Tag Archives: Deloitte

Business, Politics

Law firms, auditor Deloitte fight over Malawi Central Bank’s forensic audit report credibility

Maravi Post Reporter
Malawi central bank

LILONGWE-(MaraviPost)-There is fight between law firms and auditor Deloitte on credibility of Reserve Bank of Malawi (RBM) forensic audit report credibility.

According to The Nation Newspaper, seven law firms and a contractor named in the RBM forensic audit report as having received what auditors described as “suspicious payments” totaling MK2.8 billion have questioned the credibility of the audit.

Representatives of some of the law firms said they filed valid court settlements that prompted government to make the payments to their respective firms.

In the forensic audit report compiled by Deloitte into alleged fraudulent local and foreign payments made by RBM between January 1 2019 and June 30 2020, the auditors claimed that the office of the Attorney General failed to provide documents in support of the payments by the time the audit report was concluded.

But in separate interviews the law firms argued that the auditors did not make an attempt to hear their side of the story before publishing the audit.

The listed law firms include Kalekeni Kaphale Lawyers of former Attorney General Kalekeni Kaphale which received MK133.8 million, Tembenu, Masumbu & Partners where former minister of Justice Samuel Tembenu is a partner which received MK110 million and Nampota & Company which got the highest payment of MK2 billion.

The list also includes Mundikhumbengi Building Contractors which received MK274.6 million payment, Joe and Max Chambers which got MK200.7 million and D Salima and Company which got MK125 million payment.

According to the audit report, Deloitte claims to have sought in vain to establish whether the compensations were paid to valid entities or whether there were any unsupported or inflated miscellaneous payments made for ministries, departments and agencies (MDAs), including legal costs, court awards and settlements.

The account, also known as Compensation and Refunds-Statutory Expenditure account, is used to settle claims against the government.

Tembenu said his law firm had a genuine court consent for the payment under Civil Cause Number 321 of 2017.

“As I said, I haven’t read the report and cannot comment intelligently on the allegations nor the motive thereof. However, we are surprised that the auditors did not request this information from us,” he said.

On his part, Kaphale questioned the credibility of the audit finding, saying his law firm and several others named were not granted any opportunity to explain themselves.

“My law firm and other law firms were never ever asked. I asked the law firm and they said those are clients’ money. They are emanating from court judgements. Government doesn’t just pay people. There should be a paper trail and RBM must have paid based on such papers,” said Kaphale.

Former Anti-Corruption Bureau director Alexious Nampota, a lead partner in Nampota & Company, could not be reached for comment on several attempts.

The audit report includes details of how RBM officials allegedly bypassed own rules and regulations to authorise several “suspicious” payments, issue letters of credit to companies without any due diligence, procured contracts against procurement laws, paid a local bank suspicious sums of money, all at a huge cost to the taxpayer.

The bank is yet to clear on the mess.

Business, Lifestyle, Opinion

Deloitte must be ashamed for shabby job on Malawi Central Bank’s Forensic Audit

Maravi Post Author

By Gift Makwinja

While everyone is ‘excited’ with the recent Reserve Bank of Malawi (RBM) forensic audit report which has seen former RBM Governor and other former and current top goons at RBM arrested, let us not be overjoyed with this, let us look at facts.

First of all, the auditors who did this forensic report, Deloitte, all I can say that I am ashamed to be called an auditor (well that’s my profession!) because of the shoddy job that you guys at Deloitte did on this report, ohh my oh my look at the gaps that are in this report which you could have easily addressed had you spared some time to actually investigate and not write propaganda disguised as an audit. 

First, let us start with the RBM’s market interventions between December 2018 to December 2020 where Deloitte auditors are querying a treasury note programme with Afrexim Bank in 2018 and 2019 and the K6.5 billion payments made to FDH Bank, so as auditors, you saw no reason of checking what was the agreement between RBM and Afrexim Bank with FDH Bank as a local custodial bank for the securities of their deal? For those in the know, there is no way RBM was going to pay FDH Bank for custodial duties as RBM was borrowing  go to the basics and check again about custodial agreements! I would not be surprised if FDH Bank tells you that they got their custodial fees from Afrexim Bank, because that is how it works, yet people at Deloitte did not see this, or deliberately ignored it, at least you should have asked!

Then there is ‘a suspicious payment’ of MK4.1 billion to Pensions and Gratuity Account without an approved funding instruction from the government and Deloitte people say this is connected to FDH Bank, how? Did you check if this money is indeed in the account of the Bank? Who administers the Pensions and Gratuity Account? Did you talk to them to get the answers? Is there any contract between RBM and FDH Bank on this? Come on Deloitte!

Now there is the issue of the disbursement of US$769 million for market interventions which Delloitte says was ‘disproportionately channeled through FDH Bank inconsistent with its size’.

Now now now, all this money was for all the banks in the country to buy and it did not bother Deloitte to check how much other banks bought this money and you present it here as if this whole amount was for FDH Bank, come on!

Then there is a funny (meaning hilarious) one about the so-called MK4.3 billion being transferred to the Chief Elections Officer account held at FDH Bank on the eve of the elections. Ha ha ha ha! We all know that government was broke that time and RBM transferred the money to MEC through this account (whoever named it the Chief Elections Officer-account) for the administration of the elections which went on well save for some 15 monitors for the Democratic Progressive Party (DPP) and United Democratic Front (UDF) alliance who are missing and are yet to be found! So, is the issue that the money was transferred to an account which is being held at FDH Bank or the money was stolen by the Malawi Electoral Commission (MEC) Chief Elections Officer? What if this account was held at another bank, say Standard Bank?

I can go on and on, but while we are all happy with this audit report, I think the auditors, Deloitte would have done a good job but believe you me, some of these findings will not stand in a court of law, facts!

Disclaimer: The views expressed in the article are those the author not necessarily of The Maravi Post or Editor

Malawi

CDEDI pens auditing firm Deloitte on political-motivated Malawi central bank audit leakage

Maravi Post Reporter
Namiwa on the right

By Taonga Sesani

LILONGWE-(MaraviPost)-The country’s human rights group, Centre for Democracy Economic Development (CDEDI) has penned Deloitte expressing worry over the leakage of bits and pieces of audit which the firm is undertaking at the Reserve Bank of Malawi.

A statement by CDEDI in our possession indicates that there was a change of their firms audit reference focal point from the suspended chief internal audit to RBM governor and the Firm did not question.

The rights lobby group has also observed that the governor is a political apointee and the change of the audit puts the whole process in question.

In the statement the Executive director Sylvester Namiwa has further asked Delloitte to advise the central bank to publish a public statement to either explain or disassociate it self from such unethical and unprofessional conduct.

However CDEDI has given the auditing firm seven working days to hear their part on the issue raised.

Below is CDEDI letter to Deloitte:

RE: LEAKAGE OF INFORMATION ON FORENSIC AUDIT AT THE RBM  

The Centre for Democracy and Economic Development Initiatives (CDEDI) writes you, sir, to bring to your attention the conduct of your client, the Reserve Bank of Malawi (RBM) in the way the information in the ongoing forensic audit is being managed.

Right at the onset CDEDI would like to bring to your attention that the Reserve Bank of Malawi is a public institution established by the 1989 Act. Secondly, it is worth mentioning that the RBM, just like any other bank is a corporate body with integrity to protect.

Similarly, we at CDEDI believe that Deloitte is a reputable firm that strives to adhere to high ethical standards in all its undertakings without being seen to be embroiled in partisan political interests.

It is against this background that CDEDI writes your good office to inform you that we are extremely worried, on behalf of all well-meaning Malawians with the leakage of the bits and pieces of the audit your firm is conducting at the RBM, before the final report has even been released.

Equally, we are saddened to note that as a reputable firm you have not even raised a query when your audit reference focal point was changed from the suspended Chief Internal Auditor to the RBM Governor. This alludes to interference on the part of the audit and puts the whole process into question as the Governor is a political appointee.  

CDEDI would like to refer your firm to an incident which happened at the KPMG in South Africa where the auditors’ reputation was shamefully soiled due to similar unprofessional conduct. It is very clear that the audit information is being leaked purposefully in order to victimise people from one region and tribe for political gains.

It is our expectation and that of many Malawians of good will that Deliotte would not like to be dragged into disrepute due to the current developments taking place at the RBM. It is against this background that we challenge your good office to advise the central bank to publish a public statement to either explain or disassociate itself from such unethical and unprofessional conduct.  

CDEDI is looking forward to hearing from you in the next seven days on the issues that have been raised in this letter. You may also wish to know that this matter at hand has attracted huge public interest and anxiety, and that Malawians are waiting with baited breath on how your office is going to manage this situation.

Yours Faithfully,  

Sylvester Namiwa

EXECUTIVE DIRECTOR

Malawi

Malawi loosing US$900 million annually on illegal forex externalization; central bank launches Tip-Offs Anonymous 

Ausborn Banda

RBM

LILONGWE-(MaraviPost)- The Reserve Bank of Malawi (RBM) on Tuesday, disclosed that about US900 million (MK725 billion ) is being lost yearly through illegal forex externalization.

The central bank Governor Dr. Dalitso Kabambe attributed the financial fraud to politicians’ involvement.

Kabambe disclosed that they are the masters of dubious payments, hence the need for intensification against the vice in the country.

The Governor was addressing the guests in Lilongwe, on Tuesday during the launch of a Tip-Offs Anonymous System.

Dr. Kabambe said the System is established to fight corruption in the commercial bank sector.

The RBM has partnered with Deloitte, the Anti-Corruption Bureau, and the Financial Intelligence Authority. It is to fight fraud and corruption among workers of the banks.

The Governor stressed the need to seal all loopholes to ensure that Malawi does not witness another Cash-gate saga, which devastated the economy.

He observed that the cheques that were used in Cash-gate were RBM (Government) cheques hence there is the need for the Bank to take steps to ensure that pilferage of any Government resources never happens again.

Dr. Kabambe disclosed that the central bank is working on introducing an SMS alert system that will notify all stakeholders, including the Governor, the Finance Minister, the Secretary to the Treasury, line ministers, and other officials to help them trace dubious transactions and to stop them.

“The recent study the central bank carried, found that in 2016 alone, the Malawi Government lost about MK725 billion through illegal forex externalization, which is a big loss to Malawi. We are coming from a dark period of Cash-gate, and it was the worst. It was a tragedy for this nation and Cash-gate has taken this nation backwards, when all other countries in the region and beyond are progressing. As the country is progressing, we need to seal all the loopholes,” the Governor said.

“There are no politicians in the Reserve Bank of Malawi, we are all professionals and what we are saying is that we have to do our work with integrity. If we do that, there is no way we would allow any dubious transactions to take place; either perpetrated by a politician, a business person or any person. They will never use RBM workers for such deals,” Kabambe said.

Implementers of the Tip-Offs Anonymous System, Deloitte, emphasized the need to engage external partners in such initiatives and said that some people would not be comfortable to report fraud to in-house structures.

ACB Director-General, Lucas Kondowe, lauded RBM for the initiative, observed that people have often blamed the Bureau when incidents occur, however said that the fight against corruption cannot be won by the ACB alone.