Insufficient information on EU presidency spending, says NAO

The National Audit Office was unable to obtain full and comprehensive information in an audit of Malta’s €28 million spend to host the Presidency of the Council of the European Union between January and June 2017.

In its audit for 2017, the NAO said it was unable to obtain access to all departmental files on spending on various aspects of the Presidency, prolonging the audit unnecessarily, and finding no audit trail for Central Bank payments to service providers.

Out of the total payments, €11.7 million were made directly by the Central Bank, a method of payment primarily used for amounts exceeding €250,000, as well as payments to hotels and foreign entities. The NAO however encountered numerous CBM transactions to local suppliers whose payments were less than the threshold of €250,000.

“This method of payment does not post entries into the individual supplier’s purchase ledger on the direct accounting system. In view of this, the exact amount paid to each supplier could not be reliably established,” the NAO said.

The NAO said it the sole bidder for a chauffeur-driven service in April 2016 had failed to satisfy the conditions laid down in the tender, and should have been disqualified straight away.

Prospective bidders for chauffeur-driven cars were required to list the vehicles to be used. If the provision of 40 chauffeur-driven cars could not be met at any one time, the bidder was required to indicate what vehicles were planned to be purchased, and by when these were to be available.

The Tender Document stated that “... if the information requested is missing, the tender shall be considered as incomplete”.

But the sole bidder listed the details for only 11 vehicles out of the 40 required, and also failed to indicate whether he was planning to purchase additional vehicles.

“This rendered the bid in question as incomplete and not compliant, and therefore it was to be rejected. However, the Evaluation Committee requested the bidder to indicate where this requirement was addressed in his original submission, with the latter confirming his ability to provide the required vehicles,” the NAO said.

In an undated declaration, it was confirmed that the bidder was “... not in a position to commit itself to provide not less than 40 vehicles at one time ...” – something in conflict with the information submitted by the same bidder.

“In order to ensure equal treatment, divergence from the original requirements set out in the tender document should not be allowed. Moreover, any incomplete offers are to be rejected at the outset,” the NAO said.

In April 2017, the Presidency Unit within the ministry invited service providers to submit offers for the provision of additional chauffeur-driven vehicles, required for two meetings held during the same month.

To meet this additional demand, the ministry requested five service providers to quote the hourly rate for the hiring of 15 chauffeur-driven vehicles. It then requested direct order approval from the finance ministry for 30 vehicles – first for 15 vehicles by the cheapest bidder at €25 per hour per car, in total €11,250; then a second for another 15 vehicles by the second cheapest bidder at €31.25, for a total cost of €14,063.

However, no documentation could be traced for the reason why the ministry procured 30 vehicles instead of the 15 originally requested.

“Only the request for quotations submitted to the respective service providers in one particular instance was made available. A formal list showing the responses received was not compiled, and thus, the NAO was not in a position to confirm the actual quotes received by the MEAIM.”

The ministry defended itself saying that security issues necessitated a higher fleet of executive cars. “One needs to appreciate that during the term of the Maltese Presidency, the Ministry was faced with urgent and extraordinary circumstances,” the ministry said.

The NAO also complained that there was no proper reconciliation of the number of guests charged for by the caterers for 10 formal dinners, for a value of €84,725. Each dinner was to cater for a capacity of between 200 and 300 guests, for a total of 2,500 guests, at premises provided by the caterer, at €33.89 per dinner per guest and eventually charged accordingly for the respective 26 events.

But it could not be ascertained that a proper reconciliation between the number of billed guests and persons who registered to attend was performed by the Ministry. “A number of invoices issued by the service provider were not substantiated, while in other cases discrepancies were noted,” the NAO said.

The NAO also said that the EU affairs ministry purchased six encryption devices for €151,064 which however could not be traced in the inventory database. The ministry later two of these devices are within the Corporate Services Directorate while the other four are at MITA.