Foundation for Social Welfare Services (FSWS) CEO Alfred Grixti was not pleased with the way the National Audit Office (NAO) handled the Agenzija Sedqa audit findings that caused some controversy earlier this year, but has given assurances that every issue has been addressed.

Last May, the Public Accounts Committee held a hearing regarding the NAO’s report on Agenzija Sedqa, the government’s drug and alcohol abuse agency, which read that Sedqa had submitted “fabricated and amended documents” for the audit. The NAO also criticised some workers receiving extra vacation leave, certain payments, etc.

The NAO had said: “During audit testing, various queries in respect of salaries arose; consequently, these were thus forwarded to Sedqa for clarification. On five such instances, the NAO was provided with either a fabricated or amended document. In two such instances, documents forwarded following the NAO query were different to the ones already in its possession.”

As a result, listed under action taken in a report regarding action on the NAO’s annual 2014 report, the following was written: “Disciplinary action will be taken in similar circumstances. Summary discipline has been taken in the case indicated by the NAO. Instructions to maintain proper records were circulated among the staff.”

FSWS CEO Alfred Grixti said that the two individuals who were responsible, who held junior executive positions, were under a lot of pressure.

“We still have a manual attendance system here. Every employee has his or her own attendance, overtime, vacation leave, sick leave and time-off in lieu sheets. There are 100 employees at Sedqa, meaning that there are over 7,000 such forms in a year, given that we are paid every four weeks. Everyone was under the impression that a few went missing. In reality, they weren’t missing. The NAO auditors spent months at Sedqa, and spent a deal of time going over these sheets in its payroll office. At the PAC hearing I argued that we accepted it was a shortcoming based on human error. If you have 13 files going to and fro, taken by our auditors, my understanding up until the PAC hearing was that they were misplaced. The NAO, however, then said that they weren’t misplaced. I stood up and said it was entrapment. I said I wanted an explanation.

“Management spoke to the workers in the office concerned,” he said, referring to those who sent the different documents. “It was only the attendance sheet that went missing. They said they had been pressured and decided that they could recompile the information using other documentation at their disposal, and get the signatures of the employees in question”.

He said that one mistake was made: they wrote 2015 instead of 2014.

“I had spoken to the Auditor General, and I have nothing personal against him or his staff, but this was really unfair.

“They really pressured two people at the bottom of the food chain and they panicked and redid the sheet. I’m not saying they did the right thing. I would rather have had these two employees come and say the information had been lost, but they were tricked into it.”

He handed this newsroom a copy of the explanation given by the two, which read: “On instances we were pressured to provide documents instantly, even though such documents were already handed to the auditors. Nevertheless, the auditors kept insisting that we did not hand such documents, therefore we replaced the original claim sheet since we thought it was mislaid.”

Mr Grixti said: “I spoke to them the day after the hearing and then they wrote that statement. They have since asked to be transferred to other units. “I honestly felt I should not take any disciplinary action, as they are young, in their mid-twenties.”

He said: “I think it was the daily phone calls, emails, etc. But the auditors were also there, at Sedqa. I have since given instructions that they ask for receipts when they hand over documents to the auditors. I had lost it during the Committee when the NAO confirmed that they had the document.”

 

No definite approval for direct order

Another key finding in the NAO report was that there was no evidence of a definite approval for a Direct Order on 29 November 2014, the date on which the FSWS held an event in order to commemorate the 20th anniversary of the foundation of Aġenzija Appoġġ and Aġenzija Sedqa.

The NAO report read: “Various expenses were incurred, including that of catering services at a cost of €18,900. Approval for a Direct Order was obtained in a timely manner, however it was only granted ‘in principle’ and FSWS had to revert to the Finance Ministry for a definite approval prior to any commitments being made, once the service providers and actual costs for the provision of catering services were known. Such definite approval was not made available for review and instead the same ‘in principle’ approval was presented to the National Audit Office (NAO), verbally insisting that this was sufficient. This may imply that the actual costs incurred were not properly authorised.”

Explaining this issue, he said: “Even though this ceremony was organised by the FSWS, the budget was proportioned, so funds came out of Appogg, Sedqa etc. On a technicality, and I admit it was my fault, we received the approval in principle, and then we went ahead. The NAO are saying that after getting the quotes, we should have gone back to get approval. Did we abide by the procedures, getting quotes, etc., the answer is a definite ‘yes’.

“At the beginning, to organise this ceremony, keeping in mind that Agenzija Sapport still came under the FSWS, we needed a venue big enough. The only one available on the day was Bay Arena which, with catering, would come to around €40,000. The Minister said no, telling us to leave Sapport out, since they had their own ceremony a few years before, and to cap it at 750 people. While we had an approval in principle, we ended up spending around €26,600 all in all, considerably less than €40,000. So, to be precise, I didn’t go back but my reasoning was that I had permission in principle. The venue, the St Agatha Auditorium, ended up costing €2,500. Catering came to around €18,900. We did not formally go back to show what we found but, come on, you need to be practical.”

Turning to the use of a certain vehicle the NAO report read: “During the year under review, Sedqa was making use of a hired vehicle for general use by one of the Units within the Agency. Up to time of audit, the contract agreement entered into with this supplier was not made available for verification. Hence, it could not be ascertained whether a valid agreement was in place and whether chargeable rates were correct or not”. This, Mr Grixti said, went back to 2005. “Why wasn’t it flagged before?” he said, while adding that this was Sedqa’s first audit. “Should a public entity like ours, in so many years of existence, have been audited just once?

“I’m not being partisan, but I’m asking this in terms of value for money for the tax payer.”

He said that now Sedqa will be audited once every other year.

On this issue, he said that an advert for car rentals had been issued, and that they had filed the evaluation report. What was missing was the actual written agreement. It had been approved by the board and everything. At the time, however, there was never wrote an actual agreement. The vehicle supplier even confirmed that a verbal agreement had been made and was subsequently renewed over the years with the same conditions. “We have since replaced that vehicle”, he said.

“In addition, the NAO said that management ‘claimed’ that the verbal agreement had been renewed over the years. I took issue with them for using that phrase. If I didn’t give you an answer that is one thing, but I send you a fully documented answer and you use the word ‘claimed’? You are a journalist, you know that the word makes a difference” he said.

There were a number of issues mentioned in the NAO report related to staff, indicating that there was a systematic problem. “I think it is overstated,” said Mr Grixti. “Sedqa had a budget of €3 million that year, and at the end of the day the overpayment amounted to €741, so it’s not as if we were making overpayments amounting to €7,000. I was appointed to the post of CEO on 1 April 2014.”

Mr Grixti said that he had had no time to perform a due diligence exercise that year, and that he had had to follow what the Foundation’s auditors were saying in their reports. “For five years in a row, which includes the one which they were concluding, they said that it was a clean sheet and that any shortcomings were immaterial. This means there were some small shortcomings, and thus the issue of overpayments was considered by the auditors to be immaterial and didn’t make a dent. We asked the workers to give back the overpayments, and all but one has done so. That one employee is checking out the calculations with the union.”

As for the problem regarding vacation leave, where it was found that six workers were entitled to 203 hours as annual vacation leave, rather than the normal 192 hours, Mr Grixti explained: “It is to do with public holidays falling during the week as well as a long-standing custom. Through this custom, care workers are on duty alone during the night at our residential care services and they do not take a break. Instead, they work their break, but there is a tradition, which I found here, that apart from being paid the extra three-quarters of an hour, these are added up and added to their vacation leave entitlement. I find this strange and don’t agree with it. However, the union accepted it as back in the 2003 collective agreement they said they knew what the law stated and were willing to take that. It was not, however, specified in the subsequent collective agreement, and the comment made by the auditors was to include it in the next collective agreement and then everything would be fine.”

There was also an issue over the vehicle logbooks not being correctly completed.

“There was that issue and, prior to the arrival of the auditors, I had asked about it and was told they don’t keep them any longer. I told my senior management team in September 2014 that I wanted them to begin keeping logbooks once again. This was way before the auditors wrote up this report, but at the same time every vehicle we have, given that they are government vehicles, is logged with the Finance Ministry fleet management system. We have to fill in a form each time we fill up the vehicle with fuel, giving the mileage, how much fuel was put in the car, etc. So really and truly, the use of logbooks has been superseded, now being controlled centrally.

“On the other hand, I defended my employees. Taking the residential care services, if someone is overdosing, would you stop to fill in the logbook or rush the person to hospital? What is the priority?

“These are things the auditors did not appreciate, in my opinion. I want to see audits, but ones that focus more on value for money.

“When it comes to the annual audit, their focus is too much on what we call ‘compliance’. I’m not saying they have an agenda, but I did have a disagreement with them.”

Mr Grixti explained that part of his criticism of the NAO is that it is basically dotting the i’s and crossing the t’s. “In my opinion, it is not serving the country well enough due to its approach. You will be crucified if you don’t cross all the t’s. I want them to look at things that are definitely value for money, such as the use of overtime and whether it is necessary. For example, do you need more workers?

“I am not against the institution. I am a public servant and my income comes from public funds. I manage a budget of over €20 million and so I need to be accountable for every last cent.”