High Court calls for forensic audit report from RBM in ICT case
High Court Judge Kenyatta Nyirenda has ordered the Reserve Bank of Malawi (RBM) to produce and disclose the forensic audit report within 3 days in an ongoing K1.8 billion ICT procurement case.
This is as a result of an application by Sparc Systems Limited, the first interested party, for an order compelling the claimant (RBM) to produce and disclose a forensic audit report prepared in May, 2021 by Deloitte, a firm of auditors in a case where RBM is challenging the decision of the Public Procurement and Disposal of Assets Authority (PPDA) which ordered it to retender the ICT procurement after finding irregularities in the procurement process.
RBM and Mitra Systems Limited (the second interested party) objected to the inclusion of the audit report to the case.
The Central Bank objected to the availability of the forensic audit report saying Sparc Systems Limited had failed to make out a cogent case meriting the granting of the order being sought and only the court should call for the report if deemed important to do the same.
In his sworn affidavit, Sparc Systems Managing Director argued that the forensic report which was ordered by RBM for its own investigations was relevant and necessary to the court proceedings as it would show that the claimant (RBM) knew all along that there were serious irregularities with the procurement process now under review, despite the position that it has adopted in these proceedings.
Sparc submitted that among others, the forensic audit found that their competitor did not qualify to be awarded contract in issue as RBM had intended and that RBM changed the evaluation matrix in the middle of the procurement process to favour Mitra Systems by among other things, removing the requirement of the firm to have 5 years minimum experience, lack of financial capacity of the other bidder to execute the contract as evidence by its intention to ask for a 60 percent upfront payment in the event of being awarded the contract which was in clear and brazen breach of a requirement for financial capacity and that it did not have proven track record of having executed a contract of that magnitude.
Sparc argued that they believed that the disclosure of this report would give the court full information on what transpired which information has hitherto been hidden to all the parties to this litigation aside from the claimant (RBM).
In his ruling, Judge Nyirenda rebuffed the Central Bank saying it was duty bound to disclose the forensic audit report both under Order 15, Rule 1, of the CPR and under the duty candour.
He added that he was more than convinced that the advantages of disclosure outweighed the disadvantages of disclosure in that Sparc Systems Limited would suffer a litigious disadvantage by not seeing or using the forensic audit report which is its possession, custody or control.
“As already stated, it is the claimant who instructed Deloitte to prepare the forensic audit report. Furthermore, the party that is being required to make the disclosure, that is, the claimant, has not raised any issue regarding its financial capacity to disclose the forensic audit report. It is, accordingly, my finding that the claimant has sufficient resources to do so,” remarked Judge Nyirenda.
He added: “In view of the foregoing and by reason thereof, I am inclined to exercising my discretion in favour of allowing the application.
“I, accordingly, order the claimant (RBM) to produce and disclose to the first interested party (Sparc Systems Limited) and other parties to this case the forensic audit report.”
In May 2020, RBM invited bids for the supply and delivery of ICT hardware for flexcube upgrade and ICT hardware for Automated Transfer System and on 16th November, 2020, RBM published an intention to award both contracts to Market Insights Tracking (Mitra) Systems, a foreign-owned firm that did not meet the bank’s own set evaluation criteria during the bidding process.
The decision forced Sparc Systems Limited to lodge a complaint to the Public Procurement and Disposal of Asserts Authority (PPDA) which then ordered the Central Bank to retender the bids which were awarded to Mitra Systems Limited. This did not go well with the Central Bank which took the matter to the High Court suing Sparc Systems Limited in a bid to convince the court to still go ahead to award the said ICT company the controversial contracts.
This was however rejected by Judge Nyirenda who faulted RBM for wrongly naming Sparc Systems Limited as defendant instead of PPDA which ordered it to retender, saying Sparc Systems Limited was an interested party in the whole saga.
This latest verdict from Judge Nyirenda has become a big blow to the Central Bank which has set its eyes on going ahead to award the controversial contacts to Mitra systems Limited.
The court has since postponed the next hearing of the substantive judicial review which was scheduled for 20th July, 2021 to 27th July, 2021 at 10 o’clock.
Follow and Subscribe Nyasa TV :
