Treasury, National Audit Office clash over K11bn compensations

The National Audit Office (NAO) has queried K11.5 billion compensations which Treasury paid to around 40 institutions and individuals without sufficient proof of loss.

But the Ministry of Finance and Economic Affairs has dismissed the findings, arguing that all “payments under discussion were duly processed.”

The claim is in the Auditor General’s (AG) report compiled after an audit into government’s ministries, departments and agencies (MDAs) which focused on the 2019/2020 financial year.

The list of the disputed claims is not included in the report but Nation on Sunday has sourced it. It includes former key government officials, commercial banks, government parastatals and legal firms.

The Auditor General’s report reads in part: “A review of compensation payments showed that compensations amounting to K11 483 469 879.49 were paid out to individuals and companies for various reasons. However, the audit team was not presented with sufficient proof of loss or breach of contract.”

In the general recommendations segment, the report which was published on January 11 2022 called for further investigations into the suspected unaccountability the audit exposed.

“Further investigations should be conducted by special teams on the areas suspected that public resources may have been lost or mismanaged,” the AG advises.

But Ministry of Finance and Economic Affairs spokesperson Taurai Banda in a written response said all the processes were followed in issuance of the compensations. He added that some of the compensations were paid to former members of the Malawi Young Pioneer (MYP), a disbanded military wing of the former Malawi Congress Party regime.

Said Banda: “The payments in question are for workers compensations (including Ex-MYPs) and court cases. Proof of loss for workers compensation is done by the Workers Compensation Commissioner who then forwards the compensation claims to National Audit Office (NAO) for verification.

“Once the Secretary to the Treasury is satisfied with NAO’s verification report, he issues funding instructions to the Accountant General Department to effect payments. In the case of court cases, proof of payment is based on court judgement and instruction to pay from the Attorney General as well as the Secretary to the Treasury.”

He said some documents for workers compensation claims included standard forms of injury, death or accident report form, incapacity notice to the employer, notification to worker, medical report, pay slips, notification to employer of medical assessment and verification letter from National Audit Office.

Meanwhile, the Lilongwe Water Board (LWB) which received around K2.9 billion as compensation through different cheques between November 2019 and February 25 2020 said the funds were meant to be water bill arrears.

In an interview, the board’s spokesperson Chisomo Chibwana said Treasury has been paying the arrears under the general compensation category; hence, the mix-up.

“Through those compensations, the government was paying for water bill arrears that we had accumulated over the years. In 2019/2020 government had paid about K2.2 billion in respect of the arrears and there was another cheque of K410 million.

“From those payments, there were water bill arrears for Malawi Defence Force (K550 million) Malawi Police (K400 million), K398 million was for the Malawi Prison Service, and the K356 million was for water bill arrears for State residences,” she said.

Meanwhile, the Centre for Social Accountability and Transparency (Csat) executive director Willy Kambwandira has asked for thorough investigations into the compensations that were made during the financial year.

“Compensations without supporting documents obviously raise fears of fraud and corruption and demonstrate lack of accountability. If there is no proper documentation then it is only proper for companies and individuals involved to pay back the money as this is theft of public funds.

“It is also our expectation that sanctions will be taken against public officers involved in these phony compensations.