K5bn fraud scam swells to K15bn

The amount of taxpayers’ money allegedly embezzled in the scam involving public officers at the Accountant General, Malawi Police Service (MPS) and other government institutions has increased from about K5 billion (about $12.5m) indicated last year to over K15 billion (about $37.5m), Nation on Sundaycan reveal.

The National Audit Office (NAO) and the Anti-Corruption Bureau (ACB) embarked on a joint investigation into the scam after Fiscal Police in 2011 arrested a public officer at the Accountant General’s office who was found with about K404 million (about $1.01m) in his two bank accounts suspected to have been obtained fraudulently.

Authorities later said the figure was in excess of K5 billion after the investigating team extended the probe to State House, Malawi Defence Force (MDF) and other government offices.

If allocated to the Ministry of Health, the K15 billion is enough to construct about five standard district hospitals such as the new Nkhata Bay District Hospital with a 250-bed capacity, 30 houses and other ancillary structures, costing around K3 billion each.

The K15 billion is also enough to build about 50 complete health centres in rural areas with the main medical facility, maternity wing, five houses and other basic medical equipment, costing around K300 million (about $750 000) each.

This would in turn increase provision of essential health care services and, among others, reduce deaths of mothers and unborn babies due to pregnancy complications.

While both NAO corporate communications officer Thomas Chafunya and ACB senior public relations officer Egrita Ndala last week said the probe is at an advanced stage, two NAO officials involved in the investigations confided in Nation on Sunday that information on transactions and bank accounts of individuals connected to the scam has revealed that the amount swindled is now over K15 billion.

“The amount has exceeded K15 billion according to the information we have gathered from banks on accounts of individuals who are connected to this scam. These are fake procurement transactions that are spreading over a period of about five years,” said the NAO official.

The scam involves alleged theft of public funds drawn from several government accounts, by bypassing the government accounting system—the Integrated Financial Management Information System (IFMIS).

“These are transactions where people were just creating companies and fake transactions of procurement of goods and services from those companies. We have discovered a lot of assets such as houses owned by public officers implicated in the scam,” said another NAO official.

In an e-mailed response to a questionnaire, Chafunya said NAO is currently working on printed and soft copy statements of affected government accounts which Reserve Bank of Malawi (RBM) last week toldNation on Sunday that it submitted to the national audit institution early this year as part of the investigations.

“I can confirm that NAO got both versions of the statements from the RBM. We are still doing our work based on all information provided by all relevant stakeholders.

“I cannot at this stage divulge any information on the inroads we have made or challenges we have encountered as this may jeopardise our work,” said Chafunya.

However, the investigators confided in Nation on Sunday that they are currently cross-checking their K15 billion findings on the implicated individuals’ bank accounts with RBM statements on transactions in the affected government accounts.

Chafunya said he could also not comment on discoveries on the overall amount allegedly embezzled in the scam because NAO is still investigating the matter.

“The National Audit Office is still conducting the investigative audit into the alleged [scam],” he said.

In an e-mailed response, RBM spokesperson Ralph Tseka said they released the statements of government accounts connected to the scam after investigators requested them.

“I can confirm that the Reserve Bank provided statements that the National Audit Office requested sometime last year. Furthermore, earlier this year, the National Audit Office also collected soft copy statements for the same case,” said Tseka.

In her response to a Nation on Sunday questionnaire, Ndala only said the bureau’s investigations into the scam is at an advanced stage.

“The Anti-Corruption Bureau has had cooperation from different institutions, including the Reserve Bank of Malawi, in the investigation in relation to the case at the Accountant General’s Office,” said Ndala.

In December 2011, ACB arrested several police officers, including deputy commissioner and former MPS director of finance Elijah Kachikuwo in connection with the K400 million scam and alleged corrupt practices at the Accountant General’s Office which led to loss of millions of public funds.

Kachikuwo was charged with two counts of misuse of public office contrary to Section 25B (1) of the Corrupt Practices Act.

After the arrest, Kachikuwo was suspended, but later posted to Mangochi where he is serving as officer-in-charge.

Other police officers ACB arrested in connection with the scam include accounts staff Garnet Chandema and Barnet Mwasinga who were both charged with seven counts of theft by person employed in the public service, contrary to Section 278 as read with Section 283 (1) of the Penal Code and one count of misuse of public office, contrary to Section 25B (1) of the Corrupt Practices Act.

A gang of unidentified people stormed ACB’s office in 2011 and threatened to burn it unless the bureau dropped its investigations into the K400 million scam.

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