At least K143 million from the sale of disposed of tractors government acquired through a $50 million (about K37 billion) loan from India in 2011 was not banked, an audit report by National Audit Office (NAO) has revealed.
The audit report was one of the recommendations of the Ombudsman following an investigation that uncovered massive mismanagement in the loan scheme culminating in a scandal dubbed ‘Tractorgate’ as only 77 of the 177 tractors bought were distributed to agriculture development divisions (ADDs) as part of mechanisation of agriculture.
But 100 ended up being sold to politicians and senior government officials at very low prices, something the Ombudsman faulted considering the state of the tractors during the purchase.
Among key findings of the audit, which Nation on Sunday has seen, NAO says the procurement process used a non-competitive method of single sourcing, the tractors and their allied equipment were substandard and that there was a change of the original objective of the Loan Authorisation Bill.
The audit report, dated November 2019, further says there was conflict of interest involving some internal procurement committee (IPC) members in the deal, and notes that K341 395 9I4.36 was the difference between the purchase and selling price of the tractors and their allied implements.
The report also says auditors uncovered that one buyer won three tenders after bidding under different company names.
The report shows that outstanding payments amount to K62 I79 97O.80 while farm machineries (four tractors, 25 maize shellers and nine maize-cum-fertiliser applicators) remain unaccounted for.
While the State can show the unallocated loan balance of $80 938.00, proceeds amounting to KI43 076 768.30 are without evidence of bank payments.
The report recommends that government should revisit processes of obtaining the loan that impact its effectiveness while the Debt and Aid division should carry out a post-implementation review “to examine the efficacy of all elements of the loan acquisition, procurement and disposal of farm machinery or related items to ascertain where improvements can be made to optimise benefits delivered now or in future”.
The report further reads: “Specifically, the process involved in the disposal of government assets should be reviewed in order to strengthen the should ensure that payments or loans above certain threshold follow hierarchical approval procedures.” controls. Government of Malawi
Public Accounts Committee (PAC) of Parliament chairperson Ken Kandodo on Saturday confirmed receiving the report, saying it will feed into an ongoing separate inquiry the committee is holding.
“We had our own inquiry and we are finalising our report which we will submit once House plenary starts sitting. We will not comment on the contents because we are yet to discuss the report,” he said.
During one of PAC hearings, the committee learnt that the tractors were sold at K5.6 million each, instead of K10 million.
Ombudsman Martha Chizuma on Saturday welcomed the report as a fulfilment of one of the recommendations of the Tractorgate report, but was quick to say it fell short of complying with all recommendations.
“As office of Ombudsman, we are delighted that there had finally been compliance with our directive by NAO. We are happy that NAO investigative report has also confirmed what we suspected, that there were fraud-like activities and serious maladies with this whole process.
“We have since submitted the report to Parliament as they are the ones who are playing further oversight over the issue.
“We have also given Parliament our comments and observations on the NAO report. Major one being that the report fails short of naming public officers behind the institutions who actually messed up. That was the original intention of our directive, to ensure that someone gets to be held accountable as we believe that is the only way we can deter this kind of impunity by public officers and hurting a lot of Malawians,” said Chizuma.
Apart from the recommendations on the audit, the Ombudsman’s report also called for an apology to the people of Malawi, which government belatedly issued following a court action. Two senior public officials, Secretary to the Treasury and Principal Secretary to Ministry of Agriculture were later found in contempt of court for failing to adhere to some of the recommendations.