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NAO issues fresh subpoenas to banks in Cashgate probes

The National Audit Office (NAO) has issued fresh subpoenas to banks that did not fully comply with forensic auditors investigating the K230 billion Cashgate.

As reported in the current K230 billion Cashgate forensic report by British auditing firm RSM, for example, some four commercial banks did not fully cooperate with forensic auditors despite government, through the NAO, sending subpoenas for information.

Referred matter to Government: Ngwira
Referred matter to
Government: Ngwira

The de v e lopment prompted the audit firm to report to government to act on the banks for non-compliance as the said banks provided “limited or no replies’ to specific subpoenas.

But NAO spokesperson Rabson Kagwamminga said in a written response  last week that despite the law, saying failing to cooperate with investigators is a crime, instead of prosecuting the banks, his office has sent fresh subpoenas after most banks

provided excuses for failure to comply with investigators.

“The Auditor General [AG] issued fresh subpoenas to the banks. This was done in view of the fact that some of the banks claimed to have not received our subpoenas initially.

Their response, so far, has been encouraging and we are hopeful that all banks will eventually cooperate.

“ D e p e n d i n g o n t h e circumstances, the AG, in consultation with the Attorney General, can report the defaulter to the law enforcement agencies for prosecution,” he said.

Asked on who has the mandate to ensure that commercial banks comply with forensic auditors investigating serious fraud in government such as Cashgate, Treasury and the regulator of the banking industry, the Reserve Bank of Malawi (RBM), tossed the ball to each other.

In a written response, RBM said, through spokesperson Mbane Ngwira, the central bank noted the recommendation by the auditors for government action, but said it was not responsible for the action.

“The investigations were ordered by government and the report was submitted to government to take punitive action against the said banks. I would advise that you may contact my counterpart at Ministry of Finance for responses,” said Ngwira.

But Treasury spokesperson Nations Msowoya last week insisted RBM is the only entity with legal mandate to take action against the banks.

“The law is clear that RBM is the regulator of the banking industry. Much as the report says government should take action, there is no action we can take as Treasury,” said Msowoya.

Quizzed on RBM’s insistence that the central bank, too, argues that it has no mandate over the matter, Msowoya said there was a need for the Attorney General to make a legal interpretation of the law on the matter.

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