Honeymoon over at Escom

The new board at the Electricity Supply Corporation of Malawi (Escom) has resolved to enforce recommendations of previous financial audits to recover billions of lost funds and punish all wrong-doers, Weekend Nation has the details.

An Escom board member confided in this newspaper this week that as part of the corporation’s turn-around strategy, the power utility company wants no single person spared in the gross plunder of resources at the parastatal over the years.

Escom has for some years been embroiled in financial malfeasance and plunder of resources with numerous audits revealing blatant mis-procurements that have led to loss of billions of kwacha by the State firm.

Said the source: “We will be following up on all the previous audits and ensuring that there is total adherence to the recommendations made in terms of taking disciplinary action, prosecuting suspects as well as recovering our money where possible.”

Summarised findings of facts of an updated forensic audit report by the Auditor General from 2012/2013–2016-2017 which we have seen, show a number of questionable procurements worth over K14.3 billion.

They include contract number ESC561/1CB/G/FY2012-2013 worth K790.3 million of fuses, switches and ring main units which were rejected.

The audit report recommended disciplinary action and prosecution of officers who authorised payments for the same.

In another procurement number ESC/767/NCB-RT/G/FY2016-2017 for meter boxes worth K2.5 billion, Escom did not seek approval of the Public Procurement and Disposal of Assets (PPDA) as required by law despite making price adjustments to the original price.

The audit report did not mention the members of staff who were responsible for the mis-procurement, but recommended their prosecution and disciplinary action.

The audit states that the meters did not meet the specifications in the contract, but all the same Escom accepted the items. The report concludes that the procurement was a ploy to siphon cash out of the corporation.

The forensic audit report also revealed that between 2013 and 2015 Escom spent K10.4 billion on fuel, car hire, accommodation, air tickets, air condition, conference package, batteries, among others.

According to the audit, in most of these procurements, Escom officials were circumventing the recommended open tender processes by manipulating the thresholds and thereafter inflating prices. Again, the report did not mention the names of the suspected officers, but recommended further investigations.

An internal audit report for the period between January and June 2016, which we also saw, states that Escom lost K1.3 billion in a heist of Cashgate form through mis-procurements.

Escom public relations manager Innocent Chitosi, in a written response, also confirmed that all matters raised in audits will be followed-up and that the process will be overseen by the board.

He said: “Individuals who breached procurement rules will be brought before disciplinary processes in line with Escom Staff Rules. Staff rules provide a basis for such processes regarding addressing breach of rules by staff.”

When asked how Escom will recover losses incurred over the years, Chitosi said the parastatal, with the supervision of the board, will pursue all information indicating that a supplier had breached or did not perform according to obligations in a contract.

He observed that the new tariff lines Escom was allocated in 2018, following the enactment of the Electricity (Amendment) Act in 2016, resulted in financial losses up to 2020.

This meant the organisation did not have funds to maintain transmission and distribution power assets.

But Chitosi touted the turn-around strategy the organisation is now implementing, saying it is giving strong signals of improved financial and operational performance, adding that on a quarterly basis, Escom is now reporting profits.

A number of Escom officials are currently answering different charges in courts bordering on mis-procurements.

Energy expert Grain Malunga, who once served as minister of Natural Resources, Energy and Mining, in an interview welcomed the parastatal’s move to follow up and prosecute fraudulent transactions, saying this will go a long way in cementing transparency and rule of law at the power utility firm.

However, he pointed out that the rot at Escom is as a result of irresponsible political appointments.

“We have been fighting for transparency and rule of law. If it can be done, the recovery of funds will help the country increase generation capacity and connection rate,” said Malunga.