Dark horses in Malawi’s cash-gate scandal
The frenzy of arrests of individuals and naming of companies that has been done so far on cash-gate puts in the shadow important officials who could provide critical answers in the case, Malawi News can report.
This is according to information we have cropped detailing the links in the chain of a standard government transaction which, if tracked, could locate the whereabouts of the so-called big fish in the scandal.
To date of the 26 people that have been arrested in connection with the case, the only senior official involved is Principal Secretary for the Ministry of Tourism, Tressa Senzani.
According to the Anti-Corruption Bureau (ACB), Senzani instructed her ministry to make payments to her company, Visual Impact, when it had not supplied any services to the government.
Roots of the problem
Alongside the shaming of several companies suspected to have been recipients or conduits of the looted public money, these arrests have stirred up emotions and all manner of public verdicts.
But information from both serving and former top government officers and economic analysts well versed in government systems suggests that, unless the crackdown gets more comprehensive and deeper, the roots of the problem will remain to haunt the nation again in future.
All the four officials spoken to, including one serving senior government official, said the current crisis cannot be blamed on Integrated Financial Management Information System (Ifmis). Instead, it is a problem made by humans, including those at senior hierarchies of the government structure.
“One thing is clear: Ifmis, no matter what state it is in, will never spit out kwachas nor dollars,” said one economic analyst, a Malawian who has worked in Malawi in senior ranks of an economic watchdog body.
Links in the chain
Malawi News understands that between a government office requesting for services and then issuance and clearance of a cheque in payment for those services, at least the following must happen:
1. A relevant officer requests for services. This is approved by the supervisor, accountant and head of department in the Ministry.
2. Once the approval has been obtained, the Principal Secretary or his delegated officer
instructs the internal procurement committee to call for services, do the short listing, interviewing, selecting preferred suppliers and making recommendation to the Office of Director of Public Procurement (ODPP) who verifies and confirms the process was objective (or agrees to waivers requested) and gives a no-objection statement.
3. Contracts are signed by at least two people from government authorised to sign (including the Principal Secretary).
4. A payment request is made by the officer who initiates 1 above. The request is verified by the head of department and accountant who confirms availability of funds and budget code to charge. The Controlling Officer (Principal Secretary or his delegate) approves the requisition.
5. A cheque or instruction is generated by the accounts department via the Accountant General. This needs at least 2 or 3 signatures depending on amount, but nevertheless with the knowledge of the PS.
This request has to have original copies of supporting documents. The supporting documents include original contract, approved justifications, and proof of delivery of services.
6. The cheque becomes ready for collection, and is signed for by the contractor.
7. To cash the cheque, the bank verifies with the signatories on the cheque.
According to our foreign-based source, who did not want to be named as his current job does not allow him to comment on such matters, movement of billions of kwachas involves prior booking to the commercial banks and seeking the approval of the Reserve Bank.
Another analyst, Mabuto Bamusi, particularly highlighted that abuse of the magnitude as has been seen in cashgate cannot go unnoticed by the following who are supposed to be gatekeepers:
1. Commercial bank managers who put customers on waiting even for cheque amounting to K200, 000
2. Reserve Bank Governor and central bank senior staff who are custodians of Malawi government accounts
3. Secretary to the Treasury, who is mandated under the Public Finance Management Act of 2003 as main signatory to all withdrawals from the Consolidated Account
4. The Accountant General who is in charge of managing the Ifmis and printing of cheques
5. The Budget Director if he compromises his integrity and recklessly puts the system under duress to allow funds allocation to Votes in total disregard of approved budgets or set ceilings
6. The Controlling Officers such as Principal Secretaries in line ministries and departments
7. Accounts staff with rights to enter passwords and access Ifmis
8. Accounts staff responsible for requisitioning processes
9. Systems analysts at Accountant General as they provide support services to the functioning of Ifmis
10. Companies and individuals who voluntarily agree and accept to be used as conduits for siphoning the funds
11. Top political leaders with decision-making powers (legitimate or illegitimate) that influence allocation (or misallocation) of public funds
According to Bamusi, the nature of politics in Malawi encourages patronage and cronyism. This, he said, forces Controlling Officers to make decisions that prioritise interests of the politicians.
“Given that the Reserve Bank of Malawi governor, controlling officers, Secretary to the Treasury and Accountant General, for example, are directly or indirectly appointed by the President, it is only logical to question and investigate the top political leadership on their involvement in cash-gate,” he said.
The companies being mentioned in the scandal have to be taken to task but that cannot be the end of the story. It should be the beginning of the crackdown of the masterminds of the crisis.
Office of President and Cabinet
A former Secretary to the Treasury, who did not want to be named for fear of being accused of implicating others, also pointed at the role of Reserve Bank Governor, Principal Secretaries, Budget Director, Accountant General and Chief Secretary to the Government.
One of the offices that have been hit in the scandal is the Office of President and Cabinet. On October 4, the ACB arrested Frank Mwanza, an Assistant Accountant in that office for making three vouchers that resulted into payment of over K1 billion to International Procurement Services (IPS).
IPS belongs to Oswald Lutepo, an official of the ruling People’s Party. He was arrested on Wednesday in connection with the case.
The controlling officer in the OPC is the Chief Secretary and, according to our former Secretary to the Treasury source, the Chief Secretary is supposed “to communicate or even seek authorisation” from the President on any transactions related to the OPC account because that account de facto belongs to the President.
When contacted on cheque transacting processes in government, spokesperson for the Ministry of Finance Nations Msowoya said cheques are signed by designated senior officers within the Ministry of Finance.
According to him, this team signs all government cheques. The list of signatories, he said, is divided into categories depending on the seniority of the officers.
In reaction to the crisis at hand, however, government has laid down new procedures when it comes to signing of cheques, he said. These include that amounts above K500,000 should have three signatures. One of them will have to be a senior government official of PS Grade or equivalent.
Msowoya said cheques above K500,000 cannot be cashed easily but rather be deposited. And payments above K1 million have to be pre-audited by internal auditors to ascertain their authenticity, he said.