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Inadequate financial management of nuclear safety cooperation

There are weaknesses in the financial management of Norwegian and Russian contracting parties in the nuclear safety cooperation in North-Western Russia. The Ministry of Foreign Affairs does not follow up whether the Norwegian project managers have good internal control systems. - This entails a risk that irregularities are not prevented and uncovered, says Auditor General Jørgen Kosmo.
Published 12/6/2011 12:05 PM

Document 3:5 (2011-2012) The Office of the Auditor General's follow-up of the parallel audit with the Accounts Chamber of the Russian Federation of radiation safety and protection of the environment against pollution from radioactive sources in North-Western Russia, was submitted to the Storting on 6 December 2011.

The investigation was carried out as a parallel audit with the Accounts Chamber of the Russian Federation. It shows that the investigated projects aimed at securing radioactive waste and spent nuclear fuel in North-Western Russia have largely been carried out in accordance with the contracts entered into between Norway and Russia. - The nuclear safety cooperation between Norway and Russia has given the Norwegian authorities valuable knowledge about safety at the nuclear installations and risks relating to radioactive waste in North-Western Russia, says Auditor General Jørgen Kosmo.

The cooperation with the Accounts Chamber of the Russian Federation has enabled the Office of the Auditor General to audit the Russian contracting parties' management of Norwegian funds for securing radioactive waste and spent nuclear fuel in North-Western Russia.

The investigation shows shortcomings in accounting documentation on both the Norwegian and the Russian side. The Ministry of Foreign Affairs does not require Norwegian project managers to report how their activities are organised with a view to preventing and uncovering corruption, misuse of funds and irregularities. The investigation also shows that some contracts contain no requirements for competitive tendering and documentation of the accounts of Russian contracting parties. - It is important that the Ministry of Foreign Affairs monitors that contracts entered into between Norwegian and Russian project managers are used actively to ensure the efficient use and effective control of Norwegian funds, says Mr Kosmo.

According to the Ministry of Foreign Affairs, a number of measures have been implemented since 2009 to strengthen the Ministry's grant administration procedures. The Ministry also sets stricter requirements for Norwegian project managers to establish internal control systems in their activities. - It is crucial that the Ministry of Foreign Affairs not only sets requirements, but also takes steps to ensure that Norwegian project managers organise their activities in such a manner that corruption, misuse of funds and irregularities are prevented, says Mr Kosmo.

The parallel audit has been limited to two Norwegian-funded projects: the project for the scrapping of submarine 609 and the project for the removal of radioactive solar cell panels from lighthouses along the coast of Murmansk and Arkhangelsk counties and in the Nenets autonomous region.

The Office of the Auditor General of Norway and the Accounts Chamber of the Russian Federation cooperated on planning the audit of the accounts for the two projects. Accounting data obtained from Russian contracting parties were reviewed and processed jointly by the two supreme audit institutions, and they also carried out joint interviews with Russian contracting parties and subcontractors.

On 1 September 2011, Auditor General Jørgen Kosmo and Chairman of the Accounts Chamber of the Russian Federation Sergej V Stepashin signed a memorandum setting out the results of the respective investigations and joint assessments. As a result of the auditing cooperation, the Russian contracting parties have established entities for internal control of the use of Norwegian funds.

The document can be downloaded via the link on the right.

The deferral of public access to documents prepared by or for the Office of the Auditor General in connection with Document 3:5 (2011-2012), cf. the Act relating to the Office of the Auditor General section 18 second paragraph, is hereby set aside.

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