How civil servants, politicians collude to steal from govt

Syndicates that have been abusing Malawi’s Integrated Financial Management Information System (IFMIS) to swindle public funds at Capital Hill involve both civil servants and politicians who connive to beat the system at several stages, Nation on Sunday has established.

Several Malawi civil service accounts personnel confided in Nation on Sunday last week that the syndicates have connections at Ministry of Finance, especially the budget section which funds ministries and departments, another ministry where funding is channelled for processing of payments for fake transactions and Accountant General’s office where cheques are issued to pay for the fake transactions.

Nation on Sunday

has learnt that the abuse of IFMIS has worsened over time because of pressure from politicians for civil servants to mobilise resources to bankroll their activities such as political rallies.

When Malawi President Joyce Banda addressed the media on Wednesday, she also acknowledged the age-old problem at Capital Hill.

Said an accountant at Treasury: “The civil service has been highly compromised because of the relationship between civil servants and politicians. To some extent, politicians fear civil servants to avoid sabotage while on the other hand civil servants fear politicians to avoid losing their jobs to the extent that the civil service has entered into an unwritten agreement with politicians to hold each other to ransom.

“From the time of UDF to the present, there have been several politicians who have approached civil servants, including principal secretaries, saying that the president has sent them to collect money for some political activities and allowances. The same happens for vehicle fuel for political activities.

“Not all the money that is given to people at political functions comes from the pockets of politicians. Principal secretaries and directors in government ministries and departments have been under pressure to mobilise those resources by creating fake transactions like field trips which never happened.

“In the end, this has created a culture of theft because some civil servants and politicians have also taken it as a way of making money for their own pockets. Politicians have well placed people in the civil service, including accounts personnel, who act as their eyes and ears apart from working as agents to speed up processing of their payments

“That’s why you find some junior civil servants defying or disrespecting their bosses. It’s sometimes because of these connections which make some civil servants feel untouchable and boast that they are connected even to State House.”

How IFMIS was abused

The senior accounts personnel Nation on Sunday talked to—whose identities we have withheld for their own safety—said the process of government funding to ministries and departments begins in the Ministry of Finance’s budget section where they know how much taxes the Malawi Revenue Authority (MRA) has deposited into government’s Account Number One at the Reserve Bank of Malawi.

“The office of the budget director at the Ministry of Finance is the one which funds ministries through IFMIS. The syndicate is, therefore, connected to some people at Ministry of Finance to ensure that enough funds are channelled to a specific ministry for a specific purpose.

“When funding to ministries appears in IFMIS, personnel in the ministries then enter the system to tie specific activities in their budgets to that funding so that everybody from anywhere sees what the money which the Ministry of Finance has disbursed in the system to that ministry is being spent on.

“This is where you have accounts personnel like accounts assistants who are part of the syndicate and have access rights to IFMIS going into the system to attach payment details for a fake transaction to the funding that the Ministry of Finance has provided in the system.

“The accounts assistant will process payment vouchers and attach details of invoices and orders from a company which has not delivered anything to the ministry. In this case, you have companies which either belong to politicians, accounts personnel themselves or some business-people.

“Once the funding in IFMIS is marched with these details of an activity which is being paid for and relevant officials in the ministry have approved the payment, IFMIS generates an LPO [Local Purchase Order] which marches with the orders from the supplier.

“A cheque cannot be processed at the Accountant General’s office without this LPO to authenticate the payment process,” said another senior accountant in one of the ministries.

The accountant said when an accounts assistant processes the payment vouchers, the head of department responsible for the activity being paid for is supposed to approve the transaction and then a principal accountant or chief accountant in the ministry is supposed to authorise the payment through IFMIS.

“An accounts assistant who knows the IFMIS password for the director of the department can go into the system and approve the payment without the director knowing. Some directors write their passwords in diaries or ask their secretaries to write them somewhere so that they don’t lose the passwords.

“It is, therefore, possible that an accounts assistant can process the payment vouchers and also approve the transaction himself,” said the source.

The syndicate is connected to the Accountant General because that is the paying side in government so they want to make sure that cheques for payment of the fake transactions are processed and released at the Accountant General’s office.

The accounts personnel said the oversight function of Principal Secretaries in ministries is compromised because most of them delegate handling of business in their ministries to their subordinates as they are mostly busy attending meetings, including presidential functions.

Zero impunity helped IFMIS Tanzania, where Malawi borrowed the wisdom of using IFMIS, make sure that in cases where individuals have been spotted abusing the system, they were arrested and brought before justice on a continuous basis.

In addition, our sources at the Ministry of Finance in Dodoma, Tanzania, said: “Since 2004, whenever it was deemed appropriate, new versions of IFMIS have been introduced.”

Further, the system has worked for Tanzania because “as it was a new system the staff had to undergo frequent training.”

“But as you may be aware, it is not the system that encourages its abuse; rather, it is the human element. Individuals who are tasked to operate the system use passwords. If an individual does not hide the password and it gets into the wrong hands it is very likely another bad guy could take advantage.

“There is not much the system can do to prevent stealing. It is like you operating your computer.

“Your computer does not recognise individuals but passwords. Even if I am not authorised to operate the system if I have the password the computer cooperates,” added the source.

He also hinted at how the cheque approval system works in Tanzania.

“In general terms, once an approval for payment has been done, a ministry, in this regard an accountant, writes a payment voucher which is submitted to the Treasury.

“Before a cheque is issued, Treasury has to confirm that the funds are available and are within the annual budget as authorised by Parliament. Funds are released on a quarterly basis. So, this cheque will only be drawn if funds are available for the respective quarter.”