AGD Report Questions NPL’S Inefficiencies and Management

The Auditor General’s Department, (AGD) is questioning the damning findings into the Nutrition Products Limited, (NPL’s) management and procurement practices in the latest audit. NPL is tasked with providing meals to some 97, 000 poor Jamaican students under the path initiative.

In seeking to answer the main audit question, is the NPL managing its resources to provide meals to schools in keeping with its mandate, the Auditor General found several shortcomings on the part of the company’s management and procurement team.

Key among the findings, NPL relied on external providers to carry out routine repairs and maintenance of its plant and machinery to the tune of 49 million dollars between 2017/2018 and 2020-21. All while equipped with an internal maintenance team that should have been performing those tasks based on their job description.

In 70 instances the audit found service providers’ invoices totaling 13.7 million dollars predated requisitions and purchase orders which were reportedly prepared after the services were provided. NPL allegedly failed in those cases to use normal control procedures limiting its procurement manager’s role to merely signing the purchase orders after the service was completed.

But concerns rose when NPL reportedly paid 143 million dollars to companies and individuals connected to board members and management staff to provide transportation, repairs, and sanitation services among others.

Related party transactions are not prohibited by law but, the Auditor General notes the nature of the transactions is likely to create potential conflicts of interest. The audit notes instead of finding a board of directors collectively and individually exercising duty of care in keeping with fiduciary responsibility, there were several breaches to the procurement law.

The audit found board members acted contrary to ethical standards and fiduciary responsibility by failing to disclose connected party relationships. Citing examples, the report states between November 2010 and January 2021 a distribution company was paid 69.6 million dollars for haulage and transportation services. The audit later found the registered owner of the trucks used by the distribution company, was an investment company of which the former chairman is a director and shareholder.

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