An investigation approved this year by the control agencies of Argentina, Brazil and Paraguay detected "irregularities" in the management of a Mercosur fund for public works.

The resources are part of the so-called Mercosur Structural Convergence Fund (FOCEM), which was created in 2004 to finance programs that promote competitiveness, promote smaller economies and less developed regions, and help strengthen the integration process of nations Member of the Southern Common Market.

For their part, the audit entities that participated in the report are the General Audit of the Nation (Argentina), the Court of Accounts of the Union (Brazil), and the Comptroller General of Paraguay. The text clarifies that, although Uruguay is also benefiting from the projects implemented through the FOCEM, the Eastern neighbors did not intervene in this report.

The FOCEM in Numbers

As explained, the Convergence Fund is made up of about 100 million dollars per year, of which Brazil contributes 70%, Argentina 27%, Uruguay 2% and Paraguay the remaining 1%. The report also adds that since 2012 Venezuela has joined the initiative, delivering some US $ 27 million, but the Bolivarian participation was not analyzed in this opportunity.

With regard to how money is distributed, and taking into account the goal of promoting smaller economies, the nations that contribute least are the ones that receive the most resources. Thus, of the US $ 100 million per year, Paraguay gets 48% and Uruguay 32%, while Brazil and Argentina each receive 10%.

Since the birth of FOCEM, Argentina has received US $ 84,404,385, based on this sharing mechanism, of which, according to the research, "48.2% was allocated - something over US $ 42 million - , To about six projects approved and approved by the Fund, three of them linked to public works (see The audited ventures).

Brazil's numbers are similar to those in Argentina: it received US $ 81.3 million and has five projects in execution, two of which are public works, totaling US $ 44.4 million (55%).

Finally, until 2014, 20 projects were financed in Paraguay, of which one had to be terminated and six were completed and 13 were still in operation. For all this, $ 628 million of the FOCEM was executed, representing 88% of the total amount of money received by the initiative, "indicating a high degree of resource implementation," notes the joint research, adding that at the same time that amount equals almost two-thirds of "all projects approved for the region."

Overall, of the 46 projects funded by FOCEM, "26 have a public works component for a total of US $ 1,471,912,525."

The Audited Ventures

Of the works carried out in Argentina through the Convergence Fund, the report of the control agencies selected the interconnection in 132 kilowatts between Iberá and Paso de los Libres, in the province of Corrientes, and the work in Santa Fe schools. What strictly has to do with these undertakings, the AGN last year approved a report highlighting several irregularities.

On the Brazilian side, the audited work was the expansion of the Ponta Porá Sanitary Exhaustion System, Mato Grosso do Sul, on the border with Paraguay, while in the latter country, the undertaking analyzed was the paving of the road linking the Localities of Concepción and Vallemi (picture).

Irregularities in all the Works

Control agencies focused their observations on several aspects. In the first place, the fulfillment of the countries in providing resources to the FOCEM, taking into account that the transfers should be made on May 31st and November 30th of each year.

In that sense, it was verified that of the 16 contributions analyzed by Argentina, 13 were made "with delays of between 1 and 274 days", with an average delay of 90 days. Brazil, for its part, owes transfers for 2013. While Paraguay recorded a "timely and timely fulfillment" of the deadlines set for contributions.

With respect to the degree of compliance of the administrative processes of the projects, the entities remarked "certain irregularities in all the works."

For example, the report says that "in the case of Argentina, there are delays between the date the project is considered eligible and the signing of the FOCEM Convention," and adds: "Brazil has formal errors in the agreements, such as inaccuracies in the Object and reach. For Paraguay, which has several projects in force, it is a positive point that procurement of contractor services was carried out in accordance with established regulations, however, one of them was detected without a logical framework and one that is not adequate and that It lacks the requirements for effective enforcement."

In addition, "Argentina highlights the absence of documentation that substantiates the history of contracting that complies with current national regulations and the bidding documents have weaknesses of internal control." For its part, Brazil showed "delays in the deadlines for the granting of 'no objection' by the Technical Unit of the FOCEM generating delays in the start of the service. And deficiencies were also detected in the presentation of the bidding documents." While in Paraguay it appeared there were "delays in the calls for contracting contractors and inspectors."

Regarding whether the projects were adequate to be tendered, executed and fulfilled, the Argentine case highlights the fact that both works analyzed - the Corrales interconnection and the schools in Santa Fe - "have undergone technical modifications without their due foundation and in advance of the bidding process, which determines differences between the execution and the original project."

"This situation," the report adds, "also occurred in two works in Paraguay. In addition, once projects are completed, projects are subject to expansions and these variations are weaknesses in planning that generate variations in lead times and costs."

Other observations are linked to the deadlines foreseen in the works. The three bodies' research notes that "in all three countries the physical goals are not met in terms of project duration, with significant delays in the execution of the work affecting the deadline. On the other hand in Argentina and Paraguay has not been fulfilled with the planned financial schedule."

To conclude, the chapter related to the supervision of the undertakings affirms that "control is only partially fulfilled in both projects of Argentina. And there was a lack of technical and accounting inspections, of sending external audit reports to the internal control body. In Paraguay, the lack of internal audits was observed."