A government foundation entrusted with a million-euro budget has been found to have “little or no monitoring” mechanisms in place to ensure good financial management.

The National Audit Office highlighted an array of problems at the Tourism Zones Foundation, including flouting of public procurement rules, project cost overruns, lack of verification before payments were made and a failure to present audited accounts.

Set up in 2015, the foundation is funded by a tourist tax to carry out maintenance works, waste collection and cleansing in designated tourism zones.

Last year, the foundation made a loss of over €650,000.

"For the sake of good governance, management is expected to comply with the reporting mechanism in a timely manner".- Auditor General

In a report, the auditor general emphasises that proper internal controls, found lacking at the foundation, are fundamental for the proper running of an organisation. 

The report implores the foundation’s management to ensure ongoing monitoring of its activities and to evaluate and improve the design, execution and effectiveness of internal controls.

“Spot-checking transactions or checking based on basic sampling techniques can provide a reasonable level of confidence that the controls in place are functioning as intended”, the auditor general said.

'Breach of legislation'

Apart from lack of internal controls, the auditor general highlights the foundation’s failure to publish audit accounts annually. The audit report notes that, despite being set up over six years ago, only one set of audited accounts has ever been published, for the year 2019.

“This is a breach of the pertinent legislation,” the auditor general said. “Audited financial statements are an indispensable tool to provide unbiased and objective assessment of whether the accounts show a true and fair view of the state of affairs. Thus, for the sake of good governance, management is expected to comply with the reporting mechanism in a timely manner,” the auditor general said.

At board level, the auditor general pointed out, meetings are not held on a regular basis.

When a new board was appointed in May 2021, the first board meeting was only held the following October, five months after the board was officially appointed.

At the time, the foundation’s board was chaired by Edward Montebello, who is now Prime Minister Robert Abela’s chief spokesperson.

Times of Malta reported in March how the foundation has been turned into yet another vehicle for political patronage.

A dive into the foundation’s only available accounts, for 2019, shows that over a quarter of a million euros were spent on wages alone.