Maravi

Auditor General's report reveals continued theft of public funds

Auditor General's report reveals continued theft of public funds
By Chibaula Silwamba
Tuesday February 12, 2008 [03:00]

THE latest report of the Auditor General has revealed that government has continued to lose billions of kwacha through theft and abuse of public funds. The Auditor General’s report for the financial year ended December 31, 2006, which is due to be submitted to Parliament, obtained by the Business Post, revealed abuse of public resources and the institutions mentioned in the report include ministries of home affairs, communication and transport, justice, lands, works and supply, foreign affairs (mostly embassies and high commissions), health, information and broadcasting.

Others are ministries of local government and housing, finance and national planning, youth and child development, defence, education, agriculture and cooperatives, and provincial government administrations in Luapula, Copperbelt, Southern, Central, Northern, Western, and North Western provinces, and the Zambia Revenue Authority (ZRA) and Electoral Commission of Zambia.

In the Ministry of Health, about K23.5 billion was unvouched.

“Contrary to Financial Regulations number 45 and 52, payments in amounts totaling K23, 518, 186, 103 made during 2006 were not vouched in that payment vouched were either missing (K2, 894, 371, 442) or inadequately supported (K20, 623, 814, 661),” the report revealed. “Imprests in amounts totaling K4, 411, 793, 224 involving 150 transactions issued to 82 officers during the period from March to December, 2006 had not been retired as of October 2007 contrary to Financial Regulation number 96(1).”

The report stated that about K5 billion meant for repatriation of health workers, and drugs worth about K1.8 billion were unaccounted for.

The report further revealed that there was an overpayment of about K142.9 million relating to the purchase of sodium chloride and ringers lactale from the International Drug Company in that instead of paying the invoiced amounts of about K110 million, the ministry paid about K253 million in February 2007.

“As of November 2007, the overpayments had not been explained,” the report stated. “Misapplication of funds: out of the total amount of K93, 898, 721, 400 released to cater for support to institutions (K47, 455, 506, 155), drug (K30, 049, 060, 065) and recruitment (K16, 394, 155, 180), a test check revealed that amounts totaling K28, 045, 057, 755 were misapplied on unrelated activities such as fuel, air fares, staff retirement benefits, stationary, training, workshops and seminars, payment of salaries and housing allowances among others.”

The report further revealed that the ministry purchased goods and services worth about K28. 6 billion made without following tender procedures.

In the Ministry of Justice, the audit report revealed that K142.7 million was purportedly paid to Constitutional Review Commission (CRC) commissioners in sitting allowances were not acquitted.

It further revealed that K91.7 million were irregularly paid as sitting allowances.

“There were no receipt and disposal details in respect of stores items costing K348, 561, 767 purchased during the period under review. In May 2004, CRC paid researchers advances amounting to K20 million to be recovered from their dues.

As of October 2006, amounts totaling K18 million had been recovered leaving a balance of K2 million still outstanding from one of the researchers,” the report stated. “An HP laptop, serial number HUB351036X valued at K7 million was reported missing at the secretariat.

However, as of July 2006, no loss reported had been processed contrary to financial regulation number 172.” The report revealed that out of K260 million paid to nine provincial permanent secretaries as imprest in August 2005 for distribution of draft constitution, K97.6 million had not been retired as of December 2007.

In the Ministry of Works and Supply, there were payments totaling about K9.4 billion made between January and December 2006 involving 294 transactions that were unvouched because they were either missing supporting documents (about K1billion) or inadequately supported (about K8 billion) contrary to Financial Regulation number 45.

“Imprest in amounts totaling K910, 545, 454 issued to 61 officers involving 102 transactions had not been retired as of August 2007 contrary to Financial Regulation number 96(1).

During the year under review, fuel costing K972, 478, 723 involving 46 transactions purchased from various filling stations were not reconciled with invoices and statements from suppliers.

In this regard, it was not possible to ascertain how the fuel was accounted for,” the report stated. “Amounts totaling K1, 026, 260, 484 involving 22 transactions were transferred from Recurrent Department Charges account to salaries account to meet payments related to personal emoluments such as terminal benefits. As August 2007, the RDCs account had not been reimbursed.”

It further revealed that the ministry did not remit about K667.9 million to the Zambia Revenue Authority (ZRA) as taxes which was deducted from officers’ commutation of leave days, long service bonuses and retirement benefits.

“Amounts totalling K3, 694, 341, 660 paid as salary (K30, 390, 830) and loans (K3, 663, 950, 830) to various officers in the ministry could not be verified as recovered as there were no salary advance registers, loan registers, ledges and below the line abstracts,” it stated.

The report stated that between January and December 2006, there were unexplained adjustment on the Ministry of Works and Supply’s bank reconciliation statements totalling about K3 billion.

“As at 28th December 2007, the adjustment had not been explained,” the report stated. “On 4th September 2006, an amount of K24, 293, 913 was transferred to a beneficiary, public administration, whose account was maintained at Barclays Bank Plc Hanover Square 200575, London , UK .

However, there were no supporting documents to show the nature of services rendered by public administration to the Zambian government. As at 28th December 2007, the adjustment had not been explained,” the report revealed.

“On 6th November 2006, the ministry paid an amount of K74, 496, 871 Zambia National Commercial Bank to clear outstanding bank charges accumulated from 2003 to 2006. Enquiries from the bank revealed that the funds were credited to various beneficiaries’ accounts.

The rationale of raising a cheque to clear bank charges instead of the bank debiting the account directly is questionable. The bank reconciliation for October 2006, included an amount of K430 million as ‘other income’ whose source was not explained.”

Under the HIPC account in the Ministry of Works and Supply, between January and November 2004, there were bank transfers totalling K1.9 billion that could not be authenticated as at December 28, 2007.

“The transfers included amounts totalling K1, 029, 584, 554 made to four beneficiaries whose details were not disclosed by the Ministry of Works and Supply,” the report stated. “According to the bank statements, in June 2004 and June 2006, two transfers amounting to K360 million (2004 – K180 million and 2006 – K180 million) were made to a provincial administrator.

It was however not clear who this provincial administrator was and as to what goods were supplied or services rendered to the Ministry of Works and Supply. As of 28th December, 2007, no explanation had been provided on the nature of this transaction.”

Under RDC bank account, between January and December 2006, there were unexplained adjustments on the bank reconciliation statements totaling about K1.3 billion.

“As at 28th December, 2007, the adjustment had not been explained,” it stated. “Between March and October 2006, there were unexplained adjustments on the bank reconciliation statements on Control 64 at the BanK of Zambia amounting to K254, 354, 291. As at 28th December 2007, the adjustment had not been explained.”

In the Ministry of Information and Broadcasting Service, imprest totalling K77 million issued to various officers had not been retired as at December 2007.

“It was further observed that the above transactions were not entered in the imprest register contrary to Financial Regulation number 93,” the report stated. The report further stated that after the contract given to the Cable and Satellite Technologies Limited (CASAT) to install transmitters in 17 rural districts was terminated, the Zambia National Broadcasting Corporation (ZNBC) was given the task to implement the project.

However, the report stated that there was poor record keeping hence it was impossible to verify the receipt and disposal of equipment costing about K1.7 billion.

“ZNBC awarded a contract for the supply of 21x19” 18U steel racks for the rural TV project phase two at a contract price of K40, 158, 563 to a local company. It was however observed that the company was owned by the principal engineer in charge of planning and development at ZNBC. In addition, it was also observed that the principal engineer had not declared interest at the time of tendering,” the report revealed.

The report further stated that in September 2006, the ministry paid about K300 million to a company to supply 40 digital cameras (about K235 million) and 40 card readers and 40 memory cards for about K67 million.

“It was however observed that the memory cards were not compatible with the cameras and therefore could not be used. In this regard, the amount of K67, 264, 000 used to buy 40 memory cards was wasteful,” the report revealed. “In December 2005, the ministry paid K33, 570, 450 for the installation of a local area network and wireless internet link.

It was however observed that the company failed to fulfill its contractual obligations. In this regard, another company was engaged to carry out the same works at a cost of K35, 035, 705 and was paid the whole amount in August 2006. Therefore the amount of K33, 570, 450 paid to the earlier company was wasteful.”

In the Ministry of Defence, the report stated that in December 2005, the ministry drew about K577.7 million to pay housing allowances to classified daily employees based in various units of the Zambia Army, Zambia Air Force (ZAF) and Zambia National Service (ZNS).

“However, only K377, 700, 000 was supported by acquittal sheets leaving a balance of K200 million unaccounted for,” the report stated. “Contrary to the provisions of the Cabinet Office circular number B4 of 2003, amounts totalling K42, 950, 000 were irregularly paid to various officers who were not eligible for the allowance.

There were imprests in amounts totalling K1, 413, 859, 919 issued to various officers during the period under review that had not retired as of May 2007.”

The report revealed there were no receipt and disposal details in respect of stores items costing about K144 million.

“A comparison of the prices quoted for the Ministry of Defence on which the payments were based with market prices used by the same suppliers for the same goods revealed that prices for goods bought by the ministry were overstated by K54, 534, 987,” the report revealed. “In

December 2004, the ministry engaged an international company to supply and install four Reinke Centre Pivot System at a contract price of K3, 073, 600, 588 and the company was paid in full. It was however observed that two pumps costing K167, 745, 335 had not been delivered as of May 2007.”

In the Ministry of Home Affairs’ prisons and reformatories, the report indicated that mealie meal costing about K7.2 million supplied to Lusaka Central Prison in March and December 2006 was not accounted for.

“During the period from March 2005 to April 2006, various food stuffs valued at K106, 515, 000 issued to Mwembeshi Open Air Prison and

Lusaka Remand Prison could not be accounted for,” it stated. “Imprest in amounts totalling K59, 031, 930 involving 15 transactions issued to various officers during the period under review had not been retired as of August 2007 contrary to Financial Regulation number 96.”

In the Ministry of Sport, Youth and Child Development, the report revealed that about K586 million payments made between 2005 and 2006 that were not vouched.

“Imprest in amounts totalling K156, 546, 936 issued to various officers during the period under review had not been retired as of February 2007,” the audit report stated. “The ministry disbursed grants to various institutions under its charge amounts to K3, 660, 252, 983 and funds for rehabilitation works amounting to K846, 201, 122 between 2005 and 2006.

However, expenditure returns for K2 , 165, 392, 492 were not submitted to the ministry making it not possible to ascertain whether the funds were utilised for the intended purpose.”

On the part of ZRA, the report indicated that a contractor based in Ndola had incurred tax liabilities of over K200 million and the money had remained outstanding contrary to the time to pay agreement.

“As at 31st December, 2006, amounts totaling K314, 509, 094 were not paid by Amchile Import and Export, an oil marketing company. Although a warrant of distress was served on the company to recover the money, as of August 2007, the money had not been recovered.

In his response, the commissioner general of ZRA stated that a warrant of distress had been served on the firm to recover the outstanding amount but the company did not have sufficient distrainable assets. It was however not clear on which assets the warranty was served,” the report stated.

In Ministry of Agriculture, about K80 million was unaccounted for out of the K280 which was collected from issuance of import and export permits.

Under the Road Transport and Safety Agency (RTSA), about K350 million was unaccounted for at Ridgeway office in Lusaka and about K340 million was unaccounted for in Ndola while K58 million was unaccounted for in Kitwe .

“Livingstone main office: A review of revenue records at the station revealed that an amount of K32, 940, 600 was stolen on 15th December, 2006. Although the theft was reported to the police, no recoveries of the money had been instituted as of April 2007,” the report stated. “At Kazungula border post, a total of K5, 310, 816 collected between May and December 2006 in respect of toll fees was not accounted for.”

The report further disclosed internal audit reports from RTSA revealed that revenue totalling about K30 million collected as toll fees at four stations was misappropriated.

In the Ministry of Home Affairs, about K300 million collected at various police stations was not accounted for and about K83.6 million collected from six immigration stations could not be accounted for.

The report revealed that about K156.6 million collected at four passport offices was not accounted for.

Labels: AUDITOR GENERAL, CORRUPTION

posted by MrK @ 3:53 PM