Palikir, Pohnpei – Speaker Isaac V. Figir recently requested the Office of the National Public Auditor (ONPA) to perform a review of Congress finances to see if there were any areas in which Congress could improve in their financial accountability to the people of the FSM. The results of that review were released to the public sometime during the week of May 5. The public can obtain a copy of the review which covers fiscal years 2005 through 2007, on the National Public Auditor’s website at: http://www.fsmpublicauditor.fm.
National Public Auditor Haser Hainrick, in his cover letter to President Manny Mori, who was a Senator for a portion of the time period covered in the review, said, “Good governance requires the promotion of accountability and transparency in the use of government funds. However, we found that certain processes used by the Congress in budgeting, appropriating and spending of funds for their own operations did not establish clarity of purpose, accountability, and transparency.”
A close read of the review shows that ONPA did not accuse Congress or its members of violations of laws. Rather they pointed out that transactions involving Representation Funds, Delegation Office budgets, and Official Expense allowances were imprudently managed in terms of transparency. They said that the laws that govern these types of expenses overlap and are ambiguous at best.
FSM’s Acting Director of Finance and Administration, Juliet Jimmy, in her response to the review recommended that laws governing the use of those three types of funds be amended in order to eliminate overlapping uses for those funds.
Speaker Figir in his response to the review thanked the auditor for his recommendations to improve the allocation and management of funds for Congress. He said that Congress had begun the review process of the definitions of key expense types as evidenced by Congressional Bill 15-1 which was introduced by Senator Dohsis Halbert in the first regular session of the 15th Congress. He said, “I now see that more comprehensive amendment is required. I undertake to complete this.”
The review says that this is the first review of the Congress budget that focused specifically on the Delegation Expense budgets, Representation Expense Allowance, Official Expense Allowance, and regular travel expenditures.
ONPA said, “Title 55 Chapter 2 Section 224B(3) of the FSM Code defines ‘Delegation Office Expense’ as expenses incurred in the course of delegation operations, including, but not limited to, official public relations, travel, entertainment activities or constituent services necessary to carry out the functions of a Congressional Delegation Office in the FSM States. Similarly, Title 55 Chapter 2 Section 224B(2) of the same FSM Code defined ‘Representation Expense Allowance’ as expenses incurred in the course of official public relations, entertainment activities or constituent services necessary to advance the purposes and goals of the National Government.”
They said that the absence of clear-cut and distinct laws defining each of the three types of expenses caused the amount of representation funds that each Senator had at his disposal to be much more than the $35,000 allowed for that purpose in 2005 and 2006. Congress raised the Representation Expense Allowance per Senator to $37,500 in 2007.
The review said that Congress did not follow its usual requirement that budgets be defined by line item when approving the budget for each of the four Delegation Offices. Because of that the total amount given to the delegation offices could be used any way they wanted.
The practice in Chuuk and in Pohnpei has been to divide up the Delegation Office expense amongst the individual Senators. In Pohnpei this meant that Senators received an additional $21,616 on average in each of the last three years. In Chuuk, Senators received an average of $31,107 per Senator on average in each of the last three years. This additional money, according to the review was used just as if it was an additional source of representation allowance for each Senator.
Yap and Kosrae Delegation Senators did not divide up the Delegation Office budget amongst themselves.
Senators who are also Standing Committee Chairmen of which there are six also received an additional $6000 as an Official Expense Allowance for expenses relating to the committee that they chair.
The review said that Chuuk Senators who were also standing committee chairmen received $69,000 in 2005, $70,500 in 2006, and $78,500 in 2007. A Pohnpei Senator who is also a committee chairman received $54,000 in 2005, $64,000 in 2006, and $71,000 in 2007. The auditors said that under the current law it was difficult if not impossible to tell how those funds were used.
In 2005 and 2006 all 14 Senators presented affidavits for the Representation expenses. In 2007, 13 Senators presented affidavits to cover their expenses and one Senator presented actual receipts. A copy of the standard affidavit that Senators present at the end of a year was attached as an Appendix to the review. It essentially says that the undersigned Senator has spent the money and that he spent it the way it was supposed to have been spent.
The auditor said that information is not enough for accounting purposes despite the declaration to the contrary contained in the affidavit itself. Essentially an affidavit should be used only as a last ditch measure when a particular receipt cannot be found. In that case the affidavit should contain the date of the purchase, the vendor, the amount, the specific item purchased, names of companions if the expense was for a meal, and the nature and purpose for the payment.
The auditor provided two hypothetical situations in which representation funds could be misused if an affidavit of the type Congress has been accustomed to providing is the only documentation that is available:
“Hypothetically,” the auditors said, “a Senator could receive a cash advance of $37,500 for Representation Expense Allowance but not spend the funds as allowed by FSM law. Since a Senator is allowed to close 100 percent of his advances by executing an affidavit, the Senator could merely execute a defective affidavit and no one could determine that the funds were not properly used. In this hypothetical case, the Senator may keep all or part of the cash advanced for his own use.
“In another hypothetical case, a Senator could employ a double-dipping scheme. In this scheme, a Senator actually spends the amount of advances received for Representation Expense Allowance, which is budgeted under the Main Office and gets the receipts and invoices from the vendor upon spending. However, instead of providing these receipts or invoices to close the cash advances received for Representation Expense Allowance, a Senator could present them for reimbursement under the Delegation Office funds and execute an affidavit to close the cash advance for Representation Expense Allowance. In this case, fraud and overpayment exists because one payment is claimed twice.”
In the case of 41% ($192,529) of ONPA sampled transactions of reimbursements made to Senators from Delegation funds there was no indication as to the purpose for the expenses recorded on the receipts. ONPA provided samples of the types of expenses documented by those receipts. The examples included airline tickets, groceries, restaurant meals, apartment rental, pigs, pianos, and alcohol.
The ONPA also noted concern regarding conflict of interest. They said that they noted $28,171 worth of payments from Delegation offices’ funds and Official (Committee) representation funds that were made to businesses owned by certain Senators or family members. Those payments included money spent for pigs, alcoholic beverages, food, and car rental. The review did not include the name of the Senators who had made payments that might indicate a conflict of interest:
“Senator A paid a total amount of $12,451 to a business owned by him or his family member for the purchase of food items and alcoholic beverages. Moreover, Senator A did not indicate the purpose of buying such items.
“Senator B presented a reimbursement for a total of $8,303 for various payments from his Delegation office funds and paid to the business establishments either partially or fully owned by the said Senator or his family member. Likewise, these payments include food items, repair and fuel and the documentation did not specify the purpose for incurring the payments.
“Senator C presented a reimbursement for a total amount of $5,050 for various payments made in Senator’s spouse name from car rental, and a payment for food items (pigs) from his niece.
“Senator D presented a reimbursement for a total of $2,367 representing payment made to a restaurant owned by him and his wife for a reception that the Senator hosted in honoring his constituents and food items (takeouts) for a Congressional committee meeting.”
The review went on to say that there were fund disbursements that were not in compliance with the FSM laws and requirements. It said that there was $35,709 worth of airline tickets that were not supported by a travel authorization. A TA is required for any travel that is paid for with government funds. ONPA said that the airline tickets were for constituents not employed by the National Government. They gave as example tickets that were issued for a group to travel from an FSM state to Hawaii to Los Angeles and back in the amount of $5,172 that was not backed by the issuance of a TA.
Further, the review says that auditors found TA’s totaling $15,478 under the Travel Expense account that did not provide sufficient justification to establish the purpose of the trip. One TA for $2550 indicated the following: “To amend original TA to obligate funds for airfare to allow the traveler to go to Majuro and back to Kosrae.” Majuro was not indicated in the original TA and no purpose for the trip was stated.
They also noted that some reimbursements were made to Senators that appeared to be personal in nature. For example, they noted that one Senator reimbursed himself $465 from his Official Expense Allowance for a membership for himself and his spouse at the Continental Airlines President’s Club at the Guam International Airport. Another Senator requested and received a reimbursement amounting to $599 from his share of Delegation Office funds for a repair of a private vehicle.
For reasons that are not entirely clear, the review did not contain the name of any Senator in association with any of the questionable expenses ONPA used as an example.
The Speaker of the 15th Congress, Isaac V. Figir in his response briefly highlighted the proposed changes that Congress would implement “to ensure it remains an accountable, transparent body in which all transactions have clarity of purpose.” It’s a goal that he has on many occasions, declared to The Kaselehlie Press in both on the record and off the record conversations.
On the subject of the Delegation Expense Allowance, the Delegation Operation Budget he said that in the future the budget would be defined in line item set categories that would be able to be scrutinized in future reviews.
He committed to ensure that “the definition of representation funds will be amended, to clarify appropriate use of the funds. Representation funds will be allotted every quarter, and only after the previous quarter’s funds have been reconciled.”
He said the Administrative Manual for Congress would be updated and that it would include a requirement that original receipts and detailed explanations for all expenditures be presented as documentation for expenditures of all types. He said that new forms would be designed to ensure those requirements are met.
He declared that the use of one affidavit for all representation funds will cease.
Figir also committed to the creation of a conflict of interest register though he did point out that the small population of FSM meant that many of its people are related so that “traditional Western conflict laws do not fit. However, I appreciate the direct conflict of interests identified in our report.” A conflict of interest register could be used to ensure that “no members may approve funds that will benefit, directly or indirectly, themselves or a family member.”
He said that he looked forward to ONPA’s follow-up review within twelve months.