Introduction
The
Malawi Electoral Commission wishes to clarify issues that were grossly
misrepresented in a newspaper article, “Audit Reveals Abuse at MEC” which appeared
in the Weekend Nation of June 20, 2015.
The
article, based on a draft report leaked from the National Audit Office, claimed
that a total of 55 audit queries totaling roughly K1 billion were unaccounted
for the period 2008 to 2012 thereby raising fears that the money might have
been abused.
The
current Commission would like to state categorically that it is not answerable
for issues arising from management of the 2009 elections. The current
Commissioners were appointed on May 19, 2012 with the Chairman joining them on
9th October,
2012.
However,
since the institution has perpetual succession, the secretariat remains
responsible and would like to give an explanation on the issues that were
misrepresented in the newspaper article and also inform the public about
measures that have been in place to ensure financial prudence. 2
Reconciling old financial records
When the current Commissioners were appointed, MEC had just
gone through two audits. The first one was by PriceWaterHouseCoopers (PWC) in
2010 that showed K1, 585,033,030.02 was not accounted for.
Following these revelations, Government shut down the MEC and
instituted a forensic audit from December 2010 to April 2011 in order to come
to the bottom of the unaccounted for funds. The audit was carried out by KPMG.
The forensic audit managed to reconcile about K1.1 billion of
the K1.5 billion mentioned in the earlier audit report.
The remaining K467 million could not be reconciled because
the auditors were unable to access relevant supporting documents. The documents
could not be made available to the auditors because they had been mishandled by
agents of the state namely the Anti-Corruption Bureau and the Fiscal Police
when they were investigating reports of suspected fraud on MEC finance staff in
2009. The documents could hence not be traced. The members of staff who were
arraigned were discharged by the competent court of law.
When this Commission was appointed, it directed the internal
audit department of the Commission to carry out further reconciliations of the
amount unaccounted for in the forensic audit. The Internal Audit Department
managed to authenticate a further K106 million of the K467 million previously
stated as unaccounted for. This was a major exercise and it could not continue as
the Commission had now started activities leading to the 2014 tripartite
elections. 3
The Commission is of the view that
the audit issues are not an issue of fraud but just unavailability of
accounting records due to reasons already stated.
The very same reasons that documents could not be found
because they were mishandled are the same why it was not possible to present
them to the NAO auditors.
Issues that are being raised in the report and subsequently
in the news article were responded to. The documentation and explanations
supporting transactions that are alleged to be missing were provided. To that
effect there shouldn’t be an issue raising allegations of financial
mismanagement at the Commission.
Improving financial management
With the experience MEC had been through, the current
Commission embarked on initiatives to strengthen internal financial controls
and corporate governance and so far it has managed to:
o Set up an internal audit department
headed by a director with five full time staff.
o Set up an Audit Committee headed by a
Commissioner to which the Internal Audit Department reports.
o Initiate audits by private firms. Apart from audits by
the National Audit Office, the Commission is audited by a private firm,
Deloitte. It is anticipated that in December Deloitte will be conducting audit
for 2014/2015 financial year. The purpose is that queries arising should be
answerable by the responsible persons.
4
Travel allowances for Commissioners
and staff for trips not undertaken in June 2012
When Commissioners were appointed they were supposed to go on
study visits to Kenya and South Africa accompanied by staff. The trips were
cancelled due to other circumstances after allowances had already been paid. It
was arranged that when the trips would be rescheduled the Commissioners and
staff would use the same allowances and only get a difference if need be. The
trips were rescheduled and Commissioner Dr Bernard Malango and Ms Nkovole who
were supposed to go to Kenya went to Zambia from 7 to 13 April, 2013. Also in
the team to Zambia were Commissioners Dr Wellington Nakanga, Commissioner Mrs
Nancy Tembo, former Commissioner Dr Bertha Simwaka and Mr Harris Potani.
Commissioner Mrs Elvey Mtafu who was supposed to travel to South Africa took
the trip from 24 to 30th September 2012 to the same country.
This was explained to the auditors and it was dropped in subsequent draft audit
report that National Audit Office provided to MEC.
There is also an allegation that other Commissioners and
staff did not provide their passports for verification during the exercise.
This is not true as the passports were provided. This issue was also dropped
after the explanation.
On failure to account for nomination fees
For the 2009 the nomination fees were received at council
level. It happened that some councils did not bring all the documentation when
remitting their reports to the Commission. The auditors from the National Audit
Office (NAO) were 5
given all the resources to go and
verify in the councils and up to date MEC is waiting for their report on what
they found out.
As a matter of fact, the analysis of the nomination fees from
the districts, assumed that all nomination fees were paid at the districts.
However, candidates for the DPP were paid for by Bineth Trust as a lump sum and
their nomination fees could not therefore have come from the districts.
Related to this, the auditors also raised an issue on the
refund of K19.1 million which MEC gave to Bineth Trust for the candidates who
competed on the ticket of the Democratic Progressive Party (DPP). MEC clarified
to them that the party paid K19.2 million for all its candidates through the
Trust and that is why a refund for the candidates who qualified had to be made
to the Trust.
Postponement of by-elections
The Commission would also like to clarify that the Local
Government By-elections were not postponed because funding was exhausted but
that we had not received funding for the by-elections. Funds for by-elections
are requested separately.
Conclusion and advice
The Commission appreciates the role played by the media in
promoting transparency and accountability but at the same time it expects the
media and other professionals to be responsible. Issues raised in a preliminary
audit report are not for public consumption until the final report, which is a
public document, is out. This was explained to the author that the allegations
being raised in the 6
report were clarified and dropped in
subsequent reports therefore publishing them now could send false information
to the public. The Commission also expects auditors to conduct themselves in a
manner that does not erode the confidence clients have in them.
The Commission is assuring all stakeholders that it is
committed to financial diligence and further urges those who might wish to seek
clarification to contact the undersigned on ceo@mec.org.mw.
Dated at Blantyre this 25th day
of June, 2015.
Willie Kalonga
Chief Elections Officer
