Auditor General Stephenson Kamphasa has told Parliament’s Public Accounts Committee (PAC) that he has withdrawn his earlier endorsement over a K567 million interest payout controversy involving Pioneer Investment and with Malawi Police Service (MPS) over food rations.
Kamphasa, who was appearing to the committee on the matter for the second time, said on Wednesday that he has withdrawn his endorsement because the contract signed between Malawi Police and Pioneer Investment was null and void as Secretary to Treasury Ben Botolo has requested an audit verification of the arrears.
According to Kamphasa, the documents included bid documents, bid data sheets and a restriction order which clearly stated that the contract would not be subject to revision or a latter insertion of interest clause.
The Auditor General said Police should not have accepted invoices with interest because there was no such agreement.
“If documents had not been there, they [Pioneer Investments] had a right to claim [interests] but can now withdraw the certificate because this information was not before me when I made declaration that the government should pay the interest amount,” Kamphasa to the House committee.
“The whole document, including general conditions of the contract such as bid details, letters of offer and acceptance letter were not used. The interest claim is null and void and should not have been entertained,” he added.
He also said Pioneer Investment should not have been given the contract because they asked for price adjustment which bloated the contract price from k2.3billion to K2.8 billion.
Kamphasa said Malawi Police should have gone back to Office of the Director of Public Procurement “to communicate the request for change in contract price.”
The food supplier agreed to five percent adjustment during bidding on August 4 2015, but six days later requested a price adjustment of 20 percent.
The committee accused Pioneer Investment of being cheaters in bidding.
Pioneer Investment is a company linked to Zahir Karim, whose family is accused of corrupting state contracts.
According to documents in possession of Nyasa Times, the company is claiming K567 million in interest for what it says was late payment from January 1, 2016 to June 30, 2017 for goods which were supplied to government after receiving advance payment.
Like the notorious Guptas of South Africa, the Karim family is controlling some state affairs as the the Democratic Progressive Party (DPP) government continues to be facing allegations of corruption amid a worsening unemployment.
Inspector General of Police Lexten Kachama told the House Committee that there is no merit to pay the interest as it did not form part of the contract.
Karim appeared before the committe accompanied by private practice lawyer Frank Mbeta, who said where the contract does not include interest payment, the law allows for it if there was an agreement on payment period.
Mbeta said interest should be paid because there was delay in payment.
PAC chairperson Alekeni Menyani and his deputy Kamlepo Kalua said Pioneer Investments needs to be investigated further.Follow and Subscribe Nyasa TV :