Parliament’s Public Accounts Committee (PAC) has asked for a forensic audit at investment firm Alliance Capital Limited to establish what happened to the K690 million nomination fees Malawi Electoral Commission (MEC) is failing to recoup.
PAC made the request on Thursday during a meeting at Parliament Building in Lilongwe where MEC officials were summoned to respond to expenditure queries.
In an interview after the meeting, PAC chairperson Shadric Namalomba suspected the funds were abused at Alliance Capital Limited (ACL). He said this was why his committee was calling for the forensic audit to establish what happened.
He said: “Alliance Capital has been put into liquidation by the Reserve Bank of Malawi [RBM]. The question: will this K800 million, which is due from Alliance Capital, form part of money that will be realised out of that liquidation?
“What it means is that the creditors rank in terms of their seniority of debt. If that debt was secured, then you start paying that which was secured. In this case, this money was not secured. It was money that was invested.”
Namalomba, a certified public auditor who is also Mangochi South West legislator, feared that under those circumstances, MEC may not recover all the funds.
He said: “Now the question is what happened to that money? This is why we are proposing a forensic audit. We need to understand what they did with that money. It has to extend to their directors and the shareholders.
“If it was invested in the projects, let us also go for those projects. We need to know why they invested in those projects. Are they linked to the directors? Are there personal interests? We should not just accept that there is liquidation.”
MEC invested the funds, which with interest are projected to have grown to K800 million, after collecting nomination fees from candidates who contested in the 2019 Tripartite Elections.
However, the electoral body is failing to recover the funds from the portfolio and investment management firm that RBM suspended last year. MEC has since sought court’s intervention.
During Thursday’s meeting, MEC acting chief elections officer Harris Potani told the committee that Alliance Capital had offered to pay back the funds in instalments, but the electoral body turned down the proposal.
“Alliance Capital accepted liability and indicated that it will be able to pay K15 million per month up to the end of the entire amount. That was just a drop in the ocean considering the amount involved, K800 million. For K15 million, I don’t know how long it would take,” he said.
Ministry of Finance and Economic Affairs had not yet responded to our questionnaire to comment on the request for forensic audit into the deal.
But dur ing an ear l ier appearance before the Budget and Finance Committee of Parliament last August, MEC chairperson Chifundo Kachale feared the funds were at risk because ACL was not giving inspiring feedback.
MEC is among organisations and individuals whose savings are in jeopardy following Alliance Capital’s failure to pay its clients.
In March last year, RBM suspended the portfolio manager’s licence for Alliance Capital for breach of technical operating requirements.
Earlier last year, the High Court Commercial Division ordered Alliance Capital Limited to settle in full K373 513 566.31 it owed one of its clients.
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