August 29, 2014
News Update
Farewell John Schnebly
An American who was credited with helping the Ministry of Finance fix numerous accountability problems died suddenly in Majuro earlier this month. Finance and other government agency personnel turned out in force for the funeral of John Schnebly. “The guy was one of a kind,” said Jason Aubuchon, who works for the Graduate School USA, which provides economic technical advice to the RMI, FSM and Palau, and worked with Schnebly. Schnebly was hired by the Ministry about two years ago after one of the worst audits in RMI history. He helped turn around the situation so that in last year’s audit, the RMI government set a record for the lowest amount of spending questioned by auditors. Finance Secretary Alfred Alfred, Jr. said Schnebly left a legacy at the ministry by training numerous staff, which has helped raised accountability standards in Finance.
Read more about this in the September 5, 2014
edition of the Marshall Islands Journal.
To subscribe to the Journal, email the Journal at:
US okay Compact funding?
A big question on the table this week is whether the RMI can get the US government to approve FY2015 Compact funding — on which hundreds of RMI government workers depend — in the absence of required planning documents sought by the US. The RMI government has not been able to complete a so-called “decrement plan,” which the US government said was required to be submitted for this week’s JEMFAC meeting in Honolulu in order for any Compact funding to be allocated for FY2015. RMI officials earlier this week told US officials they needed more time to complete the report and are instead
offering a draft for discussion and US input. Chief Secretary Casten Nemra, pictured, who is heading the RMI group to JEMFAC, said
the aim is to “finalize the plan after the JEMFAC meeting.” US officials said they have been asking since 2009 for a financial planning report that shows how the RMI government is addressing the annual decline (“decrement”) in US Compact funding, and set a deadline of this week’s annual budget meeting. US and RMI officials met Wednesday to discuss use of over $20 million in Compact for FY2015 that starts October 1.
Illegal spending of hundreds of thousands of dollars by the Ministry of Health is reported in the RMI Auditor General’s latest report delivered to Nitijela last week. The audit also shows that disarray in accounting at the
Donor $$ returned
Ministry of Health last year resulted in the ministry reimbursing a donor for funding that the ministry had actually spent. The audit report, for fiscal year 2013, shows numerous examples of manipulation of bids for Majuro hospital involving over $370,000. Recent criminal prosecutions against two government employees and one businessman charge that the business paid government workers in order to win RMI contracts for supplying Majuro hospital. According to the latest audit, in order to bypass bidding rules so they could direct contracts to one business, Ministry of Health staff listed many purchases as “emergencies” so they could “sole source” the purchase through the Health Care Revenue Fund that is controlled by the hospital. On procurement documents, government staff said the local vendor could provide the supplies needed on receipt of the purchase order. But in one case, the delivery of the goods “occurred almost three months after the PO date,” said the audit. Another purchase that was sole-sourced was classified as “urgent” and stated the item was ready to be delivered on receipt of the PO. The two-month delivery time “does not support the purchase as an ‘emergency’ considering the time lapsed from request to item receipt,” the audit said. The audit also noted a number of instances where the Ministry split a single order into as many as 10 separate purchases to come under $25,000, an amount that requires formal bidding process to be followed. For example, the payments that were split into 10 separate items ranged in amount from $16,000 to over $22,000. Auditors said it appeared that these purchases were “intentionally being split” and as a result appeared to violate RMI government law. The FY2013 audit results for the Health Care Revenue Fund were delivered to new Health Minister Phillip Muller and new Health Secretary Julia Alfred in June. The audit states that violations of the RMI procurement law by the Ministry of Health have been pointed out by auditors every year since 2005. The Ministry of Health said it agreed with the audit’s findings and said the ministry is working on establishing a bidding process for medical supplies and pharmaceuticals.
In other audit issues, the Ministry of Health:

• Could not provide adequate documentation to auditors concerning a number of checks and purchase orders.

• Returned grant funds to the Pacific Islands HIV and Sexually Transmitted Infections Response Fund. The Ministry’s accounts were in such poor condition that it did not realize it had actually already spent the money that it returned to the donor, putting its account into deficit. “We recommend that management determine the ultimate financial status of grant funds prior to reimbursement and thus avoid the returning of grant funds that have, in fact, been spent,” said the audit.
Marshall Islands Book