A highly-placed Malawi News source at the Ministry of Finance has spilled the beans by detailing how the Malawi government is losing millions of kwacha through poor financial management system which has led to the suspension of government’s payment system called Integrated Financial Management Information Systems (IFMIS).
The source said at the Ministry of Finance there is what is commonly known within the system as ‘loose minutes’ where officials apply for large sums of money, sometimes as huge as K16 million, where records are not kept and the money cannot be traced.
“We say government is an institution of records but if you try to follow records of payment through ‘loose minutes’ there is nothing here that can be found,” the source.
Following the shooting of Budget Director Paul Mphwiyo, who is currently fighting for his life in a South African hospital, there have been revelations of how government has been losing money prompting a fraud and risk management consultant to advise government to change the IFMIS which is said to be operating on an outdated software called ‘epical’ which is making government susceptible to theft.
The source said government has since suspended the system, a point disputed by the Accountant General David Kandoje who said the system has not been suspended but it has collapsed and government is not sure when it will be operational again.
“It has been running on old machines and software and currently we are working on it. It will take a long time before the problem can be rectified,” he said.
Kandoje, however, said the crash will not in any way create loopholes for theft of government money.
“We will be controlling everything from here. Every cheque will be scrutinised here before payment,” he said. “So it won’t be possible to be taken advantage of.”
The Treasury source also said the Financial Intelligence Unit (FIU) has since taken up the issue where it has launched investigations into the loss of money in government.
He said several companies, including a company called Stado co-owned by Stanford and Dalitso Mpowola (deceased), have been used as conduits for government officials to siphon money.
The said company, which has accounts with FDH and NBS banks, has been getting huge sums of money, including K450 million at one point.
“The company at first genuinely won contracts to construct markets in Mangochi and Mchinji but later government officials started using it and this is why FIU has come in,” the source said.
FIU Spokesperson Masautso Abere was non-committal on whether the unit is investigating the company and some government officials.
“The FIU does not disclose what it is doing to the public,” he said. “We just generate intelligence to be used in court.”
Abere also refused to confirm if the unit is investigating the ministries of Tourism and Defence whose accounts government officials are also using to siphon out money.
Abere nonetheless said the unit will issue a press statement on the matter to give its official position.
In an interview from Zambia where he is currently on official duty, Treasury spokesperson Nations Msowoya explained that ‘loose minutes’ are part of the communication channels in government.
“If a loose minute is written it has to be approved by management for it to be considered genuine,” he said.
“Once approved by management it can be sent for payment and a copy of which has to be attached to the voucher and another one filed out for record purposes.”
He said it is therefore not correct to suggest that no records can be traced.
“As for procurement any transaction has to be approved by internal procurement committee,” he said.