Exclusive: K1.6 bn cashgate at Malawi Electoral Commission

A special   investigation   of   the   Malawi   Electoral   Commission   (MEC),   conducted   by   the Central Internal Audit Unit of the Ministry of Finance, uncovered rampant mismanagement of public resources at the electoral body, Nyasa Times has established.

The report Reference No 1A/270/15/0018, issued on August 7, 2015, was addressed to the Secretary to the Treasury and copied to the Chief Secretary to the President and Cabinet, the Accountant General, the Auditor General and the Chief Elections Officer.

It states that MEC flouted procedures and the amounts questioned are in excess of MK1.5 billion. The 40 page long report cites:

• Procuring and spending outside budget and failure to maintain appropriate accounting records;
• Recruiting staff without following laid down procedures;
• Procuring without due regard to regulations; and,
• Disposing used vehicles to the Chief Elections Officer (CEO), commissioners and staff in a non-procedural manner.

The above some of the irregularities that have cost the tax-payer funds in excess of MK1.5 billion, an amount can ill-afford to waste.

Already K20 billion was lost in the Cashgate scandal on President Joyce Banda’s watch, while K577 billion was misappropriated during President Bingu wa Mutharika’s rule. Donors stopped assisting Malawi as a result. MEC is one of the few institutions still receiving assistance from multilateral donors.

Summarizing the catalogue of non-compliance to the Public Financial Management Act, the report, seen by Nyasa Times and subjected to various authentication correspondences with the Spokesman of the Treasury, the Chief Secretary, the Chairperson and CEO of MEC, the National Audit Office, and other stakeholders, queries MEC on:

1. Financial mismanagement;
2. Irregularities in staff recruitment;
3. Anomalies in disposal of used motor vehicles; and
4. Non-compliance with procurement law.

Financial mismanagement, amounts queried total MK883,537,531.00

Specific findings include:

• Incomplete accounting records which it states can mislead management into making inappropriate decisions;
• Maintaining an unnecessary number of bank accounts which complicates tracking of funds;
• Unreliable bank reconciliations which can ease occurrence and concealment of fraud as was the case with  “cashgate”;
• Investing public money amounting to MK398,040,000 without documented authority;
• Transferring   huge   sums   of   money   MK118,667,404.44   to   unknown   accounts   –   a feature of cashgate;
• Over-refunding   of   nomination   fees   totalling   MK75,050,538.17   in   political appeasement;
• Overspending the travel and accommodation costs by MK205,623,586.00;
• Paying Commissioners for trips not undertaken to the tune of MK15,422,756.00;
• Drawing personal loans from public funds without evidence of repayment amounting to MK39,922,286.00;
• Paying gratuity from operating funds amount MK16,850,324;
• Abusing funds on un-approved travel amounting to MK2,228,975;
• Unjustified hire of motor vehicles for the CEO to the tune of MK7,043,662;
• Claiming MK4,688,00 in allowances for overlapping periods; and
• Spending on borrowing of lamps and tents when no such budget existed.

Irregularities in staff recruitment:

Findings   on   irregularities   in   staff   recruitment   include   recruiting   people   without   even attending   interviews   and   placing   people   in   positions   different   from   those   they   were interviewed for.

Anomalies in disposal of used motor vehicles:

Of the fourteen used motor vehicles that were disposed of irregularly, two were allocated to the CEO; six to commissioners, three to staff members, one had no details and two were at the time of the audit yet to be allocated.

Among other things, the auditors suspected foul play in the way the vehicles were valued. In the case of the two vehicles allocated to the CEO for instance, the Chairperson’s vehicle, registration TO2966, had just incurred repair costs of MK1,419,000 yet it ended up being valued at MK1,500,000.

The CEO’s official vehicle was repaired to the tune of MK396,854 and somehow, valued atMK350,000.

The Commission also incurred costs on the other motor vehicles earmarked for boarding-off amounting to MK744,976.10. In other words, the MEC CEO, some commissioners and staff acquired public vehicles for a song, after the Commission had invested a fortune in their repairs in a well-orchestrated looting manouvre.

Non-compliance with procurement law – total MK688,684,743.09:

Issues on procurement include a sum of MK104,701,494.50 which the audit reports states did not comply with Public Procurement Laws. Again, in a scenario reminiscent of cashgate, MEC failed to substantiate the supply of goods by SCI Tanzania which was paid a whopping MK16,688,709. SCI, per their website, is a market-leader in technology consulting and solutions.

Goods procured outside the procurement plan and budget amounted to MK40,655,225; while andMK526,639,314.59 was noted by the auditors to have been spent in excess of the threshold where the Office of the Director of Public Procurement should have granted prior approval.

MEC Management Position:

Responding to an emailed enquiry on the report, the Commission through its spokesperson Sangwani Mwafulirwa, faulted the report, saying: “The report you have only covers one side (the auditors’ findings). We wish to inform you that what you have was a draft by the auditors which they submitted to MEC for response,” explaining that the issues raised in the report were responded to and that MEC was expecting the auditors to issue a report that would incorporate responses from MEC management.

“With the explanations, responses and evidence we provided to the auditors we expect the issues that you are raising to be dropped. However, we would not divulge them now as that would be unprocedural and unethical practice in audit. We wish to emphasise that this is work-in-progress and not meant for the public yet,” stated Sangwani Mwafulirwa.

Lamenting that “someone had leaked the draft report before its finalization” and that this could lead to throwing of wrong and unsubstantiated allegations into the public sphere”.

Mwafulirwa urged this correspondent to wait and “use the final report because it will have comments and responses to the findings of the auditors and possibly the issues you are highlighting now will be non-issues as they will have been dropped by the auditors.”

This was on September 12, 2015 and as we wrote this report, neither the Minister of Finance spokesperson, nor any one at the Central Internal Audit Unit had issued a “revised” report which dropped the issues highlighted, despite a flurry of emails from Justice Maxon Mbendera to the Central Internal Audit Unit.

MEC Chairperson weighs in:

On September 21, 2015 the Chairperson of the Commission, Justice Mbendera kindly weighed   in,   sharing   copies   of   correspondence   between   MEC   and   the   Secretary   to   the Treasury   in which   MEC   had tried,   apparently   in   vain, to   clarify on   the   findings   of   the damning audit Report.

Contrary to   the   claim by  the   MEC  spokesperson  that   the   report  was  a   draft,   MEC  had received   communication   from   the   Central   Internal   Audit   Unit   which   clearly   and unambiguously indicated that the report was in fact final.

Verbatim,   the   memo   accompanying   the   report,   dated August   7,   2015,   Ref.   No1A/270/15/0018 addressed to the Secretary to the Treasury and copied to the Chief Secretary, the Accountant General, the Auditor General and the Chief Elections Officer reads:

“Central   Internal   Audit   Unit   conducted   an   investigative   audit   at   the   Malawi   Electoral Commission between April 27 and May 15 2015. I now submit the final audit report for your information and appropriate action.

Signed August 7, 2015.”

MEC, licensed to loot and to rig?

As of today, the both the Chief Secretary, Mr George Mkondiwa, and Ministry of Finance spokesperson, Mr Nations Msowoya, are yet to respond   to emails seeking to hear from the Treasury if indeed the report was just a draft which would be revised,  as argued by MEC and given the gravity of the findings, what decisions had been made.

In a comment on his Facebook page, Stanley Onjezani Kenani lamented the endless abuse of public resources, and wondered whether this evil will be resolved at all.

“Malawi is like a leaking bucket. Everyday there is news of looting of public funds. At the same time, we are appealing to the international community to give us $146 million to prevent death by hunger. What assurance will donors have that their assistance will indeed go to those in need?”

To us at Nyasa Times one thing is clear: no action has been taken against anyone at the Malawi Electoral Commission, and none will be taken because the current Commission serves the interests of the Democratic Progressive Party (DPP) and hence it is licenced to loot with impunity.

The   DPP is, in fact, implicated in the report because its candidates are the direct beneficiaries of the nomination fee refunds queried by the auditors.

Besides, the DPP is not taking any action whatsoever on the K577 billion Cashgate Scandal. The DPP is happy to be yapping at former president Joyce Banda and telling the world it is serious about cashgate.

Again, expecting the current crop of Commissioners to rectify this mess and bring sanity to MEC, is as good as expecting a mango tree to produce apples.

Some Commissioners, for crying out loud, received MK15,422,756.00 for trips they did not undertake.

And, two of them are now proud owners of ex-public vehicles they bought for a song.

It is therefore safe to conclude that Malawians should rest assured that the MEC Commissioners, the CEO and top Management will remain untouched, and survive to loot and rig again, with impunity.

Fast Facts:

• The Central Internal Audit Unit (CIAU), under the Ministry of Finance and Internal Audit Units is part of the Internal Audit Common Service created by the Malawi Government in July, 2003 to improve in the use of public resources, reduce potential risks of corruption and financial mismanagement. More information on this unit is on this link:http://www.finance.gov.mw/index.php?option=com_content&view=article&id=104:central-internal-audit-division&catid=47:divisions&Itemid=115

 

• You have news tips? Contact: [email protected] or  Karvei Exclusive Publications Contact: garveykarvei@ymail.com

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