RBC on the spot again over financial irregularities

Officials of Rwanda Biomedical Centre (RBC), yesterday, for a second year running, appeared before the Parliamentary Public Accounts Committee (PAC) to answer queries raised in an Auditor General’s Report.
Theoneste Karenzi, the vice chairperson of PAC (R), speaks during the hearing as PAC chairperson, Juvenal Nkusi, looks on. (Photos by Nadege Imbabazi)
Theoneste Karenzi, the vice chairperson of PAC (R), speaks during the hearing as PAC chairperson, Juvenal Nkusi, looks on. (Photos by Nadege Imbabazi)

Officials of Rwanda Biomedical Centre (RBC), yesterday, for a second year running, appeared before the Parliamentary Public Accounts Committee (PAC) to answer queries raised in an Auditor General’s Report.

The body was represented by Jeanine Condo, the Director General; James Kamanzi, her deputy; Usta Kayitesi, the vice chairperson of the board; together with heads of all 14 divisions.

 

Among the 34 queries raised in the 2014/2015 Auditor General’s report, lawmakers put emphasis on the persistent issues related to corporate governance, unreliable financial statements, unsupported expenditures, un-authorised adjustment in the book of accounts, poor or lack of proper filing system, drug stock management failures, and outright fraud, among others.

 

With RBC having received an adverse opinion in the report, officials were specifically grilled on failure to recover around Rwf960 million in debt; and failure to justify Rwf2.5 billion in unsupported expenditures, and Rwf 183 million posted in fraud cases, to mention but a few.

 

RBC was created after the merger of several health institutions.

The AG report indicated that transactions involving Rwf12.7 billion lacked supporting documents, Rwf3.8 billion had incomplete financial documents, while Rwf1.7 billion had been classified as wasteful expenditure.

RBC was also cited as big wasters even as it runs on a budget of more than Rwf100 billion, a sum comprising both government allocations and donations.

The lawmakers also faulted the body for unreliable financial statements, failure to observe AG recommendations, lack of a governance board, expired drugs and breach of tender and bidding processes.

“What does it take to provide supporting documents of your expenses during the audit, are you aware it is your obligation as much as it is the responsibility of the AG office to demand these supporting documents? How do you even explain drug expiries when there are medical facilities right now with empty stocks,” asked Juvenal Nkusi, the chairperson of PAC.

Theoneste Karenzi, the deputy chairperson of the committee, said looking at such financial flaws, lawmakers were tempted to wonder whether the officials even knew their entire operational budget


“There are noticeable filing problems, and faulty systems in terms of drug stock management which posted Rwf405 million actual cost of expired drugs,” he said.

Obadia Biraro, the Auditor General, told PAC members yesterday that there are issues at Rwanda Biomedical Centre are inherent, stressing there was lack of seriousness in their financial reporting which needed systematic support from both the government and parliament.

“We should bear in mind that the core business of the RBC is about people’s lives, and people there have been resisting change. They are implementing governing laws as if they are still in a transitional period since the merger in 2012,” he said.

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Jeanine U. Condo, the Director General of the Rwanda Biomedical Center (RBC) (R) speaks during RBC in public hearings on the Auditor General’s report  (2015) conducted by PAC as the deputy DG of RBC James Kamanzi looks on. 

In response, James Kamanzi, one of the directors, admitted to negligence in the preparations of reliable financial statements, blaming it on several structures in place which do not favor appropriate financial reporting.

“If I may give an example of the Medical Procurement and Production Division (MPPD), there are ongoing plans to have it detached from RBC, simply because its public financial reporting does not match well with other public entities,” he said.

“MPPD is more or less like a business organisation; it procures drugs and sells them, it uses modified cash basis accounting (record transactions in case of incoming cash or outgoing cash) while the rest use accrued basis accounting (recording of revenue when earned), thus this has been providing incompatible financial reports”.

Kamanzi stated that MPPD itself was responsible for Rwf2,5 billion whose unsupported financial documents had not been collected during the time of the audit.

According to Kamanzi, the anomalies are attributed to withholding taxes they had paid to Rwanda Revenue Authority (RRA)for which they were yet to receive receipts of the transactions.

“71 per cent is the money we paid to RRA, while 29 percent of it involved management fees which were paid internally to implement a number of processes, they are normally fees we pay for inside transactions, but it should be clear that this money was not lost to fraud and there was no corruption involved,” he added.

On expired drugs, the RBC officials said that only 2.4 per cent were out of shelf life for various reasons.

“There are only two issues in relation to expired drugs; one, because some of them are not procured especially when the rate of the diseases has significantly reduced, second reason is discontinuation, which is when a drug is on the market and in the process we are told that a new one with the same features but upgraded has been released,” she said.

The MPs and the Auditor General stated that there was need for separate financial reporting of MPPD from the rest of RBC and that management needed to enhance controls in financial reporting to ensure that balances in books of accounts are properly reported in the financial statements.

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