service passport holders do not pay the security fee of $20 or D1,000. However this is contrary to annex III (II) 5 of the contract which only exempted aircraft crew, airline staff, children below 2 years, transit passengers and passengers whose flights are diverted to Banjul meaning tha exemption of diplomatic and service passport holders is not part of the contract.
“Several requests were made to the IT personnel of Securiport to provide the CAISS system report which shows the number of diplomatic and service passport holders arriving and departing the Banjul international airport but no response is received from management. Therefore, the finding remains unresolved up to the time of finalising this report,” the auditors stated.
The auditors further highlighted that a notice of both corporate tax and education levy was prepared and submitted to Securiport for the year ended 31 December 2020 by the GRA but a review of the notice of assessment revealed that Securiport owed a corporate tax liability amounting to D334, 228.15 and D761, 801.03 respectively for the years ended 2019 and 2020.
“We also noted that an Education levy of D98, 226.37 for the year ended 31/12/2020 was also due for payment. These tax liabilities include penalties and interest. Our discussions with officials of GRA revealed that this assessment was based on Best of Judgment (BOJ) and there was no payment of tax by Securiport up to the time of finalising this report. There is a risk that Government contribution to this project is at least equal to, if not more than the initial investment incurred by Securiport. We recommend that Securiport pays its tax liabilities to the Gambia Revenue Authority and evidence of payments be provided to the NAO for verification,” the auditors stated.
They further stated that based on their calculation, there is under reporting of revenue collected by Securiport amounting to $250,315.93 which is equivalent to D12, 928,817.70 between expected revenue and the revenue reported by Securiport for the periods under review.
“We also noted differences of D5,580,985.00 and USD160,093.00, respectively between receipts captured in the POS and the amounts deposited in the cash collection account. There is a risk that not all collections made from the security fee were deposited to the cash collection account,” the report stressed.
The report also revealed that a review of the cash collection sheets showed that collections totalling D47, 000, €12,045 and £3,190 respectively were made from security fee but these collections did not reflect in the system receipt records (POS) while another reconciliation of the amounts recorded in the collection sheet and the amounts in the POS noted a difference D444, 540.00 and USD 130,768.00 respectively.
The auditors also revealed that receipts totalling D347, 190.00 in respect of security fee were collected between the 28th December 2020 and 31st December 2020 but a review of the bank statement shows only D27, 190.00 were deposited during this period leaving a balance of D320, 000.00 which was used to pay staff salaries based on the authorization email correspondence from the Managing Director of Securiport.
“This is a deliberate attempt by Securiport to suppress and divert cash collections for personal benefits,” the report added.
According to the auditors, collections of CFA858,000.00 in respect of security fee were receipted; however, there was no evidence of deposit of these collections to the cash collection account while another review of the cash collection bank statements for both dollar and pound sterling accounts revealed deposits of USD3, 235 and GBP6, 780 respectively, were made but inspection of the manual receipts showed no corresponding receipt of Security fee collected on the same period for both dollar and Pound.
According to the detailed audit report, Securiport failed to pay Expatriate quota tax which is an annual payment made by foreign nationals employed in the country with ECOWAS nationals paying D10, 000 and non-ECOWAS nationals D40, 000.
“During our audit, we observed foreign nationals working as employees of Securiport. Our attempt to establish the number of foreign employees at Securiport was unsuccessful as a list of foreign employees was not provided for review up to the time of finalising this report. As a result, we could not confirm the tax status of the foreign employees at Securiport. Further discussions with officials from the Gambia Revenue Authority revealed that there has not been any payment of payroll tax by Securiport for its foreign employees since the commencement of its operations in the country,” the auditors added.
According to the auditors, there is a risk that Securiport is engaging in tax evasion thereby causing loss of revenue to the Government of the Gambia and recommended that Securiport pays its payroll tax liabilities to the GRA and evidence of payments is provided to this office for verification.
“But we have not received a management response. Therefore, the finding remains unresolved up to the time of finalising this report,” the auditors stated.
The report further highlighted that attempts to review the Cash Collection bank statements for all currencies was unsuccessful as Securiport fails to provide this information for their review.
“During the audit, several requests were made to Securiport for the provision of the security fee cash collections bank statements from January 2021 to May 2021 but this remained outstanding up to the time of writing this report. Therefore, we could not ascertain that Security fee collections were fully paid to the cash collection account for the period highlighted above. Implication,” the report added.
But according to Securiport, this might be an oversight and that the cash collection bank statements from January 2021 to May 2021 are available and will be transmitted to the auditors.
But the auditors maintained that the bank statements were provided and reviewed however, they noted that monies totaling USD 22,000 and D10, 700,000.00 were transferred from the cash collection account to the operational account (Business account) of Securiport even before revenues were shared.
The auditors added: “We noted that Securiport opened four (4) cash collection accounts in four (4) currencies with Guarantee Trust Bank (GTB) without notifying Gambia Civil Aviation Authority (GCAA). This is a deliberate breach of an important provision of the contract by Securiport at the start of the implementation of this project”.
“A review of the cash collection bank statements for both dollar and pound sterling accounts revealed deposits totalling USD3, 235 and GBP6, 780 respectively were made but Our inspection of the manual receipts shows no corresponding receipt of Security fee collected in the same period for both dollar and Pound. Therefore, our audit could not determine the receipts for these amounts deposited to these accounts,” the auditors stated.
Reacting to the findings, Securiport said the deposit slips are available and will be transmitted to auditors.
“Deposits in the wrong accounts are simply human mistakes,” the company added.
However, according to auditors, the management response “did not address the audit finding therefore the issue remains outstanding”.