NAC in fresh funds trouble
–World Bank wants K1.8bn accounted for
Beleaguered National Aids Commission (NAC) is facing a fresh accountability test, with the World Bank demanding an explanation and possible refund of K1.8 billion spent without complying with set procedures.
The Bank also says there is another K46 million (about $110 000) of what could be ineligible spending.
In a letter dated March 20 2015 to the Ministry of Finance, Economic Planning and Development signed by World Bank country manager for Malawi Laura Kullenberg, the Bank recommended a careful review and implementation of NAC’s financial management arrangements “to ensure integrity of transactions and financial reports”.
The World Bank said through its review undertaken by audit and business advisory firm Graham Carr, possible ineligible expenses were identified.
The Bank defines ineligible expenses as comprising expenses outside established policies and procedures regarding use of its financed credits and grants.
Kullenberg’s letter, with the subject In-depth Financial Management Review of the Multi-Sectoral Aids Project-P073821, is a follow-up to earlier communication to NAC following an audit for the year ended June 30 2013 carried out by Price Waterhouse Coopers (PwC) and a Graham Carr audit of grant recipient organisations (GROs) covering the periods beginning July 1 2007 to June 30 2013.
Reads in part the letter addressed to director of Debt and Aid Management Peter Simbani: “The Graham Carr report came up with ineligible and unliquidated funds amounting to K1.8 billion. We appreciate the steps taken by NAC in requesting the GROs to refund these unliquidated amounts.
“However, in the event that these funds are not fully refunded, the Bank will proceed to declare these ineligible and request government to refund on the same to the Bank and other partners which contributed to the pool.
“The Bank will agree with government on a reasonable time for the refunds to be fully effected. In addition to the above, the review also identified ineligible expenses amounting to K46 million.”
Ministry of Finance spokesperson Nations Msowoya confirmed knowledge of the amounts of money contained in Kullenberg’s letter, but could not comment further as to where the money in question will come from.
Said Msowoya: “Give me more time to cross-check facts, but as government we are aware and all measures will be followed as per the letter.”
According to the report, despite NAC providing explanations for some of the issues raised, the Bank notes that there is no evidence supporting the commission’s justifications.
Recently, NAC has been in the news mostly for wrong reasons largely relating to accountability of funds from its partners.
For example, a National Audit Office (NAO) audit revealed that between 2013 and 2014, State House and Joyce Banda Foundation International (JBFI) obtained the commission’s resources under dubious circumstances.
The revelation came amid an outcry over grants NAC made available to First Lady Gertrude Mutharika’s Beautify Malawi (Beam) Trust and Mulhako wa Alhomwe—organisations whose core activities are not related to HIV and Aids.
Earlier this year, The Global Fund on Tuberculosis, Malaria and HIV/Aids stripped NAC of its long-time status as principal recipient on the back of the controversies.
The Global Fund has since demanded a refund of $6.4 million (about K3 billion) due to ineligible expenditures in 2010 as unearthed by the Fund’s independent audit body, the Office of the Inspector General.
The unauthorised expenditures included buying of unbudgeted for vehicles.
However, Minister of Health Jean Kalilani played down The Global Fund withdrawal during earlier interviews, attributing it to the Fund’s change in funding model.
The development comes amid other boiling issues involving mismanagement of funds at NAC.
The Global Fund—one of NAC’s major benefactors—has since re-channelled all funds to the Ministry of Health, Action Aid and World Vision, saying NAC will need to apply for funds just like any other organisation.
