Ministers pay no attention to millions in grants: Control over subsidies fails

POSTED: 12/8/14 1:39 AM

St. Maarten – The government paid 78.2 million guilders in subsidies to 58 different organizations in 2013, but it has no clue whether these organizations used the money in an appropriate manner. The subsidy-amount represents 20.1 percent of the 2013 budget. This appears from the compliance audit by the General Audit Chamber of St. Maarten’s 2013 financial statements.

The general subsidy ordinance stipulates that an institution that is granted an annual subsidy must present the minister with a financial accounting describing (in general terms) the activities carried out and the effects, as related to grant objectives, the audit report states.

The Audit Chamber evaluated for 2013 whether subsidies to 21 organizations complied with the subsidy ordinance.

In twelve cases, the Audit Chamber did not receive documents from the responsible ministries and therefore these subsidies were not audited. Of the remaining nine grants, “we determined that none complied with the legal requirements,” the report states. The conclusion of the auditors is that in all cases the subsidies were “unlawful.”

That is not the only criticism from the Audit Chamber about the way the different ministries dole out money like candy. “The manner in which the General Subsidy Ordinance is applied in practice, inadequately guarantees efficient expenditure.”

In other words: in many cases, the ministries do not adhere to the law, by ignoring the stipulations in this ordinance. The Audit Chamber report gives as an example that there is a lack of review “regarding lawful issuance and expenditure by the recipient institutions.”

In layman’s terms, this means that the ministries have no clue what the subsidized organizations do with the money they receive. They do not “sufficiently account for the activities they carry out.”

The result is that there is no insight whether subsidized organizations achieve the goals for which they receive their subsidies in the first place.

“In our opinion, the ordinance is antiquated. Additional adjustments are needed to the National Subsidy Ordinance to guarantee the efficiency and effectiveness of grant issuance,” the Audit Chamber report states.

The Chamber furthermore notes that the subsidy policy receives little attention from the government. To illustrate this point, the report notes that the subsidy ordinance was signed on February 21, 2013 and that it went into effect retroactively on October 10, 2010.

In conclusion, the report comes down hard on the Minister of Finance: “The minister can do a better job of informing Parliament regarding the effective use of subsidies by requiring the relevant recipient institutions to report regarding their activities, expenditure, results and outcome.”

The Chamber also points the finger to other members of the cabinet: “The ministers hardly, if ever, review whether the subsidies granted occur in accordance with the General Subsidy Ordinance.”

Finance Minister Hassink reacted to the audit report in a letter dated November 27, 2014, but his reaction is limited to the recommendations and does not touch on the issue of subsidized organizations.

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