Malawi’s Central Bank has said those people who interfered with government abandoned payment system the infamous Integrated Financial Management Information System (IFMIS) did not enter the bank’s operating systems to plunder public resources.
The report by the Public Accounts Committee (Pac) of Parliament on the Cash-gate scam called for the firing of Reserve Bank of Malawi (RBM) Governor Charles Chuka.
Tabling the report in parliament on Wednesday, Chairperson of the Committee Beatrice Mwangonde said the removal of the Governor will ensure smooth investigations into the role of the bank or the Governor himself.
But Chuka has not resigned and Reserve Bank said in a statement on Tuesday that its operating systems are subjected to stringent reviews by international organizations, such as the International Monetary Fund IMF).
The bank’s position came in the wake of accusations by the Public Accounts Committee of Parliament that the bank was complicit in the famous Cashgate scandal by authorising the looting of government’s Account Number One also known as consolidated account.
In a letter dated 29 October 2013, PAC invited the Governor of the Reserve Bank of Malawi to a meeting scheduled for 2 November 2013 at Sunbird Livingstonia Beach Hotel, Salima.
Paradoxically, PAC expected the Bank to facilitate the meeting by providing for the logistical requirements for the meeting and the members of the Committee.
But when the Bank seemed not forthcoming, a PAC Committee member called to advise the Governor of the postponement of the meeting at the eleventh hour, citing logistical reasons.
PAC has submitted its Report and Parliament has adopted it.
“In the wake of the fraud in Government, the Bank wishes to state categorically that, to the best of its knowledge, its officers were not in any way involved in the fraud in Government.
“The RBM remains committed to professionalism in its dealings with Government as an agent and will always adhere to the set agreements and will go even further to advise Government when things do not flow as expected,” reads part of the Bank’s statement.
On the consolidate account, the Bank said it has no cheque book and as such no cheques are or can be issued against it.
The Bank said when Government revenues or donor funds are deposited into it, the government instructs the Bank to transfer specific amounts to individual government operational accounts and then government cheques are issued from these transactional accounts.
“Since the Government does not operate a cash budget, the consolidated account is not pre-funded. Drawings beyond available resources constitute borrowing from the Bank”
“It should therefore be noted that government cheques are not encashed against Government Account Number One, nor can the Government write or issue cheques against that account. The Ministry may however issue written instructions to make payment from Account Number One,” it said.
According to the Bank, Malawi government has two payment systems for government transactions namely the Credit Ceiling Authority (CCA) and the Central Payments System (CPS).
“Operations under these systems are governed by Memorandum of Understanding (MOU) between individual commercial banks and the Malawi Government acting through the Reserve Bank of Malawi,” the Bank said.
The Central Bank said currently only District Assemblies and some donor funded projects use the CCAs to enable them have individual holding and corresponding operating accounts for each project and ensures accountability by Government officers.
“Under the Central Payments System (CPS) designed to move away from CCA and centralize the government payment process government interfaced CPS with the IFMIS through Staffware.
“Currently CPS is operating under six Central Payments Offices (CPOs); the Accountant General; Southern Region Treasury Cashier; Eastern Region Treasury Cashier, Northern Region Treasury Cashier, Malawi Defense Force and State Residences,” the bank said.
But one of the major challenges of CPS, according to the Bank is that it was designed in such a way that only cheques printed in the system should be honoured.
However, RBM noted that Malawi government also operates a parallel manual system under which cheques are hand written.
“This mostly happens when there are technical problems with the system. Government communicates information about the manually issued cheques to the Bank and government officers are expected to update the IFMIS accordingly.
“However, delays in updating IFMIS results in a mismatch between funding and expenditure, and thereby rendering reconciliation difficult,” it said.Follow and Subscribe Nyasa TV :