K577bn reduced to K236bn: Malawi ‘grand corruption’ report reveals ‘big rigging’ scheme

The K577 billion (about $856 million) plunder of public money between 2009 and 2014 has been reduced to un-reconciled amount  of K236 billion, according to the  forensic audit conducted by RSM Risk Assurance LLP of the UK.

The summary of the audit reportsays the K577 billion that is regularly quoted as unaccounted for is incorrect and has reduced the un-reconciled amount to K236 billion.

“It is likely that the remaining unreconciled amount could be reduced further if additional analysis were to be taken,” the report in its Executive Summar.

Auditor General Stepheson Kamphasa has since submitted the report to Parliament and shall be referred to Public Accounts Committee for further scrutiny.

Collusive activities

It has also revealed  that there has been collusive activities in the way government has been awarding its contracts confirming that bid rigging and manipulation has been plaguing the Capital Hill – the seat of government in Lilongwe.

The audit reveals that K83.5 billion was paid to 44 of the businesses which were selected as part of the sample of 50 businesses which matched to the bank transactions.

The report says to date, 13 businesses and K17.08 billion have been subject to review and that of these 13 cases alone have allowed the audit to identify at least $19.6 million in possible savings and recoverable costs.

These are $14.2 million in overpayments for goods and services; one duplicate payment of $5.45 million which the report says should be subject to immediate recovery; and $29 166 overpayment on shipping to wrong locations.

Accoring to the report, there is evidence to suggest that a number of cartels are winning contracts through restricted tender and single source procurements sometimes to supply quantities that do not reflect the actual needs of the MDAs.

“These groups of suppliers are owned by the same individuals with the majority of trade being inter-company implying that limited actual trade exists,” reads the report,  adding:“This suggests ‘layering’ a method sometimes used to hinder or prevent investigations in accurately tracing the source or destination of transactions and flow of funds.”

It reports that the use of bank cheques to move funds between related suppliers could be seen as an attempt to deliberately conceal the audit trail.

“Of even more concern is that we have gathered evidence which suggests that manipulated procurements have taken place as late as December 2015 and are therefore likely to be continuing,” says the report.

List of shame

President Peter Mutharika’s trusted allies are among 7 ministers implicated in the report.

Also named on the “list of shame” are Asian business persons.

But Auditor General refused to name and shame those implicated.

Public Affairs Committee (PAC)  asked government to speed up prosecutions of those involved in the ‘grand corruption’, saying there should be no sacred cows.

PAC chairman Felix Chingota courageously told Mutharika in the face to ensure he brings DPP and government officials to book if evidence linked them to the multibillion loot of government money at Capital Hill.

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