The Cooperatives Board has decided to start procedures to liquidate the Koperattiva Indafa Pubblika (KIP), the now inoperative public cleansing co-operative, but it does not have the Lm50,000 required to appoint a liquidator.
Board acting chairman Mario Falzon told the House Public Accounts Committee that the board would have to act as guarantor that the liquidator would be paid for the services.
The committee was discussing the arrears of revenue due to the government by the cooperative, which stand at Lm950,000 in VAT and CET, including interest, additional and estimated tax. In his report for 2003, the Auditor General noted that final settlement tax and social security contributions withheld from the cooperative's wages up to 2001, which were not transferred to the Department of Inland Revenue, totalled Lm188,644.
The auditor said that besides unsettled fees for dumping at the facilities at Maghtab and the Sant Antnin recycling plant, and claims by tax authorities for the non-filing of the required statutory returns up to the time the cooperative ceased its operations, amounts owing to other departments were not excluded.
Mr Falzon told the committee that an agreement had been reached with local councils which made use of the cooperative's services to pass the VAT element of the bill directly to the VAT Department. Another Lm20,000 were recouped from the councils when the cooperative stopped operating. However, VAT dues from bills paid by other clients remained outstanding.
The Cooperatives Board had written to 30 service providers to establish what outstanding bills the KIP had. Only three had replied and since then these did not follow up their request for liquidation.
Labour MP Joe Sammut said the board should ask the courts to appoint a liquidator. Committee chairman Charles Mangion remarked that some of the property belonging to the cooperative had been taken over by its members and legal redress should also be sought.
Individual members also owed the government Lm19,700 but the majority had been paid through a payment programme.
George Catania, Director of VAT, said that legal proceedings had been instituted against the cooperative and garnishee orders were issued. However, nothing substantial was found. Legal proceedings have now been instituted against the chairman of the cooperative.
Mr Falzon said that the newly elected committee, in 2003, had declined to assume responsibilities. The last audited accounts the Cooperatives Board had in its possession dated back to 2001. However, it was not known who was in possession of the cooperative's records.
At this point Dr Mangion said he was asking the board to write to the cooperative, asking for its representative to appear before the House committee next month. The cooperative's committee was legally responsible for what he called "this blatant misappropriation".
Nationalist MP Robert Arrigo remarked that the committee members were also personally responsible for not passing to government the social security contributions the cooperative withheld from its members.
Earlier, the PAC was informed that the Treasury had to be satisfied that all steps had been taken by government departments to recoup any arrears before these were written off. Departments were given a harder time to write off statute-barred arrears.
The sum of realistically collectable arrears stood at Lm85 million. Finance Director Saviour Gauci said that these had accumulated through the years. The government's income totalled more than Lm800 million a year.
The auditor in his report had noted that a substantial number of departments did not pass on their arrears returns to the Treasury. Mr Gauci said that stricter control was now being exercised over permanent secretaries and directors and their performance in collecting revenue and arrears was a criterion which was taken into consideration in their performance rating for the annual bonuses.
The committee also discussed arrears pertaining to the Social Security Department, which in December 2003 stood at Lm2.7 million.
Joe Ebejer, permanent secretary, and Joe Camilleri, director social services, explained that when overpayments were noticed, efforts were made to recoup the sums due without causing hardship to the beneficiaries, especially to pensioners and those on social assistance.
A systems audit between the department and MITTS has been completed and recommendations have been made to streamline the operation. These included the integration of systems, the abolition of manual reporting and the introduction of an accrual based accounting system.
The greatest incidence of overpayments was to short-term beneficiaries of sickness and unemployment benefits.
On a remark by Labour MP Chris Agius that a number of pensioners in government homes were finding it difficult to pay arrears following a revision of their contribution to a higher rate, Mr Camilleri said that the department's computerised system was being linked with that of the Department of the Elderly so that action would be taken as soon as possible and arrears possibly done away with completely.