After the unprecedented course that experienced the report on the Football, archived first and published 45 days later, this time the General Audit Office (AGN, for its acronym in Spanish) directly decided to release two different versions of the same investigation, linked to the purchase of locomotives and wagons to China in operations performed between 2008 and 2010 for more than $546 million dollars.

Holding in his hands the findings made by technicians, members of the College of General Auditors produced two interpretations, one in the minority, which reproduces the original text, and again in the majority, including several modifications. The differences appear on issues such as missing records, breaches of regulations on investment and public credit, and lack of planning of costs incurred in those transactions.

In this situation, also unprecedented in the control body a "Proposal Vote", prepared by two General Auditors -belonging to the majority block-, which contains comments and suggestions for changing the original report, up next, the points of dissent.
Lost Records
Something common in the audit reports prior to the listing of observations is the section on the scope limitations; there, the crew described the difficulties that may be encountered when developing their work, such as lack of access to necessary information.

Regarding the purchase of wagons and locomotives from China, the version approved by the majority says that its tasks "have been limited in scope by the loss of two files, through which payments were processed relating to the acquisition of rolling stock for Line A Subway for $12,745,282.50 each. And adds: "The audit team could not relieve the payment circuit involved, the fulfillment of the preconditions, the deadlines and supporting documentation procedures performed by the agencies involved."

In the minority's report however this situation transcends the limitations section and is listed as one more remark. It is that this version adds that the loss occurred in the National Directorate of Projects with International Credit Organizations (DNPOIC) and set out its reconstruction but, "at the delay" of that process, "it was not possible to access information."

In the aforementioned "Proposal Vote", most members requested to remove this observation of the minority bloc, arguing that it was already covered by the scope limitations.

"Manifest Breach"

The Watchdog’s technicians analyzed three signed contracts with China for the purchase of rolling stock for the ex-subway line San Martin, the Buenos Aires metro and long distance services (see Shopping).

The work warned of the "risk of making acquisitions disadvantages, from the perspective of economy, efficiency and effectiveness", since "it has been verified a partial compliance with provisions relating to public investment regime, not verifying the existence of opinions of the technical qualification required for that purpose."

Translated: The purchases were made without previous analysis of both feasibility and technical performance, which "represent a clear breach of the Law on Administrative Procedure, to the extent that bypass (steps) provided and implicit in the current law", and also "precludes timely interaction of budget organ competition, as the Cabinet and the National Budget Office."

But here differences arise. It is that the majority report explains that the three contracts with China are in the so-called Bank Public Investment Projects, with their respective BAPIN numbers -by the acronym of the entity-and objective data, intermediate and final, estimated amounts, status, source of funding and start and end dates of the project. Yet this information is considered "insufficient."

While the minority, for its part, argues that only one project has a number BAPIN (that of ex line San Martin), "but not the other two contracts", whose details were accessed "by consultations through the website" another state office, the National Public Investment.

Another irregularity warned in research has to do with Article 59 of the Financial Administration Act (24.156) that says: "No public sector entity may initiate proceedings to make public credit transactions without the prior written and formally executed" the coordinating body of the financial management systems.

The fact is that, after analyzing the contracts in question, it was concluded that there was a "failure of the system of public credit in relation to the submission of applications for authorization to start the ONCP" and the subsequent approval by joint resolution of the secretariats of Treasury and Finance.

Even the most recognized version of this, stating that "in all three cases the omission of the authorization of the coordinating body was noticed." In parallel, this block consulted "stakeholders" and received in response internal notes (memoranda) developed by the ONCP and DGI in describing "briefly" the general conditions of the agreements, with the particularity that these documents were dated after the start of receiving financing offers.

That happened for example with the contract for the ex-subway line San Martin because, as it turned out, "the contracts were well advanced before the competent authorities found out." In addition, from those consultations it was found that the ONCP, under the Ministry of Finance, summarized the general financing agreement and reproduced certain provisions of the Financial Administration Act, but to another feature: "Article 59 was omitted," said the AGN. For completeness, the report states that in transactions "no evidence of intervention by the Cabinet of Ministers was obtained."

On the side of the minority, this observation remains almost verbatim, except for the mention of another article of the Law 24.156, 66 which says: "The public credit operations carried out in contravention of the rules laid down in this Act are null and void, without prejudice to the personal responsibility of those who conduct.”

Budgetary Treatment

In 2010 a law established a Priority Investment Program (PIP) composed of several projects (for example the railway), that should be considered and treated budgetary financial assets, and to completion, as Advances to suppliers and contractors was enacted.

The field work done by the technicians of the AGN concludes that, the same year that that rule was enacted, "the budgetary provision for the purchase of railway rolling stock was incorrectly budgeted (was to fixed assets instead of Advances to Suppliers.)”

There's more: "It was also found that the costs related to commissions of Directors, Management and Coordination, commitment fees and expenses paid in foreign currency, were charged to Expenditures" in the case of rolling stock contract for long distance, as "Advances to Suppliers" in the ex-line San Martin, when "in both cases should have been charged to subsection fees and Other Expenses".

The majority bloc of General Auditors assessed the situation, on the one hand, as a "lack of uniformity in the budgetary treatment" of loans and, on the other, as "a partial budget programming," pun.

However, the minority interpreted this, "in addition to demonstrating contradictory criteria" in the allocation of funds, which also "distort the economic outturn and highlight weaknesses in budget programming."

Forms

Following the management of funds, another finding of the AGN notes that "the widespread use of payment orders without budget item (for) observed outlays on Advances effectuate, insurance premiums and commissions, most of which were not regularized at the end of the year." These payment orders without charge are the C42 forms, they are used to provide the outflow of funds from the General Treasury of the Nation and have no budgetary consideration when making the expenditure.

The Audit says (the original version) that these papers are "exceptional and require subsequent regularization, that is, the reallocation of items to allocate spending as much an organism to a corresponding period."

In the documentation analyzed it shows that between 2010 and 2013, for the contracts in question were disbursed some 132 million and that, of that total, 98.18% was done through forms C42, i.e. payment orders without budget item.

When interpreting the numbers, the majority report says that "78.9% has not been regularized" of those operations and, as a justification, it is argued that "payments are treated necessary to start implementing the contracts which, verified arrears, could generate delays "in the same performance.

And while the minority was handled with the same data, the conclusion was different because, after consulting the matter with the Directorate of Public Debt Administration, the office reported that "there was no regularization" and what was to be avoided finally happened: "This indicates weaknesses in budget management to make readjustments, which resulted in payment delays and postponements in the start of the supply."

Send a Train without Looking At Whom

Like it was said before, one of the contracts analyzed was for purchasing rolling stock for long distance services.

The problem is that according to the original report, "at the exact moment the acquisition was not defined on which branches would develop the activity or the amount or frequency of services. There were no studies that warned about meeting demands, operating costs, the necessary resources and their method of production or value of the tickets, etc. Even at the time the SIGEN warned of missing details on rail corridors in which they operate."

For this small detail, there was an addendum (amendment) to the contract, in which it asked the Chinese vendor who, out of 20 locomotives that it would send –they had a top speed of 160 kilometers per hour, to reduce the power of 13 trains to 120 km / h. After the change, the National Commission for Transport Regulation itself (CNRT, for its acronym in Spanish) warned that "it still remains unclear the fate of those 13 formations and this situation has hampered the necessary works for operating the trains."
Well, on this issue the majority bloc of Auditors said that the analysis before the purchases were "partial" and "could not verify the existence of the planned distribution of cars and locomotives for long distance service."
While the minority ruled that "in no case were the analysis complete of the various supplies (they were going to buy) regarding the railway operation which they aim to provide" and completed: the acquisition of 220 cars and 20 locomotives for long distance services materialize without establishing in advance a specific plan of railway operations."
This version also notes that, given the characteristics of the products purchased, "there were no ramps in commercial and technical conditions that would provide a service at the speeds that the material allows."
The Cart before the Horse
Moreover, the audit found that "the existence of a schedule of activities to establish different levels of implementation of infrastructure works in relation to the receipt of new rolling stock acquired could not be verified."
Translated: locomotives and wagons were purchased without something to plan or construction works in the stations where they would run.
The report reveals the existence of studies where "the need to raise the platforms so they can be operating the new trains are needed." And the audit team verified "in December 2013 that they had risen two platforms, in Retiro and José C. Paz stations, and two central platforms in Villa del Parque, Saenz Peña, starting from October of the same year to be provided with partial service new rolling stock with exclusive stops at those stations. It could not be verified the correlation of the works mentioned to raise the rest of the platforms."
All this led to that "part of this new material is destined to strengthen services in the former Sarmiento and Mitre lines".
For the minority, this lack of coordination between the purchase of the wagons and completing the necessary works produced an "underutilization of materials acquired."
Reasonable Prices    
Both reports agree in pointing out that "the analysis of reasonableness of prices" for long-distance contracts and the ex-line San Martin have "partial results."
On the side of the minority, the observation remained almost verbatim, except for an aggregate. This version says: "The lack of these analyses in an exhaustive and complete manner are considered unavoidable, aware that these contracts were concretized bilaterally (State-State) without recourse to an international tender and therefore without public certified offers.”
The Observation Removed
The majority bloc of General Auditors decided to eliminate one of the observations contained in the original report.
This section does appear in the version of the minority, and says: "Previous analyses of the financial cost of the acquisition are partial, by not including all the concepts to be considered in an evaluation project. As a result of this situation, estimates differ significantly from what was actually paid.”
What does this mean? That in the calculations of the project, the 15% deposit was not included in the total price of each contract, paid by the Ministry of Transport-, i.e., the analysis of the purchase was limited to 85% of the total price. 
But that's not all, the work adds that "the estimates made by the Insurance Premiums and interest significantly different from those actually paid."
Why did the majority eliminate that paragraph from their version? According to reports, to evaluate this issue was taken into account the answer given by the National Bureau of Public Credit in its defense.
The agency said on the advances that they "are not considered in the valuation, because it forms part of the financial contract" and that its function is not comprehensive evaluation of the project "since it is not part of their competition." They add, moreover, that on "the difference for insurance premiums, they may differ because the term structures of interest rates depend on market expectations at that time."
The Purchases
The AGN report addressed three operations. The first is by rolling stock for ex-line San Martin (2008 and 2010) they were 24 locomotives for $47 million and 160 wagons for $74 million. In both cases there were changes in costs, and ended up leaving $48.7 million and $77.5 million respectively.
The second is the purchase of rolling stock for subway line A. At first, in 2008, this operation was made up of three contracts to buy 279 trains at a value of $653 million.
The last contract was for the purchase of 20 locomotives and 220 carriages for long distance services for an agreed price of $ 321 million.
The variations in this case, were technical, such as the aforementioned request to the seller to reduce the maximum speed of 13 locomotives on the acquired 20. Outside, there was no change in either quantity or price of the contract but as a result of that request, the difference would be offset by buying more parts to reach the scheduled original value.