Fishy K1.2bn OPC payments

Payments amounting to about K1.28 billion, which the Office of the President and Cabinet (OPC) made to government officials and others from a special account for building houses for chiefs, have attracted an audit.

But government has defended the payments, saying there was no fear of fraud as they were duly sanctioned by Secretary to Treasury.

Our investigations, however, show that most of the payments appear unrelated to the concept of the project, which was established by the late Bingu wa Mutharika administration and continued throughout the Joyce Banda administration.

Our investigations further show that some officials paid were not necessarily working in ministries related to the Community Leaders Housing Project aimed at providing decent accommodation for traditional leaders in the country.

More curiously, there is evidence that some OPC employees had their school fees and holiday allowances paid from the project’s account 0260787106, held at First Merchant Bank Capital City Branch

The suspicious activities of the project also attracted the attention of the Financial Intelligence Unit (FIU) in 2014, which, according to information we have gathered, raised suspicion of possible irregularities.

The total cost of payments amounts to K1.28 billion with some of the funds coming from donors, among them, the Moroccan government, which donated $1 million (about K713 million). But the K1.28 billion is conservative as it only covers payments above K1 million.

Minister of Energy and Natural Resources Bright Msaka, then head of OPC was, for example, paid $6 000 (about K7.3 million).

He conceded to Nation on Sunday in an interview a couple of weeks ago that he does not recall any activity related to the project he was undertaking.

“I have never been paid in my life for anything I have not worked for. While I cannot recall why I was paid, there must be an explanation,” he said.

Msaka further said the decision over the payments were not done by him, but accounts officers, dismissing fears that such payments were in breach of the Public Finance Management Act.

“What happens sometimes in government is that people are paid allowances from other budget lines because their budget lines are not funded,” said Msaka.

Chief Secretary to Government George Mkondiwa said he was aware of the issue and confirmed that an audit was going on to investigate what happened.

“I am aware of the issue; there have been a lot of interest in the matter. Under the Public Accounts Management Act this is permissible as long as it was authorised by the Secretary to Treasury. The name of the account and the nature of the payments raise eyebrows; hence it is understandable there have been a lot of interest. There has even been an audit by the Auditor General. As far as I am concerned, there was no wrong-doing,” said Mkondiwa.

Patrick Matanda, now at Treasury, was Principal Secretary (Finance) at OPC during Msaka’s administration.

He, too, defended the payments as normal in the government system, saying government had no special events fund at the time; hence, several payments were channelled through the project.

Matanda confirmed the initial amount came from the Moroccan government, which was meant for construction of eight houses and offices for chiefs across the country, and that the rest came from government.

“Just to again indicate that the project was funded by the Republic of the Kingdom of Morocco to the tune of $1 million [K150 million at the time of funds release]. The money was fully used to construct eight chiefs’ houses and offices and a full account was sent to the Moroccan government. The Moroccan government was satisfied with the houses and offices built. A special team from Morocco inspected the houses and offices. The full list of the houses is available at OPC,” said Matanda.

He further revealed that the account was last year audited by the National Audit Office and auditors once again queried the transactions due to the same misunderstandings on how government operated the project account.

“We now realise the need for more prudent use of the accounts so we have created a special events account at OPC to remove any confusion,” he said.

From 2009 to date, we have learnt that various individuals, including senior government officers, have cashed various sums from the account.

Though various business entities were also paid from the account for goods and services purportedly provided to the project, our investigations could not align some of the businesses’ activities to project objectives.

Examples of payments not related to the project include money to travel agents, hotels, car hire firms and Television Malawi.

FIU director, Atuweni Tupochile Phiri, confirmed in an e-mailed response to a questionnaire that the agency, too, analysed the project’s account after noting the suspicious transactions.

“Yes, the FIU noted that there was what appeared to be irregular transaction, however, the truth or lack thereof of this is something that would have to be determined by the appropriate —agencies,” said Phiri.

Contrary to government position that an audit cleared the account, National Audit Office (NAO) spokesperson Lawrence Chinkhunda confirmed in an e-mail that the office was still auditing the project.

“Yes, we have an audit in progress on Community Leaders Housing Project and until the audit is finalised any disclosures at this stage would be legally and professionally unethical and jeopardising to the audit process,” said Chinkhunda.

Public Accounts Committee (PAC) chairperson Alekeni Menyani described the transactions as suspicious, saying the parliamentary oversight committee will soon order a forensic audit on the account despite NAO’s position on the matter.

Menyani said PAC has not received any report on the matter and account and says the transactions appear illegal.

“We are looking at this as total abuse of funds. Perhaps, because we are looking at chiefs’ project, government feels they cannot be held accountable at how the project was run. We will call for a forensic audit report,” said Menyani.

The Public Finance Management Act says expenditure outside budget during “exceptional circumstances” shall be reported to Parliament.

Treasury spokesperson Nations Msowoya, while admitting that Parliament passes special events votes, said only OPC could explain why the State opts to use another account for special events transactions.

“It is done under Treasury instructions. If there are instructions, it is acceptable. As you can see from the events which were funded, they were public in nature, maliro [funerals] and others. So, we cannot conclude that someone was trying to steal.

“The account of special events might have been there, but the account might not have been funded. They have explained what happened. The auditors can raise such queries, but if the respondents are able to explain as I have done, the matter can be closed but speak to Mr. Matanda,” added Msowoya.

Ministry of Local Government and Rural Development spokesperson Muhlabase Mughogho said the ministry has no records of the transactions and other project details.

“We were just being invited to organise official opening ceremonies, all the work was done by OPC,” said Mughogho. n