Food supplier insists no wrongdoing in K600m interest claim: Malawi Police IG says ‘calculations verified to be correct’

Pioneer Investment company which is at the centre of controversy between Malawi Police Service (MPS) and the National Audit Office (NAO) over a multi-million interest claim, insists no wrongdoing clarifying the details of the contract.

Inspector General of Police Lexten Kachama advised government to honour the payment.

Treasury stopped a K500 million payment to Pioneer Investment, a food rations supplier to Malawi Police initially authorised by the Auditor General, Attorney General and police.

The company said as per their Malawi Police Contract no: MPS/SB/226/06/2016, which was for supply of conned beef, energy biscuits, energy juice and tinned fish, deliveries were completed on 13 May, 2015 and subsequently invoiced to government with 30 days payment terms but there was no advance payment

“As per normal business norms, Pioneer Investments started charging interest 30 days from date of invoice. Every quarter, an interest debit note was sent Malawi Police,” Pioneer managing director Zamir Karim said in an interview with Nyasa Times.

The food supplier insisted the demand for payment of interest was legitimate and accused police of a breach of contract.

He said payment was made in full on 12 April, 2016 “excluding interest charged because Pioneer Investments had taken bank loans to buy the items, and were paying daily interest.”

Karim said interest claimed is MK567,866,013.40 as of August 2017 but has increased to over MK600 million since due to non-payment.

He said in July 2017, Police received a letter requesting interest arrears to be verified which was forwarded to the Auditor General and Secretary to the Treasury.

Police responded through  the Inspector General (IG) of Police, Lexten Kachama , addressed to Pioneer Investments and copied to Auditor General, Secretary to the Treasury and Attorney General verifying the interest claims and that the sum is correct.

“We have gone through the calculations and verify them to be correct based on bank interest rate calculated on a reducing balance taking into consideration the date of delivery of goods and date of payment,” reads part of the letter by Kachama dated August 7 2017.

Karim said on August 9 2017 Pioneer Investments wrote a letter to the Secretary to the Treasury requesting to process payment for the claim as confirmed amount.

But the National Audit Office (NAO)—which initially authorised Treasury to pay the interest—instituted an audit to verify the calculation and claim.

According to a memo from the Auditor General dated August 22 2017, titled ‘Verification of government arrears owed through Malawi Police Services: K567 866  013.40’ certified the demand for payment of the claim.

“Reference is made to your letter Ref No FIN/BD/2/2/20/060 dated 28/2/17 in which you requested for an audit verification of arrears totalling K567,866,013.40 accumulated by Malawi Police Services. The arrears were in respect of interest on late payment as at 30th June 2017. The interest claims were in effect from 1st January 2016,” wrote Auditor General Stephenson Kamphasa in a memo.

“The verification exercise involved, among other things, examination of contract agreements, payments vouchers, invoices, delivery notes and other supporting documents. Confirmation of deliveries of goods to Malawi Police headquarters was conducted and officials from Malawi Police Services were also interviewed,” reads the memo.

In his findings,  Kamphasa wrote:“An examination of contract agreements, invoices, payment vouchers, delivery notes and other supporting documents confirmed that the claims on accumulated interest totalling K567,866.013.40 were outstanding as at 30th June 2017.

He notes in the memo: “Further examination of the contract between Pioneer Investments and Malawi Police Service showed that there were no provisions for interest for delayed payments in the contracts, but only provided for payment to be made within 30 days after production of an invoice.

“However, based on advice from the Attorney General’s office through letters Ref. No. MJCA/AG/181 dated 24 March 2017 and Ref. No MJCA/AG/031 dated 27 April 2017, [NAO] was advised that the fact that there is a stipulated payment period within the contract implies that any late payment will attract interest.”

The letters were signed by an officer on behalf of the Attorney General.

Public Accounts Committee (PAC) of Parliament  chairperson Alekeni Menyani  has faulted Finance Minister Goodall Gondwe on the matter and said the committee will be interested to investigate theinterest payment query by Pioneer Investments.

But some PAC members have said they have not taken a position on the matter because they have not been furnished with all information, saying Menyani may have “personal interest” in the matter.

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Milton Milazi
Guest

It is sad that some PAC members should be saying Menyani has personal interests. Should gvt be losing money on interests like that? Why did gvt pay on time as agreed in the contract? Gvt has long outstanding debt with several local suppliers. If all these suppliers start applying this interest rule on unpaid invoices when agreed payment period lapses will gvt have money to pay them? Does gvt budget for such interests? If not where do they get the money?

Gawa
Guest

So once you supply goods to government you can demand interest if payment is delayed hahahahaha

M\'Malawi Weniweni
Guest

This government is wasteful. Why enter into contact to pay in 30 days when it’s clear there was no intention to pay? These see tactics for siphoning money for later sharing.

Mesimadzi
Guest

JJB, you are right. This disease of finding pleasure in making innocent people suffer is now becoming epidemic.
Take the case of ADMARC officers who were demonized and subsequently declared innocent. These officers are still suffering despite being cleared by ACB and ACC of Zambia.
If people who resisted pressure from the minister, the board chairperson and the private sector are allowed to suffer like this, what message is the country sending to other officers in parastatals? Are they not encouraged to succumb to such pressure to avoid suffering just like they ADMARC friends are suffering now?

benjones
Guest

Malawi is to weak to fight the decease called corruption and stealing openly.

mjiba
Guest

The truth of the matter is whether there is interest to be paid or not. Supply of ration is the new cashgate in the Malawi Police Service. MK2.3 billion worth of food supplies consumed by Malawi Police Services???!!! who has consumed this ration?? What are the Malawi Police Service Priorities???? We read of Police stations having no money to buy fuel, to service cars, and to respond to crime, yet they prioritise Ration?? Food over work? Somebody help me. Cashgate Cashgate Cashgate

JJB
Guest
Yesterday you were pointing fingers at Minister of Finance as being corrupt, in his dealings on this issue. Infact you were agreeing with PAC to investigate. So what changed between yesterday and today? Malawians are in the business of damaging other people reputations. Kamlepo Kalua was a hero as long as he damaged other peoples reputations, anyone who saw him as he really was was an enemy of the people, where is he now. Malawians never learn. During Kamuzu innocent people were demonised and killed, during Muluzi innocent people were demonisedand killed, during Bingu innicent people were demonised and killed,… Read more »
mowaya
Guest

why should the government get surprised when your bank are allowed by you to charge such interests and you approve them.Minister of Finance must learn his economic ability.

Baba
Guest

You are a big fool. Minister of finance’ job is to pay not to decide whether to pay or not. Was he there when the police were entering into the contract for the supply of the food.

Ministry of finance refused to pay because they said they had already paid in full, but the stupid police did not present the invoice on time and were arguing about the terms of the contract, nothing to do with Ministry of Finance.

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