International non-governmental organisation, ActionAid—one of the two principal beneficiaries of the Global Fund grants in the country—has uncovered a K26.9 million fraud that has seen three officers summarily dismissed.
ActionAid Malawi has since clarified that the misappropriated funds were not grants from the Global Fund for malaria, tuberculosis and HIV and Aids. The organisation said this week that the funds were from other donors for different projects.
However, despite the explanation, the Global Fund Country Coordinating Mechanisms (CCM) in Malawi has cautioned ActionAid to be on “very high alert” in terms of managing project funds.
In an interview this week, ActionAid Malawi acting country director Mohamed Sillah said the suspected fraud happened between last year and this year, but gave assurances that the situation is now under control.
In a written response to a questionnaire, he said the employees involved in the suspected fraud appeared before an internal disciplinary hearing which found them guilty of wrong-doing and were summarily dismissed.
He said the matter is being handled by the Malawi Police Service.
Said Sallah: “The matter was referred to the Malawi Police for the State to take appropriate action having in mind the gravity of the offences against donor funds meant for the people of Malawi. The [ActionAid] board took the issue very seriously as it affects the reputation of the organisation.”
Secretary to the Treasury Ben Botolo, who chairs the Malawi Global Fund CCM, said ActionAid, which is handling a lot of funds from Global Fund to benefit a lot of Malawians, should take the incident as a wake-up call by sealing all loopholes.
He, however, said the fact that the fraud was detected by internal controls is a demonstration that ActionAid was doing a good job.
Said Botolo: “If it were another organisation perhaps they could have swept it under the carpet. It just shows that they have zero-tolerance to corruption which is a crucial component in the handling of Global Fund’s grants.”
In the wake of the fraud, Sillah said ActionAid has taken a number of measures, including strengthening the internal controls such as reviewing of levels of authorisation and approvals within the financial system.
He said instructions with commercial banks have also been reinforced to call the acting country director to confirm any cheques presented from ActionAid. Besides, there is also a new head of finance deployed from ActionAid Africa regional office.
Inside sources said the suspects were operating a coordinated scheme that saw them draw cheques and cashing them, among others.
National Police spokesperson James Kadadzera yesterday said he did not have the names of the suspects in hand and asked for more time to check with fiscal police section.
In May last year, outgoing ActionAid country director Martha Khonje indicated that most local non-governmental organisations (NGOs) had failed to meet the criteria to disburse the funds as only three out of the initial 63 made it.
She described the process as intense as they were looking for many documents before an organisation could be qualified to apply.
The Global Fund is funding the $298 million (about K206 billion) bio-medical project to run from 2016 to 2018 with ActionAid as the project administrator.
In February 2015, ActionAid took over the administration of Global Fund grants in Malawi after National Aids Commission (NAC) was stripped off its status as principal recipient of the grants following controversies in the management of funds.
The same year the fund also demanded a refund of $3.3 million (about K1.4 billion) the Malawi Government abused in the previous budget as a condition to access its grant
In March 2014, the Global Fund secretariat announced that the NAC’s overall performance was downgraded to ‘inadequate,’ mainly due to weaknesses in financial management, which led to ineligible, or unsupported, expenditures and delays in external audit. n