| – decisions made by CabinetA critical forensic audit report of the National Insurance Scheme (NIS) is out and it speaks of major investment decisions being made by the Cabinet, and not by the supposedly independent Board of Directors.Former NIS Chairman Dr. Roger Luncheon“Some of the decisions, including the purchase of shares in the Berbice Bridge Company Inc. (BBCI), are continuing to severely impact the scheme’s cash flows and the recoverability of the investments,” wrote auditor,Authentic Baltimore Ravens Jersey, HLB R. Seebarran & Co. , in the report.The report covers the period of December 2011 to May 31, 2015 with information and data included from earlier periods to have a more comprehensive understanding of the scheme from the inception to present.The audit was ordered by the David Granger administration following the coalition’s assumption of office in May last year following early general elections. It was one of several launched into state-owned agencies.Based on several instances, the report concluded that Cabinet had significant input over the previous board, with certain decisions made which the directors accepted without any discussions, analysis and due diligence to determine the merits of those decisions.The forensic audit was done to not only determine whether NIS was complying with its mandate and good practices, but to assess and test systems and detect any instances of corporate malfeasance.It was also to determine the authenticity and validity of significant commercial and financial transactions entered into by the entity with related parties,Brett Favre Falcons Jersey, suppliers and customers, and measure the extent of potential prejudice the entity may have suffered through such dealings, if any.NIS was established in accordance with the National Insurance Act in September 1969. The entity extends social insurance coverage on a compulsory basis, to all persons between the ages of 16 and 60 years who are engaged in insurable employment. Coverage is also extended on a voluntary basis, to persons who cease such employment before reaching 60 years.A forensic audit report on the National Insurance Scheme is out and it appears that the previous board was being directed by the Cabinet of Ministers, under the last administration.The last board was chaired by the then Cabinet Secretary, Dr. Roger Luncheon, and included members none of whom had any actuarial or insurance background,Aaron Ramsey Arsenal Jersey UK, except for the General Manager, Doreen Nelson, the report said.Luncheon, up to last May, in addition to chairing the NIS board, was also the Cabinet Secretary.“In fact, many of the members had served on the Board for many years, but when the minutes of the BOD (Board of Directors) for the last four years were reviewed, they confirmed that critical decisions, in particular those for investments, were made by Cabinet and not the BOD. This is not what the NIS Act intended, as it provides guidance on how the Board of Directors should be appointed and regulates its proceedings.”In one case, in a meeting of the board held on July 30, 2012, the General Manager informed the Board that Cabinet made a decision for the scheme to purchase a property in Paramaribo, Suriname for €535,Alexis Sanchez Arsenal Jersey UK,000.“There was no evidence that the Board had deliberated before agreeing on this investment nor was there any evidence that a feasibility study was done to determine whether the price paid was consistent with the value of the property,” the report disclosed.There were a number of bad investments which now have NIS scrambling to ensure it recovers its monies. These include the CLICO investment of $5.1B; the loss of an estimated $1.9B in interest income for the years 2009 to 2014 relating to that investments which the last Parliament promised to repay the scheme and the investment of $2.59B in the Berbice Bridge.The bridge is making losses and has many issues now engaging government.At the end of June, 2015 the scheme’s investments stood at $30B comprising short term investments valued $20.3B, mainly of treasury bills, fixed deposits and CLICO; medium term investments valued $1.69B, mainly overseas investments in Government’s foreign account and a loan to CARICOM and long term investments valued $7.995B.Included in the long term investments are shares in companies and BBCI. The cost of the investment in BBCI is $2,562,228,000 which represents 8.5% of total investments.“The NIS Act provides for BODs the autonomy to make investment decisions. However, as explained under Corporate Governance, the Board accepted decisions made by Cabinet in particular investments in the BBCI and the acquisition of a property in Suriname without proper due diligence.”The Eighth Actuarial Review prepared for the period ended December 31, 2011,World Baseball Classic Jerseys Outlet, five years after the last review was done and in accordance with the NIS Act,2018 NFL Draft Jersey, indicated that the scheme’s average yield on returns was 4.7% compared with average inflation rate of 6.3% which resulted in a negative real rate of return of 1.8% over the five year period reviewed.“Since then, the average yield on returns for the years 2011 to 2014 has been 3% whereas inflation has been 2.2% a positive net return of .80%. Had the scheme been receiving returns on its investments in CLICO and the BBCI’s ordinary shares (dividend), the rate of returns for the last four years would have been significantly higher,” the report said.Based on the last audited financial statements (2013) the Scheme’s total investment in proportion to total assets was 93% and in proportion to Reserves was 95%. |
