Audit report exposes financial mismanagement at MEC

A special investigative audit of the Malawi Electoral Commission (MEC) has revealed gross financial mismanagement and flouting of procurement and recruitment procedures at the institution between July 2012 and December 2014.

The ad hoc audit was conducted following allegations of financial mismanagement and fraud which the Central Internal Audit Unit of the Ministry of Finance sought to dispel or substantiate.

But MEC’s chief executive officer Willie Kalonga refused to comment on the report, which is before the Secretary to the Treasury and donor community, saying it is not final.

A summary of  the audit  findings indicates that MEC had poor financial management controls and that the commission procured and spent resources outside its budget; recruited staff without following procedures;  made procurements without following regulations and disposed of 26 vehicles in a non-procedural manner.

The findings also state that the commission made bank transfers amounting to K118 667 404.44 to some unknown accounts; and paid out K15 422 756 in external travel allowances to commissioners and senior officers for trips that were not undertaken.

Other findings of financial mismanagement included personal loans paid from operation accounts without evidence of repayment K39 922 286.00 which were reportedly paid to commissioners and other senior managers at MEC.

A K16 million gratuity paid from operation funds is also a bone of contention as well as use of MEC funds on unapproved travel that cost K2 228 975.00; unjustified hiring of motor vehicles for the commission’s chief executive officer Willie Kalonga at K7 043 662, and overlapping subsistence allowances amounting to K4 688 000.00.

The audit also referred to an ad hoc expenditure on borrowing of lamps and tents from Zimbabwe during the elections which the auditors found was not provided for in the MEC budget.

The auditors also suspected under-valuation of a vehicle for the chairperson Justice Maxon Mbendera whose repair costs were assessed at K1.4 million, but valuation was pegged at K1.5 million and Kalonga’s vehicle, whose repair costs were assessed at K396 854 but valuation was pegged at K350 000.

“The audit team made an effort to enquire from [the car dealer] in order to establish the cause of under-valuation which was below or almost equal to assessed repair cost.

“But the official who signed the valuation forms [at the car dealer] deliberately avoided meeting the auditors,” reads the report.

On procurement, the auditors reported that they did not find evidence of a claim of payment for supply of goods by a Tanzanian company, SCI, amounting to K16.6 million; goods procured outside procurement plan and budget amounting to K40.6 million and procurement without Office of the Director of Public Procurement amounting to K526.6 million.

Ministry of Finance, which carried out the audit through the Central Audit Unit, explained this week the audit was carried “because MEC’s large budget vis a vis the national budget posed a higher fiscal risk”.

Treasury spokesperson Nations Msowoya said the Secretary to the Treasury had a mandate to call for ad hoc audits of any public institutions that gets funding from the consolidated fund.

“In line with this mandate, the Central Audit Unit was tasked to do a due diligence on MEC activities since it had just completed a big exercise [May 20 tripartite elections]. Therefore, it was important to ascertain the strengths of their internal control,” Msowoya said.

Msowoya could not indicate what action would be taken against MEC if the allegations of financial mismanagement were proven after the final audit report is out.

He, however, said the draft report was partly discussed with MEC management during the audit exit meeting.

“Upon receipt of the report, MEC is expected to respond to the issues raised after which the report will be finalised. Should MEC responses not be satisfactory then ST [Secretary to the Treasury] will decide what course of action to take in line with public finance management provisions,” he said.

In reaction to the allegations, Kalonga said in response to an email questionnaire on Tuesday that MEC would not reply to  media enquiries until the final audit report was out.

“Your questions are appetising to respond to, but you will observe that we have made it clear that will not be tempted to be unethical. Until the final audit report is out, we shall not provide our responses to the media. Professionalism restrains us from doing that,” Kalonga said.

MEC’s head of public relations Sangwani Mwafulirwa also said in an interview the commission would wait for the final report from the auditors which would contain the commission’s responses to the auditors’ queries.

“We trust that your interest in the matter shall be sustained until such a time the final report will be released,” he said.