Maravi

Ministry of Foreign affairs fails to account for K3.6bn

Ministry of Foreign affairs fails to account for K3.6bn
By Chibaula Silwamba
Tuesday February 19, 2008 [03:00]

THE Ministry of Foreign Affairs recorded financial irregularities totaling about K3.6 billion, most of which was abused by missions abroad. And the Auditor General’s report has revealed that the National Assembly contracted a company to install a digital security system without following tender procedure.

Auditor General Anna Chifungula’s report for the financial year ended December 31, 2006, indicated that the Ministry of Foreign Affair’s financial irregularities included about K1 billion unsupported payments, K795 million unretired imprest, K238 million unaccounted for stores, K959.7 overpayment and about K100 million was misapplied.

According to officials from the Auditor General’s office, misappropriation of funds refers to the theft or use of public funds for personal gain while, misapplication is use of funds on unintended projects and unretired imprest is when someone fails to submit receipts after using the money.

The Auditor General’s report stated that during the period under review, the Ministry of Foreign Affairs purchased a fridge, a microwave oven and an electric stove at a total cost of about K13.6 million for the deputy minister’s official residence.

“It was observed, however, that the former deputy minister went away with the items. In this regard, the ministry wrote to the former deputy minister on the matter, who in turn paid an amount of K5,000,000 in August 2007 towards the cost of the items leaving a balance of K8,690,000,” read the report. “There were no receipts and disposal details in respect of store items costing K75,383,500 procured during the period under review contrary to public stores.”

The report further stated that imprest totalling about K615.5 million involving 115 transactions had not been retired as of March 2007 contrary to Financial Regulation number 96(1).

“An amount of K5 million paid to an officer in December 2005 had not been recovered as of August 2007 and the officer had since been dismissed from the civil service and his terminal benefits were paid in full,” the report stated.

“Fourteen cheques in respect of third party payments amounting to K284,438,642 prepared during the period under review had not been collected by the recipient institutions as of November 2007.”

The report also named most embassies and High Commissions for failing to account for public funds and other resources.

At the Zambian mission in Lubumbashi in Democratic Republic of Congo (DRC), the report revealed that due to constant power failures in the area where the residence for the consular general is situated, the mission in February 2007 requested for authority to purchase a 5.5KVA diesel electricity generator which was granted.

“In this regard an amount of US $2,606 (K8,790,058) was paid to a local supplier and the generator was delivered. A physical inspection of the generator and an inquiry made in March 2007 into its effectiveness revealed that it was inadequate in that it could not generate enough power. The decision of the mission to buy the 5.5KVA generator amounted to wasteful expenditure,” the report noted. “The mission had a locally engaged staff establishment of 11.

A review of records and a physical count of locally engaged staff, however, revealed that the mission had employed 19 local staff, eight over the approved establishment without authority. In this regard, the mission incurred unauthorised expenditure of US $24,410 (K113,716,679) in respect of the eight local staff irregularly engaged.”

The report further stated that US $33,265 (K154,968,674) was recovered from 23 mission staff during the period from January 2005 to March 2007 but documentary evidence was produced to show that the money was either receipted or banked.

“Although the mission accountant explained that the cash recovered from salary advances was used at source, no expenditure details were made available for audit. In addition, it is not clear why advances were recovered in cash when this could be done at computation,” the report stated.

“The mission has seven properties comprising the chancery, the residence and five other houses. However, title deeds were not made available for audit scrutiny. It was further observed that the properties had not been insured as of March 2007 contrary to Foreign Service Regulation number 99.”

The report stated that a physical inspection of the properties carried out in April 2007 revealed that with the exception of a house at 25, Biayi Avenue, the properties were in a general state of disrepair and needed attention.

“In this regard, the third secretary – accounts who was occupying the house at 1332, Kapenda Avenue abandoned the house in November 2005. As of April 2007, the house had not been rehabilitated and the Mission had spent amounts totalling US $27,000 (K125,782,480) in rentals for the officer,” the report stated.

In Kinshasa, during the period January 2005 to February 2007 a total amount of US $15,771 (K73,470,944) was collected as revenue out of which US $1,004 (K4,677,245) was utilised by the mission without treasury authority contrary to established procedures.

“In November 2004, the mission entered into a one year lease agreement for the rent of a house for the Consular for which a security deposit of US $10,500 (K48,915,409) was paid.

It was however observed that when the Consular vacated the house in October 2006, the Mission did not recover the security deposit. As of April 2007, the security deposit had not been recovered,” the report stated.

“It was observed that the Chancery building is located in the town centre along a street leading to the centre market thereby making the offices very unsecured in times of civil unrest. It was further noted that the street also experiences flooding during the rainy season.”

The report also disclosed that in August 2005, the mission in Lilongwe (Malawi) decided to construct a wall fence around the Chancery in order to enhance security.

“The initial plan was to construct a solid wall fence around the Chancery. In this regard, a design of a solid wall fence was made and a bill of quantities totaling Malawi Kwacha MK2,565,407.50 (K89,789,2450) was prepared based on this design. When the mission sought for permission from the Lilongwe City Assembly to build the fence, the Assembly did not approve the design,” the report stated.

“Consequently, the design was changed to a palisade type. It was observed that instead of preparing a new bill of quantities for the palisade fence, the contractor used the bill of quantities for the solid wall type and included an additional cost for steel works without a corresponding reduction on the cost of the brickwork.

This increased the cost of the steel works from the initial MK98,027.50 (K2,940,825) to MK1, 111,256.05 (K33,337,681.50) but did not reduce the cost of the brick work pegged at MK877, 975.00 (K26,33,9,250). It is evident from the above that the Mission did not exercise due care and diligence to ensure that the works were properly costed prior to awarding the contract.”

The report revealed that in October 2003, the mission engaged a contractor to rehabilitate the roof of the Ambassador’s official residence at a contract price of US $19,945.98 (K89,7546,910) for a duration of sixty (60) days from the date of commencement.

“It was however observed that the Mission paid the contractor amounts totaling US $27,709.84 (K124,694,280) resulting in an overpayment of US $7,764.86 (K34,941,870),” the report revealed. “A physical inspection of the residence carried out in October 2006 revealed that the ceiling boards were falling out of place.”

The report further stated that the Kabula Hill House in Blantyre was dilapidated because it had not been maintained for a long time.

“This state of affairs resulted in the house fetching as little as MK14,850 (K396,000) in monthly rentals in an area where houses fetch as much as MK228,000 (K6,000,000) per month resulting in government losing revenue,” the report stated.

The report disclosed that the Mission in London (UK) had irregularly paid the High Commissioner and the first secretary- protocol amounts totaling US $20,493.81 (K72, 529,953) as air time allowances.

“It was however observed that the High Commissioner was paid US $11,826.87 (K40,985,095) in excess of his entitlement while the First Secretary Protocol, who was not entitled was paid US $7,466.94 (K27,189,146),” the report stated.

“The mission engaged 16 local staff against an approved establishment of 11 resulting in an excess of five staff contrary to Foreign Service Regulations and condition of service for 2004. In this regard an excess of Pound 89,808 (K608, 032,333) was paid as personal emoluments in 2006.”

The report further stated that the mission had outstanding bills totaling
£316,868.31 (K2,471,572,818) out of which £276,379.85 (K2,155,762,830) was paid leaving a balance of £40,488.46 (K315,809,988) outstanding.

“A total amount of US $190,368.83 (K694,601,764) was paid as rentals between January and December 2006 exceeding the Mission staff entitlements by US $38,218.92 (K133,766,220). As of October 2007, only US $1,000 had been recovered leaving a balance of US $37,218.92 (K130,266,220),” the report stated.

“Contrary to the terms and conditions of service which stipulate that an officer shall not obtain an advance while one is running, five officers were paid subsequent advances in amounts totalling £65,981.15 (K527,633,043) while previous advances were still outstanding.”

The report stated that in 2006 the mission engaged a contractor to rehabilitate the Chancery building at the contract price of £225,690 (K1,309,938,614).

“It was however observed that no formal (written) contract was entered into with the contractor,” it stated.

The report revealed that the mission owns four properties namely 2 Palace Gate, Kensington W8 5NG, 17 Courtenay Avenue, Highgate N6, 13 Fostcote, Hendon NW4 and 12 Chelmsford, Wilesden Green but they were developing cracks and required urgent rehabilitation.

The report also disclosed that the mission in Egypt delayed to bank revenue collections totalling about K5 million ranging from five to 16 days.

“A total amount of US $15,271 (K53,295,790) involving six transactions was paid to five officers as salary advances during the period from June 1989 to August 2000 but had not been recovered as of February 2007 contrary to the terms and conditions of Service of the Civil Service,” the report.

“There were no receipt and disposal details in respect of stores items costing US$7,690 (K26,838,100) procured during the financial year ended 31 December 2005. Although in her response dated 19th November 2007, the Controlling Officer stated that the items were eventually recorded as required, no documentary evidence was provided.”

The report indicated that according to Foreign Service Regulations and Conditions of Service for 2004, in the absence of an official residence, the Mission was obliged to pay for the Ambassador’s rentals up to US $4,000 (K13,960,000) per month.

“However, contrary to the regulations, the Mission paid up to US $4,650 (K16,228,500) for the Ambassador’s accommodation for the period from January 2004 to August 2006.

Consequently, an amount of US $132,900 (K463,821,000) was paid resulting in an overpayment of US $16,900 (K58,981,000),” the report stated.

“In August 2005 the mission entered into a lease agreement for the rental of House No. 188, El Nile Street, Agouza, Giza, sixth floor, Second Apartment as the Ambassador’s residence at the monthly rental of US $4,500 (K15,705,000).

According to the agreement, the house was to be ready for occupation by 1st September 2005 after renovations.

In this regard, an amount of US $9,000 (K31,410,000) was paid to the landlord on 16th August 2005 (being one month rental deposit and one month security deposit). It was, however, observed that on 1st September 2005 the house was not ready for occupation.

Consequently, the lease was terminated and the mission claimed a refund of US $9,000 (K31,410,000). As of February 2007, the mission had not obtained the refund from the landlord.”

The report revealed that during the period from May 2002 and May 2004, the mission leased out part of the Chancery to eight tenants at an average rent of US $1,270 (K5,715,000).

“A review of the lease agreements and receipts revealed that although the tenants were still occupying the premises, the tenancy agreements had expired and had not been renewed.

It was also noted that as of December 2006, three tenants had rent arrears totaling US $5,935 (K26, 707,500),” the audit report stated. “In May 2002, the mission sold two motor vehicles, a Leyland truck and a Mercedes Benz Car at a total of US $18,000 (K81 million). In this regard an amount of US $14,250 (K64,125,000) was received from the buyer between May 2002 and December 2005 leaving a balance of US $3,750 (K16,875,000).

However, as of October 2006, the balance had not been received.”
It stated that there were no receipt and disposal details in respect of stores items costing US$4,781 (K21, 514,500) procured during the period from February to August
2005.

It further stated that the mission had employed 22 local staff as a result, the mission irregularly paid wages amounting to US$ 11,225.25 (K50, 980,278) between January and December 2005 on the extra seven staff engaged without authority.

The audit report also stated that at the embassy in Moscow (Russia) about K4.3 million were transferred in June 2005 from the revenue account to the operations account without Treasury authority.

“As of July 2007, the revenue had not been reimbursed,” the report noted. “Contrary to Financial Regulation No.128, visa fee collections totaling US$4,515 (K18, 511,500) for the period from November 2006 to June 2007 though banked were not entered in the general revenue cashbook.”

The report further stated that a cash count carried out on June 29, 2007, revealed a cash shortage of K15,407,800 (US$3,758).

“Further enquiries revealed that the money had been irregularly paid to the children of a senior government official who were stranded in Russia. As of July 2007, the money had not been reimbursed,” it stated.

“Contrary to Financial Regulation No. 45(1), cash payments totaling US$498,860 (K2, 045,326,000), were not vouched in that accounts Form two: wages payment voucher, accounts Form five: general payment voucher and accounting form 44: claim and payment voucher were not used.”

The report observed that the Mission had stopped preparing and sending monthly returns to the ministry of foreign affairs headquarters since January 2006.

“Out of the total payments of US$498,860 (K2,045,326,000) made during the period under review only a total of US$219,671.08 (K900,651,428) was supported by expenditure receipts leaving a balance of US$279,188.92
(K1,144,674,572) unaccounted for,” it revealed.

“Between February and September 2006 the Mission irregularly paid $4,228.54 (K14,691,083) for graduation parties for government sponsored students who were graduating from Universities. There were no receipt and disposal details in respect of stores items and fuel costing K59,468,315 (US$ 16,923) purchased during the period.”

It noted that the inventory for the Chancery and the Ambassador’s residence had not been updated since October 1999 as such furniture purchased in the last seven years had not been recorded making it not possible to account for the furniture.

“Imprest in amounts totaling US $7,600 (K25,371,100) issued to various officers had not been retired as of July 2007,” it stated.

Records at the mission in Addis-Ababa in Ethiopia indicated that in 1965 and 1971 the embassy procured a chancery situated at Nifas Silk Ketema, Woreda 23 Kebale 12 and the Ambassador’s residence Nifas silk Lafto woreda 23 Kebele 10 at costs of US$3,400 (K15,300,000) and US$13,428.71 (K60,430,500) respectively.

“However, as of February 2007 the titles of the two properties had not passed to the Zambian government.

In June 2006, the Mission was allocated 2,000 square metres of land situated at Bole Sub City Worda 17 Kebele 23 for which title was issued,” the report observed. “The plot was to be developed within 18 months effective June 2006.

However, as of February 2007 no development had taken place and the mission risks forfeiting the plot.”

The report further indicated that a about K11.9 million was paid to 15 officers as salary advances for the period from June 1989 to June 2003 but had not been recovered as of September 2007.

“Imprest in amounts totaling K29,079,690 involving six transactions issued to four (4) officers during the period from 1997 to 2004 had not been retired as of September 2007,” the report stated.

Labels: 2008 BUDGET, ANNA CHIFUNGULA, AUDITOR GENERAL, MINISTRY OF FOREIGN AFFAIRS

posted by MrK @ 4:28 AM