Auditor's biting report on Voice of the Mediterranean

The Auditor General in a report tabled in Parliament yesterday listed a catalogue of failings in the operations of the Voice of the Mediterranean radio station.

The report was compiled following an inquiry requested by the House Public Accounts Committee.

The radio station was set up in 1984 jointly between the Maltese and Libyan governments and closed in December 2003.

The national audit office (NAO) found that:

¤ Internal control systems were lacking or ineffective and the board of councillors, whose task it was to oversee the operations of the radio station, failed to take decisive action against certain practices by the management.

¤ Management awarded major contracts related to the expansion and refurbishment of the radio station by direct order.

¤ Some staff during the last three years of operations were approached by VOM's managing director directly and asked to apply for certain posts within VOM.

¤ Excessive amounts were spent on furniture and fittings, wiring of studios, internet-related equipment and security and fire detection systems.

¤ A contractor engaged to provide an internet radio service was given two consecutive contracts by direct order within the span of three years. The first contract, which should have run for three years, was terminated after eight months without a valid reason. VOM's management subsequently entered into a second contract with same contractor covering nearly the same services but at a much higher annual fee.

¤ Inadequate soundproofing works were carried out at VOM's studios at the new premises in Birkirkara.

¤ The value of cars purchased for both the managing director and deputy managing director (who are not identified by name in the report) was in excess of their entitlement according to standing regulations based on salary scale levels within the public sector.

¤ Hospitality expenses claimed by the managing director during the last three years of operation were in excess of his contract of employment entitlement.

¤ VOM's accountant was awarded terminal benefits upon closure of the radio station despite the fact that he was only employed on a part-time basis and had another full-time job.

¤ No procedure for the proper winding up of the radio station was put in place and no administrator was appointed to administer VOM's assets.

¤ The Ministry of Foreign Affairs was duty-bound, but failed, to ensure that VOM complied with standing financial regulations and any other policies that may have regulated VOM in the procurement of various services.

The auditor said that the claim by the managing director that he was not bound by government procurement and financial regulations was not justified and failed to ensure a transparent and cost-effective management of the radio station.

In his recommendations the auditor said that prior to setting up structures similar to VOM and embarking on joint ventures or other forms of agencies or foundations, a proper framework incorporating legal and administrative procedures and financial regulations should be set up.

The code of ethics applicable to directors of boards and managing directors in which the government has a shareholding interest should be brought to the attention of all concerned and incorporated as part of their obligations in their letters of appointment.

He said the Ministry of Foreign Affairs should recoup payments which were not directly due or which were adjusted to give higher payment advantages to certain service providers or part-time employees.

Any VOM assets still in the hands of third parties should be recalled and the permanent secretary at the Foreign Ministry should appoint an administrator for VOM as suggested by the Minister of Foreign Affairs on July 23, 2004, or set up an ad hoc board in conjunction with the Libyan authorities until a decision is taken on the future of the radio station and its assets.

In the report the auditor slams the management over how items of furniture were sold to third parties at low prices and without proper record.

It says spending on security and firefighting was excessive. "Suppression systems such as those installed at VOM premises are usually found in high-risk areas such as in the server rooms of banks and financial institutions in which highly-sensitive and critical information is kept. VOI does not apparently have such sensitive data. Moreover, the fire risk at a radio station is minimal."

Moreover, the access control system consisting of swipe card to control entry to almost every room was not considered necessary and was impractical.

"The technical advisor commissioned by NAO comments that at most the system of access control should have been limited to the two main doors and the archives and computer room which would have amounted to about Lm4,000, rather than a system costing Lm10,000.

"Notwithstanding all the 'high' security measures installed, it results that access to the premises was still unsecured after working hours. There were no locks on the front doors leading to the premises. Any person could walk right into the corridors of the radio station, although the individual rooms were secure."

In remarks on internet radio operations the auditor says, among other things, that the contractor engaged the son of VOM's managing director just before he was awarded the contract and terminated that employment soon after the closure of the station. When the audit office queried on what criteria the contactor had been chosen, it was informed that the managing director declared he was employed solely on mutual trust.