Fiscal Police Section of Malawi Police Service has launched an investigation into the procurement of K1 billion materials at Electricity Supply Corporation of Malawi (Escom) at inflated prices in 2013.
In the probe, Fiscal Police have to date questioned several Escom officials, including former senior procurement manager Jack Thabwa, as part of an investigation into how the utility company procured items from an Indian intermediary at an amount allegedly 27 times the price tag offered by other suppliers.
The deal under spotlight is a 2013 contract which saw Escom buying HSC fuses from Multistar International. The items ended up dumped at Escom warehouses because they were incompatible with its system.
National Police spokesperson James Kadadzera confirmed the probe, saying: “I can confirm that Escom officials have been questioned on the matter, but cannot provide any further details.”
A memo dated February 27 2014 from former Escom financial controller to director of corporate services and director of finance highlighted irregularities in the procurement at Escom, describing the cost of the procurement as “abnormally high”.
Documentation we have seen shows that Escom management at the time reacted to findings of an inquiry into the matter by transferring then senior procurement officer Thabwa from his position without any further action.
Reads the memo: “In the process of costing foreign procurements, an officer in stores discovered that the landed cost of SP and cutouts imported from Multistar International under contract number ESC561/ICB/2012/3 was abnormally high.
“The normal price for a cutout based on the average pricing system is not supposed to exceed K8 500. However, the consignment from Multistar is costing almost K175 000 per month which is more than 25 times the expected price.”
Businessperson and chartered accountant, who chaired the Escom board at the time the procurement was queried said: “The contract had already been
uncertainty and unbearable political temperature. The presidency has been demystified and this is refreshing.
He added that economic realities in the Covid-19 pandemic period means major pledges have also faced setbacks, but said the President still set a marker.
“All the major promises require proper planning; you can’t pull off one million jobs in three months,” he said.
Yet, when Chakwera addressed journalists at Kamuzu Palace yesterday, fluffed his lines once – and prompted immediate
is not right within their democratic structures and signed. We took note of high stakes. We were failing to roll out connections. The investigation revealed that much of the material was unusable in the current protocols. It was water under the bridge at the end of the day. We tightened procurement rules, we started cleaning up balance sheet.
“I would have to ask the report. We were able to establish how we got there and how we ensured Escom doesn’t return to such a position. We left Escom with surplus. I can’t recall most measures because it was a while back. One thing we did was to reshuffle the procurement team to comply with our goals.”
In a separate interview, lawyer Paul Maulidi, who was chairperson for Escom’s commission of inquiry into the procurement, also recalled the matter, but said the contract had a number of irregularities.
He said: “I chaired the fact-finding meetings. I don’t have documentation with me, but I remember that there were certain items that were paid for in advance. We discovered that the items were not suitable for Malawi.
“We uncovered a lot of irregularities. There was a lot of infringement of the law. We advised management to take up measures. Procedure was not followed. Why pay in advance before goods arrived? Why get wrong specifications?”
But Escom public relations manager Innocent Chitosi asked for more time to respond to our questionnaire.
According to the
Escom inspection panel inspected the fuses’ consignment delivered by Multistar International and declared that they were not in accordance with Escom specifications as conveyed through the technical specifications presented to the supplier. The panel rejected the consignment.
Next, Escom engaged the supplier who agreed to replace the consignment subject to provision of a 15 percent variation order on the rejected consignment to enable the company to cover expenses for the action. Escom agreed to the arrangement.
Escom kept the rejected goods in the open, exposing the sensitive material to rain and sunlight. When the goods reached Multistar, the company reported that 30 percent of the consignment was damaged. The company issued an insurance claim in South Africa, but the insurer, upon reviewing the conditions at Escom’s warehouse, rejected the insurance claim.
The goods were shipped back to Malawi at a cost of $1.4 million (about K1 billion) paid by Escom and they lie in the Escom stores to date.