Parliament’s Public Accounts Committee (PAC) suspects “clear collusion” between Malawi Police officials and some top ranking government officers with food supplier Pioneer Investment over a K567 million interest payout controversy which has been branded as grand fraud to siphon public funds.
PAC chairperson Alekeni Menyani observed this after his committee quizzed s Inspector General (IG) of the Malawi Police Service (MPS), Lexten Kachama , Secretary to the Treasury Ben Botolo and Auditor General Stevenson Kamphasa appeared before the committee on Saturday .
Pioneer Investment IS a company linked to Zahir Karim, whose family is accused of corrupting state contracts through ties to Minister of Finance, Economic Planning and Development Goodall Gondwe.
“There was gross incompetence and collusion in the way the contract was signed [to have interest clause],” said Menyani.
He said there were some “astonishing” manipulation in the contraction.
“This is a scam, because government contracts usually have clauses where you should be able to provide reasonable defence on such big contracts,” Menyani said.
Kachama said the contract Police signed had not agreed on any interest.
“There is no basis for the police to pay the claimed interest by Pioneer Investments Limited,” Kachama said.
The police chief referred to a letter he wrote Pioneer Investment.
“We have gone through the calculations and verified them to be correct based on bank interest rate calculated on reducing balance taking into consideration the date of delivery of goods and date of payment. However, take note that the issue of interest is not addressed in the contract,” reads the letter which became the defence of the police as a disclaimer that they never authorised payment.
The Auditor General was “bulldozed” to authorise a payment to Pioneer Investment for 500 000 units of food rations it supplied to Police.
The company is claiming K567 million in interest for what it says was late payment from January 1, 2016 to June 30, 2017 for goods which were supplied to government after receiving advance payment.
The PAC chairperson said the payment controversy is “an indication of continued Cashgate (plunder of resources at Capital Hill).
The food supplier insists there is nothing wrong with their interest claim.
The Treasury stopped the interest payment after the initial authorisation by the Auditor General, Attorney General and the police.
Menyani emphasised that Pac is doing all the probes in ministries, divisions, corporations and other independent and semi- autonomous bodies.
Menyani faulted Minister of Finance, Economic Planning and Development Gondwe on the matter and urged graft-busting body, the Anti Corruption Bureau (ACB) to launch their own criminal investigations.
According to documents in possession of Nyasa Times, the company is claiming K567 million in interest for what it says was late payment from January 1, 2016 to June 30, 2017 for goods which were supplied to government after receiving advance payment.
Initially, the Auditor General rejected the claim on interest, according to a memo seen by Nyasa Times dated 12 September 2017 reference number Aud/conf/03 but there has been change of heart following political pressure.
According to the contract, the agreement was for K2.3 billion to deliver food rations within 20 weeks starting from the day the contract was signed.
The contract, which was for supply of corned beef, energy biscuits, energy juice and pilchards, has no specific interest clause.
Finance Minister Gondwe confirmed that after being asked to audit the interest payment query by Pioneer Investments, NAO initially authorised Treasury to pay the interest.
“That’s correct; the Auditor General first said ‘pay,’ and now they are saying ‘don’t pay’. We wrote the National Audit Office, after they said ‘pay them the interest,’ because—in our records—this company was paid in time and in full,” Gondwe said as quoted in the press.
According to Deputy Inspector General of Police Duncan Mwapasa , the Police advised Treasury not to pay the claim.
He also insisted that there was “no clause about paying the supplier interest if we delay to pay the sum”.
Pioneer Investment is run by a wealthy Malawian of Asian decent family of Zahir Karim accused of wielding undue influence through its links to Finance Minister Gondwe.
Like the notorious Guptas of South Africa, the Karim family is controlling some state affairs as the the Democratic Progressive Party (DPP) government continues to be facinf allegations of corruption amid a worsening unemployment.
The inquiry is expected to conclude on Wednesday as PAC is scheduled to meet Pioneer Investment and the Attorney General Charles Mhango, who had not appeared before the committee, according to PAC chairperson Menyani.Follow and Subscribe Nyasa TV :