MDF, Police top graft on procurement

Malawi’s military and police have been using national security and budget loopholes to indulge in dubious procurements, costing taxpayers hundreds of billions of kwacha, Weekend Nation investigations show.

At the centre of the plot is the near carte blanche use of single sourcing and restricted procurement methods, according to documents we have seen and interviews with current and former government officials well-versed in security-related procurements.

Despite the two methods identified as most vulnerable to procurement graft in a 2019 study by the Eastern and Southern Africa Anti-Money Laundering years

Group (ESAAMLG), to which Malawi is a member, officials say there is little oversight on the Malawi Defence Force (MDF) and Malawi Police Service (MPS) on their usage.

In principle, public procurement in Malawi should be through open tendering, but this can be waived subject to approval by the director Public Procurement and Disposal of Assets Authority (PPDA) director general and provided such deals have been vetted and cleared by the Anti-Corruption Bureau (ACB).

National defence or national security-related procurement qualify for such waivers when they are determined sensitive but, in an interview last week, MDF Commander General Vincent Nundwe said the problem has been a lack of due diligence on both the procurement processes and the suppliers.

For example, a cache of documents we have seen shows that between 2017 and 2021, MDF and MPS awarded 16 contracts worth $150 million (over K150 billion) to five companies using either single-sourcing or restricted tendering.

These contracts include procurement of food rations, anti-riot gear such as water cannons and armoured vehicles.

And correspondence we have reviewed show that in 2020 alone, government gave MDF a go-ahead to procure anti-riot equipment from Crimson Trading LCC worth $28 650 500 and water cannons from Malachite valued at $10 524 000 using single-sourcing.

The PPDA law only allows single-sourcing—in which the procuring entity goes directly to the supplier to buy goods or services or gets them from a single source—in situations of emergencies, if there is only one firm supplying them or there is no reasonable alternative or substitute.

While this single-sourcing procurement got the nod of both the PPDA and Treasury, ACB expressed its misgivings.

“We are aware that the equipment is eligible for special treatment…We are of the view, in the interest of value for money and without open tendering, the PDE [Procuring and Disposal Entity] could have used RFQ [Request for Quotation] from selected suppliers. It could be that similar equipment is found elsewhere at a lesser cost, with similar delivery capacity,” reads the letter from ACB to PPDA dated May 8 2020 and signed by director of investigations Dan Mponda.

In May 2021, PPDA approved yet another single-sourcing procurement for MDF for 32 armoured vehicles at a cost of $19 993 600, bringing the total cost to $59 168 100.

The two security agencies have also used loopholes along the public finance management chain, especially budgeting, to dish out moot contracts to a single supplier in a given year that, in some instances, are well beyond their approved annual allocations, according to budget documents and procurement paper trail we have reviewed.

No due diligence?

Such approach to procurement and spending has shocked many, including the current MDF chief and parliamentarians.

Nundwe said he was equally shocked, not only by the value of the contracts, but the nature of procurement that had nothing do with their core operational duty of national defence.

While acknowledging that anywhere in the world procurement of military items is not advertised for open tendering, Nundwe said due diligence is required to achieve value for money.

This is why, the General said, he stopped payment for the contracts, which are under ACB probe.

He said: “Usually we go to a number of suppliers and assess the quality of the items and if we are satisfied in terms of quality and price, we go to PPDA to ask for single-sourcing. But due diligence is key. I personally queried why government bought us water cannons to defend the country.

“I cannot explain why this was the case, since it happened when I was out of the system. When I came back into office I resisted to pay for some of these procurements,” added Nundwe, who was reappointed Army Commander by President Lazarus Chakwera after the court-sanctioned June 23 2020 presidential election.

Nundwe’s misgivings about government buying police equipment for the military aside, MDF has been known to take over public order duties whenever the police are overwhelmed.

That was especially true after the disputed presidential result in 2019 general elections, and the period leading to the June 23 2020 elections characterised by violent protests. Only MDF could quell violence in the face of a helpless police service.

Still, the questionable military procurement and spending has been a long- standing problem that in 2018 it caught the attention of Parliament, but little was done to deal with it and efforts at demanding accountability, even by some legislators, were quashed in the name of national security.

A report from a joint committee on Defence and Security presented in the House on June 5 2018 exposed the appetite for huge spending in the military. The report was a consolidation of budgetary requirements in security institutions, which some members of the committee deemed outrageous relative to the national budget.

But when then committee chairperson Alex Major wanted to share expenditure details to prove questionable spending in security institutions such as MDF, police and immigration, the presiding officer stopped him just after mentioning two items [catering and fuel].

“Honourable Member, I may want to restrict you on certain things. Let us avoid being specific on certain issues regarding security…I know this report will be circulated, but at the same time our national security has to be protected,” said then Deputy Speaker of the National Assembly Juliana Mphande as captured in the Hansard of June 5 2018.

Police also have their share of dubious procurements as in 2021 questions were raised after listing, as potential suppliers in a restricted tender for supply of uniforms, firms without requisite experience.

Restrictive tender is applicable in cases when “the goods, works or services are only available from a limited number of suppliers, all of whom are known to the procuring and disposing entity,” and where cost of considering a large number of bids is disproportionate to the value of the procurement according to Section 37(3) of the Public Procurement Act.

But in this particular case of a tender which amounted to nearly $20 million (over K20 billion), MPS listed firms without the required experience and some had only existed for a year.

Both PPDA and ACB raised this concern in letters after noticing that out of a list of nine, only three had the requisite experience.

But in its letter to PPDA, dated June 22 2021, MPS justified that for a long time they had depended on just two suppliers—both of whom were answering corruption charges.

“When a decision was made to procure goods using the restricted tender method, we decided to contact suppliers who were in our database in addition to Xavier Limited, a supplier with required experience,” reads the communication from Deputy Inspector General of Police (administration) at the time Meryline Yolamu, who is now Inspector General of Police.

Law enacted in 2017 worsened situation—Nyasulu

Private practice lawyer and seasoned prosecutor Kamudoni Nyasulu said the current procurement law, which literally makes any procurement in security institutions a security matter, has worsened the situation.

In the old public procurement law and its attendant regulations (2003), only 15 items were listed for special treatment, but the current law enacted in 2017 and its regulations (2020) have an extended list of 26.

Types of defence-related items eligible for special treatment in the old law included ammunition, rifles, riot equipment, armed public order vehicles, military hardware and equipment, police dogs, police uniform, military uniform, petrol bomb equipment, bomb X-ray machines, forensic science equipment, construction of magazine houses, communication equipment and fingerprint identification equipment.

The new regulations have included food rations (meals ready to eat), security and defence medals and ribbons, target papers and defence band equipment, among others.

Such an extensive list, said Nyasulu, makes it hard for a civilian to know exactly what the security institutions can procure that would not be considered security items.

He also argued that such an extended list provides more room for abuse of using easy-to-manipulate procurement methods; which are single-sourcing and restrictive tendering. Manipulation can happen across the procurement process—from pre-tendering, tendering and post-tendering phases.

According to ESAAMLG, at pre-tendering—which includes planning and budgeting, definition of requirements and choice of procedures—the process is vulnerable to manipulation during the definition of requirements that can be tailored towards a particular supplier, but also in budgeting by exaggerating cost estimates.

Were the gatekeepers Awol?

With so many top commanders at MDF, police and immigration answering corruption-related charges linked to procurement, questions have also been raised about the role of oversight institutions such as PPDA, Government Contracting Unit (GCU) and even ACB itself for waving through such procurements and what it says about their own competence and credibility.

But in a written response, PPDA public relations manager Kate Kujaliwa said the fact that a number of procurements they duly approved are under investigations should not bring into question their credibility, saying approvals are based on information submitted.

“The approval of the authority is based on the disclosure the institutions have made. You may wish to note that these cases you are referring to, for instance, any single source procurement must be vetted by the ACB in compliance with s.37 [11]. As such, it could be possible that the contract award was vetted, but the new information that has come was not disclosed to the authority and the ACB,” she explained.

Kujaliwa also indicated that the method of procurement may not necessary be a problem, but processes.

A senior official at PPDA indicated in an interview that there is unnecessary and sometimes exaggerated sensitivity on national security-related procurement such that certain details are left out.

“MDF would seek approval from PPDA on any procurement, but may not really provide more details on what they want to procure due to security reasons. Legally, PPDA deserves to know every detail, but no one really wants to compromise national security and out of fear, approvals have been granted without so much detail,” said the source, who also conceded that the expansion of the list on what is sensitive has only provided more fertile ground for abuse.

Procurement in Malawi accounts for around 70 percent of the national budget is spent through procurement related services, which makes it critical for procurement processes to have high levels of transparency and integrity.

Weak oversight

Legislator Boti Phiri, a former senior MDF officer, argues that Parliament’s Defence and Security Committee is equally incapacitated to provide expenditure oversight because it lacks special clearance

In one of the chapters in a book published in 2020 focusing on public finance management in Malawi’s armed forces, he writes: “Research findings reveal that the contributions of the Defence and Security Committee in establishing public finance oversight on secretive national security operations are absent due to lack of security clearance to handle such sensitive information.”

Further reads the chapter: “Additionally, the committee lacks professional parliamentary staff with sufficient knowledge and expertise of the military’s institutional requirements and expenditure of public money”.

In an interview, the ex-military officer turned MP said in other jurisdictions such as the United States of America, under oath, this committee has access to all defence-related undertakings, including procurement of equipment to avoid abuse of resources.

Phiri further argued that the Executive’s supremacy on matters of defence also provides a fertile ground for abuse of resources under the pretext of security and defence.

Apart from capacity gaps at the Ministry of Defence, the continued tradition where the President is Minister of Defence himself makes accountability a challenge.

But former Kasungu West legislator Major, who chaired the Committee on Defence and Security, blamed it on parliamentarians’ lack of courage to raise questions about security-related expenditure.

He said during his time, he was able to question expenditures on the so-called sensitive procurement. It was, actually, at this time when the cluster committee on defence endorsed a proposal from MDF to procure a presidential aircraft to the tune of K51 billion.

Another former Defence and Security Committee chairperson, who asked not to be named, said the problem lies in the whole structure of parliamentary deliberations where security matters are not openly discussed.

Former PAC chairperson Shadric Namalomba said on expenditure-related queries, the committee depends on audit reports, without which they can do little.

Law not barrier on audit—Kamphasa

While the National Audit Office has not responded to our questionnaire submitted over a month ago, former Auditor General Steven Kamphasa said the supreme auditing institution is at liberty to audit MDF and other security institutions, but security sensitivities ought to be considered.

He said it is also dependent on the person holding the office, stressing that, MDF, during his time, was audited and some of the wrong-doings exposed and led to prosecution.

“The law is clear that the Auditor General can carry out special investigative audits or forensic of every ministry, statutory office, agency, board, commission and bureau of the Government, and wherever public funds received by a non-profit organisation, including relevant international organisation without any exception. Section 14(1) says the Auditor General shall separately report to the controlling officer, head of an agency, statutory body or other affected person in respect of any matters that may relate to an audit, review, investigation or inquiry, and may require that person to respond to the Auditor General within 14 days of receiving the report”.