Jamaican Auditor General probe uncovers various questionable practices at Petrojam

KINGSTON, Jamaica, Dec 5, CMC – A report of an investigation conducted by the Office of the Auditor General into the state-owned oil refinery, Petrojam, has catalogued a series of lavish parties and unapproved sponsorships as well as glaring human resources breaches costing millions of dollars.

Bad management practices

The findings of the Auditor General were tabled in the House of Representatives on Tuesday and it warned that bad management practices, if left unresolved, would increase the risk of corruption and further erode Petrojam’s profitability, which has declined over the last three years.

Questionable payments

The probe found that although liquidity levels were inadequate to cover Petrojam’s obligations, the state-owned company made questionable payments related to procurement activities, had significant project cost overruns and overspent on donations, which further impaired cash flow.

The Auditor General’s report noted that Petrojam did not provide documentary evidence to substantiate payments of J$14.9 million for counselling service for employees and consultancy services relating to its 35thanniversary planning activities.

J$2.6 million for birthday parties

It noted that management also spent J$2.6 million to host two birthday parties, which were unrelated to its operations and did not conform to good corporate practices.

The Auditor General also noted that the value of donations doubled from 2013 to 2014 and 2017 to 2018 with the largest year-on-year increase of 141 per cent coming during the last two years, when donations totaled J$84.2 million in contrast to J$34.9 million in 2016 to 2017.

Petrojam exceeded the donation budget in 2015 to 2016 and 2017 to 2018 by 33 per cent and 47 per cent respectively, without approval from the Board and in contravention of its donation policy, despite cash flow challenges.

According to the Auditor General the expenditures underscore the need for Petrojam’s management to be prudent with the costs over which it has control.

The Auditor General also found deficiencies in human resource recruitment and management practices at the oil company which included explicit acts of nepotism.

It stated that two individuals closely connected to employees of Petrojam were employed despite being rejected by the interviewing panel.

The audit found that the board of the agency was deficient in its oversight and monitoring of  its operations.