K92bn forensic report out, to be presented to Finance Minister next week

The National Audit Office (NAO) is next
week set to release the forensic audit
report on the K92 billion (US$206.7
million) Cashgate that took place under
the late Bingu wa Mutharika’s watch.
In separate interviews this week,
officials from the Ministry of Finance,
Economic Planning and Development as
well as the National Audit Office (NAO)
confirmed that the Germany-funded
financial investigation—conducted by
PricewaterhouseCoopers (PwC)—is
ready for release.
Just like the Baker Tilly K24 billion (US$54
million) Cashgate investigative audit of
the Treasury looting under the Joyce
Banda administration in 2013, the latest
forensic inquiry report will expose
ministries and departments behind the
K92 billion heist between 2009 and
2012 as well as broader public finance
malfeasance as it also covers the years
up to 2014, sources close to the audit
exercise have said.
The new report could thus spark calls for
a wave of fresh arrests of those behind
the plunder that has largely contributed
to Malawi’s current fiscal crisis.
The financial stress is not just as a result
of huge amounts of money disappearing
into personal pockets under the first
Democratic Progressive Party (DPP)
administration at the expense of millions
—more than half of whom live below the
$1 (K450) poverty line.
It is also because the thefts pushed
donors to suspend direct aid to
government, which traditionally
accounts for 40 percent of Capital Hill’s
annual expenditure.
Confirming the completion of the audit
in an interview this week, Minister of
Finance, Economic Planning and
Development Goodall Gondwe said the
report—which he said is preliminary—is
still with the Auditor General.
“I am yet to see the preliminary report,
which is in the hands of the Auditor
General. He has asked for 10 more
months for the comprehensive report to
be released,” said Gondwe.
NAO spokesperson Lawrence
Chinkhunda said the report is expected
to be formally submitted to the Minister
of Finance next week in accordance with
the Public Audit Act, for onward tabling
in Parliament.
“We value our stakeholders and we are
accountable to the public at large and
this is why the report will be tabled in
Parliament through the Minister of
Finance according to the law for public
consumption,” Chinkhunda explained.
He, however, declined to shed light on its
findings since such information can only
be given by the client—Treasury.
Said Chinkhunda: “The forensic audit
report, which was produced by
PricewaterhouseCoopers as contracted
by the Auditor General covers a period of
five years, which includes the period
when the K92 billion issues occurred.
“As such, it takes a broader perspective,
covers many more issues and is not
restricted to the K92 billion.”
A source close to the investigation said
the report exposes fraud that took place
in government between 2009 and 2013.
“The report is pointing out government
departments and ministries that
misappropriated taxpayers’ funds.
“This is just a preliminary report and it
will be shared with the Minister of
Finance and concerned donors before it
goes to the public,” the source said.
The audit exercise, which the Germany
government funded to the tune of K9.76
billion, was prompted by a 2011 interim
investigative audit report of
government’s payment system—the
Integrated Financial Management and
Information System (Ifmis)—which
revealed that ministries and departments
lost about K92 billion through abuse and
irregularities between 2009 and 2012.
The K92 billion interim report—first
exposed by our sister paper The Nation
in October 2013—also details how the
money was allegedly lost or mismanaged
through seven irregularities involving
specific financial transactions as
payments that NAO suspects were done
“deliberately”—not for emergency
reasons or technical faults as some
officers claimed—outside Ifmis;
payments without vouchers
payments not supported with
liquidation documents
payments made to banks without
details of beneficiaries
payments for purchases without
Internal Procurement Committee (IPC)
payments to suppliers for goods
without evidence of delivery
payments for fuel without evidence of
The Ministry of Finance—through former
budget director Dr Dalitso Kabambe—
commissioned the audit after suspecting
fraud in Ifmis, according to the
background note in the report.
The probe coincided with the discovery
in late 2011 of K400 million (US$8 889)
in a bank account belonging to a civil
servant working for the Accountant
General’s Department (AGD).
However, the DPP administration
systematically discontinued the exercise
source-Malawi Nation


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