privacy-icon CCAC releases “Comprehensive Investigation Report on the Granting of Subsidy for School Development Plan by the FDE”

Category: Investigation Reports or Recommendations Release method: Press Releases

date-icon Release:2021/12/23

The CCAC has released the“Comprehensive Investigation Report on the Granting of Subsidy for School Development Plan by the Education Development Fund”, where it points out that different loopholes were found in the rules and regulations of the“School Development Plan” Subsidy Application under the Education Development Fund (hereinafter referred to as“the FDE”). In the phases of analysis of subsidy granting, vetting and approval, issuance of subsidy and supervision, there was a certain degree of vagueness over the knowledge and acts of the FDE which gave rise to many irregular situations that were foreseeable or preventable. Even after some of the problems were revealed in the audit report in 2015, the improvement work of the FDE still did not appear to be holistic and satisfactorily done. The supervision work carried out by the FDE was in a careless manner and was merely a formality. The FDE, which tacitly permitted the schools to manage and “reallocate” their subsidies, affected the management and supervision of the use of public money. Moreover, its failure to take initiative to follow up the implementation of the regime of the concurrent receiving of financial support involved administrative impropriety. When it came to the implementation of the statutory refund mechanism, obviously, there was even administrative illegality.

In September 2020, there was a case involving the former principal and the former vice-principal of a school in the Macao district who allegedly embezzled the subsidy from the“School Development Plan”applied by the school to the FDE. The CCAC has all along been concerning on illegal acts involving public assets, the Commissioner, according to the instructions of the Chief Executive, immediately ordered the Anti-Corruption Bureau and the Ombudsman Bureau to carry out joint investigation. As the Education and Youth Development Bureau (hereinafter referred to as the DSEDJ) was responsible for providing administrative and technical support to the FDE, the staff of the two Bureaus of the CCAC concurrently stationed at the DSEDJ, where they took a vast quantity of documents related to the subsidies of the “School Development Plan” which were granted to more than 70 non-profit and non-tertiary private schools (over 100 sections) and private education institutions in Macao by the FDE over the past school years. They heard the testimony of relevant personnel, carried out on-site inspections on many subsidised projects and holistically reviewed the loopholes and inadequacies concerning the mechanism of inspection and granting of subsidies.

In the report, the CCAC points out that in the course of the vetting and approval of certain applications, the FDE neither strictly complied with the rules and regulations of the subsidy applications that it prepared to approve subsidies nor strictly followed the specific requirements for submitting documents for the vetting and approval. Moreover, as early as in 2015, the Commission of Audit suggested the FDE to take measures to re-organise the database in order to avoid situations of duplicated subsidies. However, the CCAC found that the FDE still continued to grant the same or approximate amount of subsidies for the same matters in different school years. The CCAC also doubted whether the necessity and rationality of some projects which involved considerably huge amount of subsidy were in line with the original intention and the principles of the “School Development Plan” Subsidy Scheme. The CCAC stressed that making good use of public money was the major principle that the FDE had to follow when granting subsidies. Public money should not be abused or squandered arbitrarily.

The CCAC also found that concerning construction works and equipment subsidy projects under the“medium/long term plan”which involved higher amount of subsidy, the afterwards supervision carried out by the FDE was not satisfactory. When it came to non-fixed funded projects, quite a lot of errors and omissions were found in the verification work carried out by the staff of the FDE concerning the reports and proofs submitted by the subsidised schools. Their work was not strict enough. The CCAC believed that when compared to other funds, the corresponding asset management mechanism for which the school was required to use by the FDE for supervision was obviously weak.

Also, the CCAC found that the FDE permitted the applicants to manage and“reallocate”the granted subsidy according to their will. Even for expenditure of an urgent nature such as ad hoc projects involving repair, insurance, water and electricity which did not have prior applications, some of the staff also permitted the applicants to flexibly allocate the subsidy among different expenditures on their own but they never asked them to return the balances. As long as the subsidy amount was within the total application limit amount requested and granted, the staff of the FDE would also accept it.

Moreover, the CCAC points out that the Administrative Regulation of the Regime of Education Development Fund established a set of statutory refund mechanism, but from the time when the refund issue of the FDE was firstly pointed out in the audit report till now, the FDE still did not know that a refund regime had already existed. Instead, it put in effort to seek and create another set of mechanism to deal with the issues of refund procedures and responsibilities. It even, on its own, tried to set a period of 60 days for refund by cheque based on the Regulations for the Implementation of the Budget Framework Law. Such act was incomprehensible and was obviously against the refund period of 30 days as expressly stated in the Regime of Education Development Fund. The CCAC points out that the relevant refund decision was an administrative act stipulated in the Administrative Procedure Code and the FDE should give notification to the subsidised bodies according to this Code. It should also provide the information to lodge complaints according to the law. The investigation result showed that the FDE did not follow such practice. When it came to the issue of lawfully implementing the refund mechanism, undoubtedly, there was administrative illegality.

The CCAC also points out that the FDE never, by any means, requested or reminded the applicants to comply with the statutory regime of the concurrent receiving of financial support. They took a passive attitude toward the practice of the regime. When another government fund received an application for grant, it would request the applicant for declaration of concurrent receiving of financial support. Then it would notify the FDE on its own initiative and asked for its opinions. Subsequently, the FDE would calculate the amount of the subsidy that should be granted according to the proportion of concurrent receiving. In fact, the FDE never took the initiative to supervise the situations of concurrent receiving of financial support and strictly verified the subsidised equipment or goods, which means that it had no idea of which assets were procured with the subsidy. Therefore, there was no way to know whether the applicants would get duplicate subsidy for the same project. Although the FDE's execution of the mechanism of concurrent receiving did not constitute omission, it never took the initiative to act in accordance with the law. Therefore, administrative impropriety really existed.

The CCAC also lists some real examples in the report. It believed that there was a certain degree of vagueness over the knowledge and acts of the FDE in every stage of the granting, which gave rise to many irregular situations that were foreseeable or preventable. There were even opportunities for those with the intention to deceive to take advantage of, nearly causing the Macao SAR Government loss of public money with considerably huge amount.

The CCAC discovered that the on-site inspection in the schools carried out by the staff of the FDE was merely a formality and could only achieve the effect of an ordinary visit. The relevant personnel also did not take any serious record of the details. As for the equipment and durable goods, the FDE paid no attention to them after the subsidies were granted and it even let the applicants place, collect, remove and destruct the construction works and assets procured with public money in an arbitrary manner. Waste of public assets and money was commonly seen. Moreover, the FDE also had no idea of how to supervise the contractors. In other words, neither there was express provision that required the grantees to strictly supervise the contractors nor a mechanism to directly supervise such private entities.

In the conclusion of the report, the CCAC points out that the FDE has been showing cooperative attitude to the CCAC's investigation and it has reviewed and updated part of the provisions in the rules and regulations of the“School Development Plan”Subsidy Application for school year 2021/2022. The revisions included cancellation of the“medium/long term plan”that involved larger amount of money and caused the most problems, clear definition of the projects not to be subsidised and stipulation of a minimum usage period of the hard and soft amenities to be replaced and it decided not to support repeated purchase of equipment or materials. The CCAC considered that the said requirements would facilitate the supervision and verification of whether public money was truly used. However, as for the supervision of the construction works involving subsidy with a considerably huge amount, it did not seem that the FDE had any specific consideration and prevention actions or plans to take specific measures in order to preclude the occurrence of irregularities. In addition, although the FDE made an internal review report, regarding the obvious illegal situations such as failure to apply the regime of refund and the overlooking of the statutory regime of the concurrent receiving of financial support, the internal review report mentioned nothing. The CCAC stressed that these were the problems that should be highlighted and recommendation should be rendered in defence of the principle of“rule by law”.

Currently, the 3rd Standing Committee of the Legislative Assembly is having detailed discussions on the revision of the Fundamental Law of the Non-tertiary Education System and the Higher Education System, which is intended to combine the currently existing Higher Education Fund, the Education Development Fund and the Student Welfare Fund into an autonomous fund. The CCAC considered that if the problems found in the comprehensive investigation involving the Education Development Fund were not redressed completely, it would be foreseeable that more problems would occur after the combination of the three funds and the problems would be more complicated. Therefore, it should race against the clock to clear up the existing confusion first.

In the report, the CCAC suggested the Chief Executive ordering the Education Development Fund to act in accordance with the law, implement the regimes of refund and concurrent receiving of financial support. Moreover, it should strictly impose the statutory consequence for failure to refund and prevent irregular claiming for reimbursement by“reallocating”the subsidy. As for individual projects with ordinary market value, the CCAC suggested the FDE considering granting subsidy with a fixed or pro rata amount in order to prevent applicants from making applications wantonly or taking advantage of confusing situations for the purpose of receiving the maximum amount of the grant. Meanwhile, regarding supervision of contractors, the FDE could consider establishing a database of trustworthy contractors for applicants’reference and option. It should pay attention to the establishment of a mechanism that enables smooth communication between the staff of different units, standardisation of internal instruction and vetting and approval analyses and the supervision of verification standards, etc. Moreover, the FDE should also carefully think about establishing a complete recusal system applicable to its personnel.

In the report, the CCAC reminded the education institutions receiving the grants that they also had the responsibility to take the initiative to comply with the duties prescribed in the law and actively cooperate in the Government's supervision. Also, they should strengthen their personnel allocation in the areas of finance and audit and enhance the level of self-supervision in order to join hands with the government to use public money properly and set a good example for the next generation in Macao.

The report has already been submitted to the Chief Executive. The Chinese and Portuguese versions of the full report may be downloaded from the CCAC's website.