Friday, April 27, 2012

Fraud and blunders cost aid agency $1.5m

By Rory Callinan in Sydney Morning Herald

FURNISHINGS for the homes of Papua New Guinea bureaucrats have been ''incorrectly'' bought using $150,000 worth of Australian taxpayers funds and a thief has pocketed just over $250,000 from a justice strengthening project also funded by Australia.
The waste was among about $1.5 million worth of AusAID funding the federal agency admits will never be recovered as a result of frauds and irregular spending from 2004 to 2010.
This was revealed after the Herald asked the agency to detail how much had been recovered from a series of high-value frauds and whether those responsible had faced justice.
AusAID confirmed no one would ever face charges in four cases involving significant amounts of aid money dating back to 2006. Suspects in four other incidents are yet to face court despite the suspected fraud occurring in one case up to six years earlier.
However, the AusAID first assistant director general, Laurie Dunn, defended the agency's handling of the matters, saying some cases emphasised the reasons behind the programs while resourcing had been increased to crack down on theft.
Mr Dunn confirmed the agency's largest outstanding fraud still related to a load of food and equipment worth $1.2 million that was allegedly stolen by the Eritrean government.
He said the agency was continuing to push for the return of the goods but he admitted the food had been consumed.
In another case, AusAID said a suspect defrauded about $258,391 from a PNG aid program that was supposed to improve the justice system in 2006.
The suspect was sacked but was never charged after the matter was not finalised before the statute of limitations expired, according to AusAID.
Mr Dunn said there was ''not a lot more we can do''. He denied any suggestion the loss coming from a program supposed to enhance justice was embarrassing, saying this incident was ''the reason we are there''.
In another PNG program, some $155,080 was initially thought to have been stolen from a program on Bougainville in 2008 but was instead used to buy furnishings for the residences of PNG civil servants.
However, an AusAID spokesman said incorrect procedures had occurred in the situation and budget controls were tightened to prevent a recurrence.
 Another PNG loss the agency wrote off involved the provision of $44,222 to a sub-contractor to provide kit homes for a hospital in Oro province.
 The agency confirmed the money had been a deposit and the Hong Kong sub-contractor did not provide the homes and refused to return the money.
Mr Dunn said it ''underscored the difficulty in recovering money in developing countries'' and then a third country.
He said since the audits, AusAID had boosted anti-fraud measures. ''We have a very strong audit process in AusAID and we have just recently increased resourcing and set up a new chief of audit program,'' Mr Dunn said.
The agency had some successes, including recovering $88,315 allegedly stolen from a financial management program in PNG in 2008.

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