Financial crimes expert Lucas Kondowe who was recently appointed by President Peter Mutharika as Director General of the Anti-Corruption Bureau (ACB) has said the graft-busting body will dip for objective material evidence to be used for prosecution in the cashgate trials, saying the external forensic audit will be complimentary.
Kondowe said on Friday that the bureau will dig on incriminating evidence and not rely much on the audit report by London-based Baker Tilly Ltd.. saying there is huge amount of information to look into.
“The audit report will just be part of the input,” said Kondowe.
Asked on local radio if ACB will arrest people based on names revealed in the cashgate report, Kondowe said: “The names can be in the report but to us that means nothing, we will follow the evidence.”
Minister of Justice and Constitutional Affairs Samuel Tembenu released the comprehensive report to the media on Thursday.
The report contains a list of 49 individuals who between them had a hand in siphoning almost K24.2 billion of public funds.
Tembenu hinted that investigations into ‘cashgate’ were still on-going and several other suspects may come out in due course.
The Baker Tilly report describes the scale of the theft and how it operated. Drawing on a sample of 501 suspicious transactions between April and September, the auditors found that a total 104 government of Malawi cheques, totalling K 6.9 billion were paid to 39 different companies when they had not supplied any services to government the majority of which were deleted from the system.
Payments with no further documents accounted for a further 4 billion kwacha. The bean-counters also found that supply contracts had been inflated by 3.6 billion kwacha. All told, the state was defrauded of around $32m, almost 1% of Malawi’s annual GDP, in just six months.
A central element to the fraud was the manipulation of a government software system that was supposed to help control spending. In a typical cashgate transaction, the accounts of the tourism ministry or the cabinet office were hacked into.
The hackers found a budget allocation, say for paper clips, and generated bogus payment orders until the allowance was exhausted. A cheque was then raised and paid into the bank account of a dormant company used solely for money laundering. Money was cashed and the transaction was then erased from the accounts so the fraud could be repeated.
No one checked whether any goods had been delivered. Baker Tilly found that basic filing was not applied. Cheques were left in printers overnight and made out in corridors rather than secure offices.
Payment orders for large sums were honoured by the central bank even if they had only two of the three required signatures. In one instance high-value cheques with consecutive serial numbers for exact sums were cashed on the same day. The theft went unchecked in part because a reconciliation of bank payments by the accountant-general’s office had not been made for over a year.
Speaking during the news conference to release the report, Tembenu who was flanked by Minister of Information Kondwani Nankhumwa and deputy Auditor General Langton Gomani, stressed that the report was not an indictment of anybody but investigations into how government lost billions.Follow and Subscribe Nyasa TV :