Impunity at its best. Medical Aid Society of Malawi (Masm) is yet to discipline one of its senior officers four years after he was found guilty of abuse of office and fraud amounting to over K6 million.
Masm Chief Financial Officer Dr Ulemu Katunga was implicated in a financial scandal amounting to K15 million in 2016 where he was using an official Visa Credit Card for personal use without authorization of management.
According to an internal audit report for the Finance department of the Society dated 30th August 2016 which Nyasa Times has in possession, the Society has a Visa Credit card which is in the name of Dr. Ulemu Katunga-the Chief Finance Officer (CFO). The Credit Card number is 4121 4502 001 7021. The purpose of the card is to provide convenience when the CFO has travelled outside the country.
As per the Society’s internal control procedures, before using the Society’s funds whether for personal or business purposes a written approval should be obtained first. This procedure applies to any mode of payment whether visa credit card, cheque payments, cash payments or bank transfers.
However the audit found out that Katunga utilized the card without following the internal control procedures.
“Dr. Ulemu Katunga utilized the card without obtaining prior written approval from either the CEO or EXCO members. We observed that there is no documentation to indicate that the cash withdraws was appropriately approved as required. Dr Ulemu Katunga withdrawn funds amounting to MK4, 391,742.49 through various NBS Bank ATM’s from the 16th of March to the 15th of April 2014.”
“The CFO travelled to the Republic of South Africa in August 2014. Appropriate allowances were already drawn before the trip. Our audit further reviewed that the CFO used the credit card for shopping (purchases) from the 24th of August to 01st September 2014 with total transactions amounting to K1.9 million.”
“Again all these transactions were not previously approved by an appropriate person. Total unapproved funds withdrawn amounted to MK6, 308, 085.49,” read part of the audit report.
The report further says that after the unauthorized withdraws were done, Dr. Katunga instructed Mrs. Lamesi Gondwe to account for the funds as a personal loan.
“Again we observed that this was a departure from the Society’s internal control procedures regarding personal loans and advances. All terms and conditions for loans and advances are required to be appropriately approved by the Society. We established that there was no documentation regarding the approval of the personal loan.”
“We further observed that the manner in which the card was being used to withdraw the Society’s funds from Local ATMs was totally wrong and unprofessional. The Society cannot create a card for people to be withdrawing its funds just like that. This defeated the whole purpose of the card,” reads the report in part.
The report also shows a schedule where Katunga made local ATM withdrawals using the Visa Card, some as high as K400, 000 in a day. There are also some personal purchases of goods in South Africa with the overall total of both foreign and local transactions amounting to K6, 226,678.24.
Masm only managed to recover a partly K468, 083 in 2015 from Katunga.
“We attribute the observation to abuse of office power by the CFO since a person of this high office is supposed to be knowledgeable that use of company funds without seeking written approvals from senior management is a breach of the Society condition of service and financial procedures.”
“The Board of Directors should consider taking a disciplinary action against the CFO thus setting precedence to other staff and mitigating reoccurrence of similar transactions in future. We recommend that Executive Management of the Society should ensure that all members of staff are adhering to internal controls,” reads the report in part.
As if the abuse of the credit card was not enough, Katunga was also involved in another financial scam of K8.5 million for school fees.
The Society provides school fees allowances to its Senior Members of Staff which are paid in advance per school term in according with grade and set limits.
“However we observed that the expenditure on education allowance for Dr. Ulemu Katunga exceeded the maximum allocated limit. The additional expenditure was accounted for as a personal loan. We observed that this was a departure from the Society’s internal control procedures regarding personal loans and advances.”
“All loans and advances are required to be appropriately approved by the Society. We established that there was no documentation regarding the approval of the personal loan. The unauthorized personal loan has no terms and conditions e.g. rate of interest, repayment period,” reads the report in part.
Insiders said Katunga was not disciplined by the board of directors for Masm as per recommendations of the auditors and is still enjoying privileges of his position as Chief Finance Officer.
“This is a mockery to society members who have seen increases in their premiums for the past three or four years just to fund the expensive lifestyle of Masm bosses. I wonder why they are still keeping Katunga in his position despite all these revelations and mind you these were unearthed in 2016,” said a close source.
An impeccable source also said Katunga stopped all the recoveries of the money from his loans.
MASM Chairman John Biziwick could not be drawn to comment on the scam as his phone went unanswered and messages were not responded to.
MASM Chief Executive Officer Sydney Chikoti was not available for comment.
Katunga cut the line the moment the subject was introduced for his comment. He could not answer our subsequent calls.
However, one registered member of the society said he was going to seek answers of financial management during the society’s annual general meeting.
“They cannot keep on adjusting premiums every year so that they should maintain their life style. They will need to explain to us the progress of these findings,” he said.Follow and Subscribe Nyasa TV :