Audit reveals fraud in LDF projects
An audit into the construction of school blocks under the Local Development Fund (LDF) in Lilongwe City Council (LCC) has found that about K41 million was lost through fraud.
LDF has since written LCC management of an impending backstopping exercise of its funded projects scheduled for August 28 and 29 this year.
The Education Sector Wide Approach (ESWAp) Phase I in Lilongwe City was allocated K251 million and council officials spent K18 million mostly on fuel, but little supervision was done.
On the other hand, ESWAp Phase II was allocated about K193 million, but management spent K12.5 million on administrative costs, which is above the recommended five percent.
The auditors found that some suppliers swindled the council by supplying inferior materials amounting to K7.8 million, but also undersupplied to the council.
The auditors suspect that officials at LCC might have connived with the suppliers and contractors to deliberately overpay and might have been bribed to turn a blind eye to the delivery of supplies, most of which were of the wrong quality ordered and paid for.
The council’s draft audit report into ESWAp Phase I and Phase II carried out by the council’s internal audit office found that LCC overpaid K6.4 million to about seven suppliers for construction of school blocks at Chisamba, Kalambo, Kawale, Mbuka, Mtsiriza, Mvama, Msambeta and St John’s.
“It was noted that K6 429 131.09 was an amount paid above the agreed contract on goods supplied for the school projects. There was no proper verification of goods supplied to match with the contract agreement,” the report states.
Some of the overpayments were as high as K1.6 million to a hardware firm for supplies to Kalambo School and K1 million to a supermarket chain for supplies to St John’s School.
“Officials can deliberately overpay and get the overpayment from suppliers in form of money and goods. Suppliers should pay back the excess amount paid to them,” the auditors recommended.
The report indicates that the council paid twice the price (K538 377) to a construction company for works at Mtsiriza Primary School due to lack of supervision and reconciliation of payments by management.
The report has named the hardware company as a supplier which delivered 110 inferior 32 gauge iron sheets worth K516 500 to Kawale and Chisamba schools when they were contracted to supply 28 gauge of the same number worth K1.6 million which the company was paid.
“[The hardware firm’s[ cheating in supplying the inferior iron sheets resulted in swindling the council K1 149 850 as the council paid K1 666 350 [as] the price of 28 gauge iron sheets instead of K516 500 price of the 32 gauge supplied,” the report reads.
The report has since recommended that the hardware company pay back the K1.6 million to the council or supply the correct iron sheets as agreed.
LCC acting chief executive officer Vito Mulura confirmed that management has discussed the report and started implementing the recommendations.
“We will look into all the recommendations made in the report. The directorate of finance has since written the contractors and suppliers to start the repayments, but as a council we also owe [them] some money. We are waiting for the reconciliation exercise, then it will be done,” Mulura said.
LDF has, however, committed K39.3 million to completing the abandoned school projects.
LDF communications manager Ina Thombozi said reports of fraud in LDF projects across the country are rife, but since the LDF is not a legal entity, there is not much action they can take against the councils which abuse funds.
“But where fraud is uncovered and World Bank demands repayment, the government repays the money,” she said. n
