Statement by the Registrar of Political Parties
Mr Mohammed Saneem
Discrepancies in Financial Disclosures for the National Federation Party
FEO Media Centre – 10/09/20 – 3.30pm
The FEO has completed its verification on the disclosures submitted by the National Federation Party [NFP] and acknowledges the Party’s cooperation in furnishing the FEO with the required documents.
The Registrar commenced verification of the accounts submitted by the Party and it was decided to start with 2018, being election year, in which public interest in adherence to the law and transparency is higher.
At the completion of the verification process, the FEO has identified various discrepancies which are listed as follows:
- The Audit Report for 2018 was prepared and signed off by Parkers Chartered Accountants (Fiji) PTE Limited, and this is in breach of Fiji Institute of Accountants Act [FIA Act]. The Independent Auditors Report has been issued by a Limited Liability Company. Section 43 of the FIA Act states that:
(1) Any act done by a body corporate or by any director, officer or servant thereof of such a nature or in such a manner as to be calculated to imply that the body corporate is a chartered accountant in public practice shall be an offence under this Act and such body corporate shall be liable, on conviction, to a fine not exceeding $5,000 and, where such act is done by a director, officer or servant of such body corporate, such director, officer or servant thereof shall also be liable, on conviction, to a fine not exceeding $1,000 .
The NFP is required to submit audited accounts from an approved Auditor under the FIA Act.
ii. The total of source of party funding in the audited financial statement is overstated by $103,032.00 if all the receipts are taken into account. If bank statements are considered, then the same is still overstated by $8,760.47.
iii. It is found from the verification of the receipts that the Party has failed/ neglected to issue receipts for amounts which add up to $131,578.00. It is also highly questionable how, the Party, when it submitted the List of Donations 2 years later, derived that 54 entries in the Source of Party Funding List were attributed to individuals when these monies were not receipted at the time of receipt. The Party has confirmed that there are no other recording mechanisms within the Party if receipts were not issued.
iv. The Party explained that receipts were not issued as monies were directly deposited into the Party Bank account. This however, is not correct as there still remain monies ($92,272.00) in the List of Donations not verifiable from the Bank deposits.
v. There were 9 transactions amounting to $17,560 identified from receipt books that were not included in the Source of Party Funding.
vi. The Registrar notes that Ms. Seni Nabou, Vice President, at the meeting with the Registrar confirmed paying $3000 but ‘was not bothered about the receipt at the time’ is not a sufficient explanation that the Party could not issue receipts. Such explanations and practices raise doubts on the Party’s handling of its finances and also shows shear lack of due regard for proper record keeping and management of donations.
vii. It is noted from receipts that the Party has failed to account for $417 received by the party in 2018 but this has not been properly declared in the Source of Party Funding as required under section 23(1).
viii. The Donations, Subscriptions and Candidate Fees in the audited financial statement is overstated by $36,582.47 when verified against the various bank statements.
ix. The Parliamentary sourcing funds has been understated in the financial statement by $7,500 in comparison to Bank Statements.
x. It is found that there were 17 transactions in the value of $103,766.83, being direct deposits in the bank that cannot be linked to the Source of Party Funding list and the receipt books.
xi. There were 3 transactions which had variance in the party source of funding list in comparison to the receipted amounts which came to a total of $469.00;
xii. There were unexplained entries included in the Source of Funding list for example, the inclusion of “NUCW Refund of Office Maintenance”;
xiii. The closing bank balance stated in the audited financial statement for Account number: 1023743 is -$357 which does not match with the closing bank balance of $4,039.97 as given in the Bank Audit Certificate and the Bank Statement.
xiv. The Party has failed to properly declare the total funds it has raised through ‘fundraising activities’. In its Audited Financial statement the Party noted the amount to be $79,448.00, then in its letter dated 4 September 2020 the party provided well documented breakdown of the fundraising and the total was $88,020.00. However, after verification of Bank deposits, the total from the Bank deposits is $99,770.00.
xv. There are mismatching entries where the bank statement lists donations but it is wrongly reflected in the Source of Funding List.
It must be noted that the issues identified above contain possible breaches of the law, and those matters have been referred to FICAC.
It is also noted that the Audited Report is deemed defective in law and as such, the Registrar will reject the same. The Party ought to ensure that it complies with all the laws all the time. It has once again furnished a report that fails to meet the legal standards. This means that the Party has been in breach of the Political Parties Act since 2019.
The Registrar has also identified significant issues in the accounts of the Party itself. The issues range from failing to issue receipts, allowing (and possibly using) funds received by the party in breach of the law, failing to properly record fundraising activities carried out by the Party and mis-stating accounts of the Party. Some amounts as highlighted above are material and by any standard some discrepancies value over $100,000.
Of greater concern is the failure by the Party to properly and accurately declare the income and the source of such income by the Party in accordance with section 23(1) of the Political Parties Act.
In light of the above, I find that the National Federation Party is in breach of the Political Parties Act.
The Registrar will act to protect public record and ensure that there is proper compliance with the laws. Also in line with the directions of the Court in the earlier case of National Federation Party v Supervisor of Elections, HBM 28 of 2016, I hereby direct the National Federation Party as follows:
a. To appoint an independent Auditor that is duly registered with the Fiji Institute of Accountants, except Parkers Business Solutions or any person engaged in the said firm or company, within 7 days from today to carry out the Independent Audit of the Political Party Accounts for the year 2018. The notice of such appointment must be furnished to the registrar on or before 4pm on 18 September 2020.
b. To re-submit the Source of Party Funding List for the year 2018 to the Registrar with exact details and particulars.
c. To submit the Audited Annual Financial Report as required under section 26 of the Act within 30 days of the Appointment of the Auditor as above.
On this note I wish to acknowledge Mr. Chandu Lodhia, the treasurer for NFP who has worked with the FEO to ensure that the verification process is done with all the information as FEO required.