ADMARC loses K330m on ghost workers, bogus claims

Cash-strapped Agriculture Development and Marketing Corporation (ADMARC) lost close to K330 million to fraud and abuse masterminded by employees through bogus vehicle insurance, medical cover claims and dubious staff loan schemes, a report on the investigative audit says.

A private auditing firm, Graham Carr, carried out the investigative audit of ADMARC between July 2020 and March 2022 to investigate and get to the bottom the various schemes, projects and programmes of the company and how the same were managed in relation to standing operation procedures and policies and persons behind any breaches of these procedures and policies if at all.

The ADMARC Board sought the services of the audit firm after noting that the financial performance of the company continues to nosedive in spite of concerted interventions by the government, the board and the executive management of the company.

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The audit report says during the watch of the Democratic Progressive Party (DPP) government, ADMARC paid insurance for motor vehicles duplicated on the portfolio amounting to MK156, 984.00 and insured vehicles for non ADMARC staff amounting to MK828, 915.00 Refer to section.

“From the findings above, it can be observed that there is deep routed corporate fraud that has been happening in ADMARC. No single member of staff whose vehicle was insured could cause an alarm to say you have not recovered insurance deductions from my payroll. Staff in the finance department failed their duty by not recovering insurance payments from staff. One contributing factor is that they were also conflicted as their names were on the list as well. There was complete lack of expected standard of internal controls in relation to recovery of insurance loans from staff,” reads part of the report.

Additionally, the audit reports says, ADMARC paid MK534 million for the period against what it indicated as expected payments on their payroll of MK417 million.

The auditors say this shows that there was lack of proper reconciliation between the amounts on the MASM manifest to what ADMARC payroll staff had posted in the system and that this also contributed to the under deduction or deliberately not recovering MASM contributions for staff and their beneficiaries from the payroll.

“ADMARC paid an amount of MK15, 854, 000 to MASM for the 21 months period on behalf of beneficiaries who have been identified as undeserved, deceased MK1,572,000, out of employment MK6,728,000 and non ADMARC staff MK15,854,000,” it states.

Meanwhile, the ADMARC Board has announced that 3, 122 are set to lose jobs through retrenchment, an exercise the corporation’s board says is part of its restructuring drive.

The decision to retrench the entire workforce comes barely days after an external audit revealed that the institution has lost about K330 million to fraud and abuse masterminded by employees through bogus vehicle insurance, medical cover claims and dubious staff loan schemes.

According to a letter dated September 15 2022 by immediate past ADMARC Board chairperson, Alexander Kusamba Dzonzi, all employees will be retrenched because the company is not performing.

It reads: “Over the years, Admarc has been poorly performing such that it has accumulated debts that are now choking its operations. The company now has more liabilities than assets.

“The company has a huge wage bill that is not supported by the company’s revenue base and business model such that it has been the shareholder paying for the employees’ salaries and other statutory obligations for years.”

It adds: “Admarc intends to retrench all employees since the company has been completely restructured. The retrenchment exercise will be carried out in a phased manner and all guidelines for the retrenchment process will be followed.”

Dzonzi confirmed in an interview yesterday the letter was addressed to the company’s workers union, but he could not provide further details, arguing: “I cannot say much because our tenure expired. But we also served that letter to the Secretary for Agriculture as well as the Ministry of Labour. You should understand that this is what our board was doing before the expiry of our tenure.”

ADMARCH is one of the parastatals that have been struggling financially and has over the years failed to serve Malawians as per its mandate as produce stabiliser and provide ready markets for farmers. ADMARC has also failed to perform its social function as government’s food security apparatus.

According to the 2021 Malawi Government Annual Economic Report, as at half year of the 2021/22 financial year, ADMARC recorded a net loss-after-tax of K3.7 billion.

The report further states that ADMARC has been surviving on overdrafts and bank loans, which has been a setback to its growth.

Until 1987, ADMARC was the sole buyer of smallholder produce, but in 2004, it was incorporated as a limited liability company with the government owning 99 percent of the shares.

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Mayi wa dziko
Mayi wa dziko
2 months ago

the warm heart of africa hahahahahahahah


CANAAN
CANAAN
2 months ago

ADMARK’s failure to sustain itself has led to so many inconveniences in terms of service delivery. Imagine farmers opting to sell their products to vendors just because ADMARK has no funds to buy crops. It is a setback to the economy of Malawi at large, policies have to be changed for the betterment of our nation.

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