Audit exposes Admarc loot

Findings of an external audit show that financially struggling Admarc has lost about K330 million to fraud and abuse masterminded by employees through bogus car insurance and medical cover claims as well as dubious staff loan scheme.

The Nation established that the State produce trader, Agricultural Development and Marketing Corporation (Admarc) lost the estimated K330 million, largely through a syndicate involving at least 50 employees, some of them in the Accounts and Audit departments.

Speaking in an exclusive interview on Thursday and Saturday, Admarc Board budget and finance committee chairperson A b i s o n C h i t u ku l a confirmed that about 50 employees are suspected to have taken part in fleecing the struggling parastatal.

He said motor vehicle insurance cover for some employees was one fertile ground for claims that have drained millions of kwacha from the company.

Chitukula said some employees from management level and below would request Admarc to pay insurance cover for their personal vehicles and recover the same through monthly deductions from their salaries.

He said: “But such deductions were never effected and there was total silence. In one particular case, one employee from the Accounts Department had his 12 cars, which he probably uses for car hire business, insured through Admarc and the company has not yet recovered the money.”

Quoting the audit findings, Chitukula said through the motor vehicle insurance syndicate alone, Admarc lost K39 481 039.

He said other employees are also suspected to have swindled the parastatal out of about K36 613 480 in false medical cover claims through Medical Aid Society of Malawi (Masm).

Chitukula said the external auditors randomly sampled medical insurance schemes of 274 employees out of the company’s total workforce of 3 296 workers.

He said: “The auditors established that people who were not members of staff were benefitting.

“In addition, overage ‘dependents’, some 30 or 40 years-old, were benefitting from Masm insurance cover paid by Admarc. This was against the company’s policy. Admarc lost K18 402 120.50 through these overage dependents.

“ I n s o m e c a s e s , employees who retired long time ago were still benefitting from the medical cover and this alone cost the company K7 405 200. In total, Admarc lost K36 613 480 in false medical cover claims.”

Procurement of dunnage poles used in warehouses to prevent moisture from destroying farm produce also drained millions of kwacha from the State-owned venture.

Chitukula said in some cases, Admarc paid for goods that were not delivered.

He said: “For example, Admarc would pay for 2 500 poles when only 300 were delivered. In other instances, Admarc would pay a supplier earlier than the time the requisition was made. For instance, paying a supplier today [September 15] and then documents confirming the requisition for the poles would be dated September 30.

“This on its own showed that the suspects forged receipts to cover their tracks. Through this syndicate, Admarc lost K37 165 344.”

O n s t a f f l o a n s , the external auditors established that the executive management, comprising managers and heads of departments, obtained loans amounting to K65 495 121.65. However, by March 31 2022, K45 893 038 39 was yet to be recovered.

Chitukula said: “The audit also revealed that senior Admarc members of staff obtained a total of K150 001 779. However, by March 31 2022, K114 745 499 09 was the outstanding balance.

“On the other hand, junior staff still owed the company K31 040 708 51from loans amounting to K38 619 414.”

He said in one instance one employee owed the company a huge amount which could have been recovered over a 60-year period.

Chitukula said: “The problem was that some members of staff connived to give each other loans when the concerned employees had not finished repaying their previous loans.

“In other cases, it was difficult to recover loans from employees as the monthly premiums would be more than the recommended 50 percent of the employee’s salary.”

This means the total sum obtained in staff loans by March 31 2022 was K254 116 315 29 from which the outstanding balance to be repaid stood at K191 679 245 98.

On staff loans, the external auditors, Graham Carr recommended that the board should put in place a written policy to guide the disbursement and recovery of loans, according to Chitukula.

A d m a r c B o a r d chairperson Alexander Kusamba Dzonzi earlier confirmed the suspected plunder, but declined to disclose names of the suspects.

He said: “We cannot share the list of names with anybody because doing so would be violating their rights. ACB [Anti- Corruption Bureau] or the Police will do that when they are done with their investigations. As for those mentioned in the reports, they are being summoned for disciplinary hearing.

Speaking in a separate interview, ACB principal public relations officer Egrita Ndala confirmed that the bureau received a complaint from Admarc Board following the release of the audit report.

“Just like any other compliant, we are in the process of reviewing to see what action can be taken,” she said.

Last month, Minister of Agriculture Lobin Lowe ordered Admarc’s closure, sending all employees on paid leave.

He said the move was necessitated by the company’s continued poor performance.

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 a produce stabiliser and ready market for farmers. Admarc has also failed to perform is 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.

In May this year, Admarc Board suspended its general manager Rhino Chiphiko for buying a luxurious vehicle at a time the parastatal was struggling financially.