Businessperson asked to reimburse K585m

Mzuzu-based Youth and Society (YAS) has asked businessperson Abdul Karim to reimburse government K585 million he allegedly received fraudulently from Malawi Police Service (MPS) for procuring and delivering goods to the security agency.

The demand follows a National Audit Office (NAO) letter to Secretary for Home Affairs and Internal Security dated July 2006 which says during fiscal years 2001/2002 and 2004/2005, MPS management deliberately disregarded government procurement regulations, tendering procedures and use of an independent procurement committee (IPC) in dealing with Karim, who was trading as Africa Commercial Agency.

The YAS letter, dated August 8 2018 through Ritz Attorneys at Law, argues that Karim knowingly received the money from the Malawi Government through MPS under Procurement and Distribution of Police Uniforms in the 2001/2002 and 2004/2005 fiscal years.

Kajoloweka: We will pursue the matter

It says the money was obtained through invoicing for goods never supplied to MPS, excess charges, overpayments and returned goods whose invoices were not reversed.

Signed by lawyer Bright Theu, the YAS letter refers to a July 2006 National Audit Office (NAO) investigative audit report into the management of procurement and distribution of the goods by MPS, which it says established that out of the nine firms that supplied the goods, seven belonged to, or were associated with Karim.

It states: “The report records serious fraudulent transactions committed by your firms with your full knowledge and participation as follows: (1) Invoicing for goods you never supplied to MPS. Under 6 [six] of your firms, you issued invoices and MPS paid the sum of K170 791 725.00 for goods you never delivered and of course MPS never received.

“(2) Excess charges: You overcharged for goods delivered to MPS by K295 756 604.40 despite that other firms supplied goods of better quality and more durable than yours.

(3) Overpayments: After matching all the goods supplied against the total payments made by MPS, the report establishes that you were overpaid by K109 174 824.72.”

The letter further accuses Karim of being paid for goods which he did not supply, stating that MPS paid him K106 169 096.49, but the goods were not supplied.

“(5) Returned goods but invoices not reversed: MPS returned some goods to you and you duly acknowledged such return. Yet you did not reverse invoices for the returned goods worth K10 217 589.06,” adds the letter.

Based on this, YAS alleges that Karim fraudulently but/and knowingly received taxpayers’ money in excess of K585 940 743.18 that he was not and remains not entitled to have received, retained and or have use of it.

“On behalf of the people of Malawi, our client demands immediate repayment of the same and in any event within seven days from the date hereof [with interest thereon at 10 percent over and above normal commercial bank base lending rates as applicable from time to time since you improperly received these funds].

“We have instructions to take necessary action if we do not hear from you within the said seven days from the date of your receipt of this letter,” it demands.

In an interview, YAS executive director Charles Kajoloweka said there was need to continue tracing government money so that the public purse is safeguarded.

“We will take this matter head on and recover what belongs to the people of Malawi,” he stressed.

According to a NAO management letter to the Secretary for Home Affairs and Internal Security on the investigative audit of management of procurement and distribution of police uniforms of July 2016 we have seen, during fiscal years 2001/2002 and 2004/2005, MPS went into a substantial credit expenditure of over K800 million for the supply of uniforms from nine local and two external suppliers.

It alleges seven of the local suppliers were firms belonging to Karim, who sought to recover the debt from government through courts in respect of uniform and other goods supplied to MPS, Malawi Defence Force and the Chief of Staff.

Among others, NAO observed that management at MPS incurred expenditure totalling K819 863 156.28 on credit purchases of uniforms only which was against government’s cash budget system.

Excess charges

On excess charges of K295 756 604.40, the companies linked to Karim that allegedly committed the offence are Africa Commercial Agency, Gratolite, Lido Electrical, Kasco Enterprise, L&G Tools and Engineering as well as Novatech Engineering.

Among others, it shows that in 2004, between January 3 and November 4, Africa Commercial Agency invoiced K85 805 708.00 against a comparative amount of K36 800 804.82, resulting in excess charge of K49 004 903.18.

The audit office then recommended that MPS management should recover the overpayments made to some suppliers, reverse or recover double payments and trace missing payment vouchers.

The demand comes amid another K2.793 billion food rations scam at MPS, where supplier Pioneer Investments made an abortive interest claim of K466 million and deposited K145 million into the ruling Democratic Progressive Party (DPP) Standard Bank account whose sole signatory is President Peter Mutharika.

According to the November 2017 Anti-Corruption Bureau report, a day after the supplier deposited K2.793 billion payment from police for supplying 500 000 ration packs, the company transferred K145 million to the DPP Standard Bank account on April 13 2016.

The DPP last week announced that it was paying back the money to PI Ltd. The matter is also in court after YAS sued the DPP and PI Ltd.

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