Govt probe army, police over K4bn

Malawi Government is carrying out a comprehensive audit into the Malawi Defence Force (MDF) and the Malawi Police Service (MPS) to verify whether the two security institutions misappropriated K4 519 633 746 alleged in the Baker Tilley report.

The probe follows recommendations by the Auditor General’s (AG) audit report on Cashgate that a further comprehensive audit work needs to be undertaken at the two institutions.

The report, prepared by the sub-contracted British private audit firm, Baker Tilley, said indications showed over K4 billion may have been swindled through the MPS and MDF.

Treasury spokesperson Nations Msowoya said government signed a contract with PriceWaterhouse Coopers, an audit firm currently conducting a forensic audit into the alleged loss of K92 billion from 2009 and 2013 in the public sector system, to carry out the comprehensive exercise.

He, however, said he needed time to find out how far the audit has gone; hence, could not explain the timeframe the comprehensive audit will cover.

The AG’s report said MPS allegedly made payments that may be irregular but were not thoroughly covered as they were outside the scope of the audit review.

The Baker Tilley audit report said there were goods or services supplied to the two institutions whose values appeared overvalued.

But the report said since insufficient evidence was made available to enable the firm to accurately value the loss, they had conservatively estimated the risk amount to be 50 percent total contract value.

The audit report, therefore, recommended that some payments and procurements made by the MPS and MDF require further comprehensive audit work to be undertaken to verify whether an amount of K4 519 633 746 was misappropriated.

The report also identified K8 767 228 735, which it classified as an amount at risk at the two institutions.

“This figure includes: Foreign currency transactions where the payment would seem to have been returned due to incorrect account information though we should stress that foreign currency differences make understanding the accurate position challenging.

“At this stage insufficient evidence has been provided to enable us to confirm if these payments are valid and/or correct.”

But last month ACB deputy director Reyneck Matemba told the Legal Affairs Committee of Parliament that the bureau was working on four files that Baker Tilley submitted to help in investigating and prosecuting those involved in the MDF Cashgate where at least K18 billion was suspected abused.

So far, ACB has arrested a retired army officer whose company “is linked to alleged dubious contracts” at MDF. The suspect is currently on bail.

Matemba told the committee the suspect’s company had valid contracts with MDF prior to 2013, but ACB has found that there was no evidence of a K900 million contract to supply blank bullets.

But while not directly responding to a specific question on how far the bureau has gone with investigations on the police and the MDF, ACB spokesperson Egrita Ndala in a response to a questionnaire this week said the bureau was conducting investigations into the abuse of public resources at Capital Hill before the Baker Tilley started the audit.

Said Ndala: “The audit files were in some instances complementing the information which the bureau had found during its investigations. They had in some cases provided leads which needed to be followed.

“The Anti-Corruption Bureau is continuing with investigations in relation to Cashgate. The bureau is not able to discuss issues of investigations as that is unethical.”