At least, 3 122 employees of the ailing State-owned AgricultureDevelopment and Marketing Corporation (Admarc) are set to lose jobs through retrenchment, an exercise the corporation’s board says is part of its restructuring drive.
The decision to retrench the entire workforce comes barely days after an external audit revealed that the institution has lost about K330 million to fraud and abuse masterminded by employees through bogus vehicle insurance, medical cover claims and dubious staff loan schemes.
According to a letter dated September 15 2022 by immediate past Admarc board chairperson, Alexander Kusamba Dzonzi, all employees will be retrenched because the company is not performing.
It reads: “Over the years, Admarc has been poorly performing such that it has accumulated debts that are now choking its operations. The company now has more liabilities than assets.
“The company has a huge wage bill that is not supported by the company’s revenue base and business model such that it has been the shareholder paying for the employees’ salaries and other statutory obligations for years.”
It adds: “Admarc intends to retrench all employees since the company has been completely restructured. The retrenchment exercise will be carried out in a phased manner and all guidelines for the retrenchment process will be followed.”
Dzonzi confirmed in an interview yesterday the letter was addressed to the company’s workers union, but he could not provide further details, arguing: “I cannot say much because our tenure expired. But we also served that letter to the Secretary for Agriculture as well as the Ministry of Labour. You should understand that this is what our board was doing before the expiry of our tenure.”
Devils in the report, according to the external audit report carried out by Graham Carr on motor vehicle insurance scheme, Medical Aid Scheme (Masm), staff loans and recoveries, dunnage poles fraud for June 1 2020 and March 31 2022, Admarc paid K39.4 million in insurance for staff members, which is yet to be recovered.
“Admarc Limited paid insurance for non-runner vehicles amounting to K18 880 767. Admarc Limited paid insurance premiums for Ocean Car Hire hired vehicles amounting to K453 959. This was done even though section 3 of car hire order form appendix 2.6 covers insurance.
“Admarc Limited paid insurance for motor vehicles duplicated on the portfolio amounting to K156 984. Admarc Limited insured vehicles for non Admarc staff amounting to K828 915,” it reads.
The parastatal also paid K534 million for the medical scheme against expected payments on their payroll of K417 million, an action it says shows lack of proper reconciliation between the amounts on Masm manifest to what its payroll staff had posted in the system.
The audit report shows that Admarc paid K15 854 000 to Masm on behalf of undeserved beneficiaries; K1.572 million for people who are dead; K6.728 million for people who are out of employment and K15.854 million for non Admarc staff.
“Admarc paid Masm an amount of K7 405 200 for retired members of staff for the period of 21 months to March 2022. Admarc paid on behalf of minors above 21 years an amount of K18 402 120.60,” it adds.
On loans, the audit shows that K43 468 630.26 has not been recovered from the 2021 staff debtors listing and K10 816 417.77 from the 2022 staff debtors listing.
“Total loans noted to have remaining recovery periods of over 24-months and at times unreasonably over 24-months from the balance sheet dates amounted to K157 611 648 from the 2021 balances and K126 271 812,” it states.
It also confirmed an internal audit report on procurement of dunnage poles showed that K37 165 345 was embezzled.
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Ministry of Agriculture spokesperson Gracian Lungu declined to comment on the matters while Minister Lobin Lowe asked for patience.
“Be patient, let’s wait for all the processes, it will be done,” said
Lowe, briefly in an interview yesterday.
In August, Lowe sent the entire Admarc staff on paid leave as part of an exercise to redefine its functions to serve Malawians better.
He said in a statement that the move was also compelled by the continued poor performance of the struggling parastatal which has led shareholders to further suspend all its services except social services until further notice.
Admarc Workers Union secretary Memory Kanyenda yesterday said in a telephone interview they are discussing the way forward.
“We have received that letter and we are discussing it. We already wrote the Malawi Congress of Trade Union. So, we are waiting for their response on how best to move forward.
In a separate interview, Lilongwe University of Agriculture and Natural Resources (Luanar) agriculture economist Horace Phiri said the retracement must not be a cause for alarm, but he was worried with sales in Admarc depots.
He said: “Remember the ministry indicated that some markets will be open for maize sells. I am not sure how this is going to work with all staff being retrenched. But on the retrenchment, we have seen banks being sold and all people are laid off.
“It is right to retrench all and those with special skills may be re-employed. This will also give room to a new administration to set up new conditions of service because keeping some employees means they will have to continue with the same conditions.”
Admarc is one of the parastatals that have been struggling financially and has over the years failed to serve Malawians as per its mandate as produce stabiliser and provide ready markets for farmers. Admarc has also failed to perform its social function as government’s food security apparatus.
According to the 2021 Malawi Government Annual Economic Report, as at half year of the 2021/22 financial year, Admarc recorded a net loss-after-tax of K3.7 billion.
The report further states that Admarc has been surviving on overdrafts and bank loans which has been a setback to its growth.
Until 1987, Admarc was the sole buyer of smallholder produce, but in 2004, it was incorporated as a limited liability company with the government owning 99 percent of the shares.