Two weeks after the government suspended the association they had with the consortium of companies that controlled the electronic card for public transport, Sube (for its acronym in Spanish), the Audit General’s Office (AGN) released a financial report which noted the "shortcomings" the World Bank (WB) had in its role as controller of all stages of the recruitment.

The report explains that WB had to give a “no objection" to the various steps that have to do with Sube and, in that sense, maintained contact with the Transport Department's Office by e-mails that had no official signatures to validate its content.

All the more, the AGN emphasized that in one of the e-mails the approval of an official budget of $10.5 million was solicited, doubling the initial calculations without any justification. And the Bank did not object.

The records of the meeting can be read in the Board of Auditors, where the report was approved, which states that there was "incompetence in the performance of the Bank’s staff".

Context

The Sube project was carried out by a joint venture formed by Global Infrastructure (GI, British), Ingeniería en Relevamientos Viales SA, Ingeniería en Asistencia Técnica Argentina S.A. de Servicios Profesionales, and the firm González Fisher & Asociados.

Beyond the performance of the World Bank, the AGN highlights the "delay in the entire recruitment process, which began in June 2009 and ended in March 2011"; there were 21 months "without any basis that justifies their actions", states the report and adds that in that period there were five months of "administrative inactivity".

The adjudication was carried out in March of last year by a note signed by the Secretary of Transportation (number 789/11). In this process, the audit found two gems: "The note mentioned is not a sufficient authority, because it does not have an administrative nature as established by Law 19.549 (Administrative Procedures). In addition, the technical and financial bid winner selection process exceeded the estimated budget by 18%." The original estimate, in pesos, was $40,845,000, but eventually awarded $48,456,759.

On July 24th of this year, the National Government decided to suspend the contract with the consortium of companies that controlled the Sube project, with the corresponding payments, after the release of an investigation of the newspaper La Nación in which irregularities were noted, especially from the British firm GI, for, for example, the existence of "ghost employees" and the declaration of their office address in London where a hairdresser worked.

Fifteen days later, on August 8th, the report of the Auditor General's Office that serves as a source to this paper was approved.

That July suspension was extended twice until finally on October 4th, the contract was canceled.

Currently, there is a judicial investigation into this subject in charge of Federal Judge Sergio Torres. And a copy of the report of the AGN was referred to the National Prosecuting Department of Criminal and Correctional Federal Issues number 4, in the case entitled "NN for public offense."

More Observations from the Audit

Regarding the emails sent from Transport Department to the World Bank, AGN believes that "the precariousness of the means employed cannot be understood as an official request." The issue is that, after confirmation of the auditors, the Argentine agency itself recognized that this methodology "is common in this type of project," and that "the lender accepts and considers valid communications and notifications by e-mail."

The "no objection" to the budget of $10.5 million was not the only mail in question. In July 2010, and with this form of communication, the WB gave the nod to the evaluation of the technical proposal submitted by the consortium. However, the audit stated that "we have not seen the documents submitted for consideration by the World Bank on this topic." In a nutshell, we cannot guess on what data the bank made its decision.

Against this background, the watchdog recommended they "implement mechanisms to validate the exchange of letters made with the Bank, since in our way of working, e-mail mechanisms do not meet the substantive requirements of validity.”

Returning to the meeting in which this research was approved by the authorities of the AGN, they highlighted the "position" taken by the Minister of the Interior and Transportation to the observations and recommendations of the financial report. And, in turn, said that the tenor of the findings justify future management audit programs on this topic.