Malawi: K1.3 billion squandered at Home Affairs ministry

malawi_police_flagThe Home Affairs and Internal Security has squandered over K1.3 billion in uncontrolled procurement of uniforms through tenders or contracts offered to friends, Nyasa Times has learnt from the Auditor Generals report.(pictured: Malawi police emblem).

The report covering the fiscal 2005/06 accuses controlling officer for making payments to various uniform suppliers for items not received but recorded as received at Quartermaster.

A verification of deliveries of uniforms and examination of suppliers invoices at Police Headquarters and comparison with the suppliers copies, disclosed that some invoices were raised for uniforms not delivered at Quartermaster.

Management at Police Headquarters were unable to establish the source and physically produce the invoiced goods which were noted from outstanding invoices claims reported earlier on by internal auditors, reads the report issued by Auditor General Renford Kampanje.

The main culprits who fraudulently demanded payment from the Malawian taxpayer included local businessman of Asian origin Abdul Karim who through different trading companies invoiced K3, 771,996.00. The companies used were: Africa Commercial Agency (K3, 710,320.00) and LIDO Electricals (K61, 676.00).

Another local businessman Jack Kamwendo through Commercial Trading Company fraudulently invoiced K6, 695,150.00, according to the audit report.

Two foreign companies; Genex Export Company of South Africa and Bedi Investment Ltd of Kenya defrauded hardworking Malawians of K47, 994,156.78 and K24, 364,284.25 respectively.

The law enforcers whose jobs are to protect the general public and national assets stand accused of breaking the law they are employed to enforce by making fraudulent payments for goods not received amounting to K106,169,096.49.

Companies benefiting from the lack of internal controls and coordination at the Police Headquarters were: Africa Commercial Agency (K3, 251,621.00), Gatolite (K9,410,055.00), LIDO Electricals (K98,366.00), L7G Tools (K5,250,000.00), Novatech Engineering (K1,027,500.00), Commercial Trading Company (K31,515,155.00), Genex Export cc of RSA (K49,277,841.75) and BEDI Investment Ltd of Kenya (K6,338,557.74).

The reports further states that government lost K295, 756,604.40 due to overcharging for the uniform which was avoidable if management were prudent in the uniform procurement.

In accordance with the Public Finance Management Act, the excess expenditure of K295, 756,604.40 could have been avoided if proper procurement procedures were followed, says Kampanje in his report which stated that a payment of K29, 982,240.00 paid to KASCO Enterprise for rejected uniform but not returned could have been avoided likewise.

Local companies benefiting from the overcharges included Africa Commercial company with K49,004,903.18 on invoiced amount of K85,805,708; Gratolite invoiced K195,277,352.70 and overcharged K146,481,220.57; LIDO Electrical pocketed K23,611,938.28 in overcharges out of K33,791,063.60 invoiced.

KASCO Enterprise was paid K65,921,217.69 on K120,251,567.10 invoiced; L & G Tools pocketed K7,323,000.00 out of K15,000,000.00 invoiced while Novatech got K3,414,325.69 from K9,364,000.00 invoiced.

The audit on uniform procurement and distribution was completed on 14th February 2006 disclosing major weaknesses in financial control that led to the purchase of uniforms amounting to K819, 863,156.28 without a budgetary provision.

The Malawi Police Service did not consistently comply with Government procurement regulations and tendering procedures. Use of verbal orders from top management seriously weakened the internal control system over procurement of uniforms.

The use of Internal Procurement Committee was disregarded and the provisions of the Public Procurement Act and Public Finance Management Act were not complied with, the Audior General said in his report.

The major beneficiary of the weakened system was Abdul Karim firms which got K615, 084,298.00 Africa Commercial Agency (K94,776,358.00), Gatolite (K268,208,584.10), LIDO Electricals (K43,976,313.60), KASCO Enterprise (K162,701,097.10), L & G Tools Engineering (K15,397,500.00), Novatech Engineering (K10,417,750.00).

Kamwendos Commercial Trading Company got paid K39, 578,880.00 while Songdoh Company got K16,768,552.80; Genex Export of South Africa milked K101,328,024.54 and BEDI Investment Ltd of Kenya got K66,638,096.14.

The Inspector General of Polices office has up to now failed to respond to the audit inquiries raised by the Auditor General besides government failing to pursue refunds of lost money through fraudulent procurements.

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