Findings of an investigative audit into the expenditure of K6.2 billion Covid-19 Response Funds have exposed loopholes in public finance management that drained K720 million through procurement flaws, irregular allowances, dubious claims and poor planning.
Key findings of the audit President Lazarus Chakwera ordered the National Audit Office (NAO) to undertake on February 21 2021 amid public outcry over alleged mismanagement indicate that procurement flaws accounted for the highest cost at K493.9 million.
Reads in part the executive summary of the report: “Out of this, K321 578 996.42 related to use of RFQs [request for quotations] instead of open tendering procurement methods, K105 995 500 related to irregular procurements, K48 582 220 related to use of single sourcing procurement method.
“K7 559 016 related to failure to produce original bid documents and K10 191 500 related to procurement at inflated prices.”
The findings also highlight allowance-related irregularities totalling K80 277 500, including K29.1 million payment of ‘risk allowance’ and K17.7 million overpayment of susbsistence and lunch allowances.
“K12 908 500 related to payment of allowances using incomplete documentation, K5 385 000 related to ineligible expenditure on ‘duty allowances’, K9 391 000 related to payment of allowances within duty station, K 3 010 000 to payment of allowances to ghost officers while the rest related to some other irregularities,” says the report on irregular allowances.
The audit also established “a problem of accounting for cash withdrawn” amounting to K83 million out of which K53.4 million was not liquidated and “K12 045 350 went missing without trace.
“[There was] K989 500 excess cash after an activity shared among officers without justification,” states the executive summary.
The audit also found that K23.6 million was “un budgeted for, ineligible, wastefully and dubiously spent” and that the 35 local government councils were funded without basis.
The report added that at the time of the audit about K1 billion of the K6.2 billion had not been used by the clusters that received them.
Beneficiaries of the irregular allowances included the National Intelligence Service which paid K28 million as unjustified risk allowances to its officials.
Reacting to the findings in an interview yesterday, procurement specialist Amos Nyambo said the audit has exposed gaps that call for strengthening of guidelines on procurement, especially during emergencies.
He said while emergencies do warrant institutions to
use single-source and RFQs procurement methods as opposed to open tendering, there was still need for approval by the Public Procurement and Disposal of Assets Authority (PPDA).
Nyambo said: “The safeguard in case of single-sourcing is that the procurement has to be approved by PPDA and vetted by ACB. This helps. But if this due process was not observed then we can raise serious issues.”
On his part, Cathol ic Commission for Justice and Peace (CCJP) national coordinator Boniface Chibwana described the revelations as terrible and worrisome.
He said government should treat the findings as a tip of an . iceberg and strengthen its systems
Chibwana said: “In any country, government has a responsibility to spur economic development. As CCJP, we have also been tracking government funds in councils and it’s a terrible situation. We need to put this to a stop.”
In a separate interview, governance analyst Mathias Kafunda said the mismanagement of Covid-19 funds was an indication that enforcement of accountability was proving difficult in the public finance management system.
H e s a i d : “ T h e effectiveness of Malawi’s PFM [public finance management] system is limited and, therefore, the implementation of strategic policies is heavily compromised resulting in inefficiencies that negatively impact on quality of public services that are so crucial to ordinary people.”
During the investigative audit, NAO said it examined budgets and expenditure as well as activity plans, cashbooks, bank statetements, cheque images and procurement and stores records.
Physical verification of personal protective equipment and other items was also undertaken, according to the auditors who said they also examined payment vouchers and supporting documentation.
The audit covered the period September to December 2020.
Prior to the audit, controlling officers, including some principal secretar ies, dist r ict commissioners, city and municipal council chief executives and other heads of ministries, departments and agencies were interdicted on presidential order to pave the way. n