Millions of rand seeped out of Malawi’s public health system last year through fraud, payroll manipulation and unauthorised payments, a leaked report from the office of Malawi’s Auditor-General indicates.

The losses form part of audit queries to the tune of MK4-billion (R80-million) highlighted by the report.

According to the World Health Organisation, Malawi’s health indicators are among the worst in the world, with a high HIV/Aids prevalence and widespread malnutrition.

Global Finance magazine ranks Malawi as the world’s sixth poorest country, with a per capita GDP of $1,139 a year.

According to Auditor-General Stephenson Kamphasa, the audit – signed in May 2017 – only covers about 68% of government accounts, as many ministries and departments failed to submit their financial reports for audit.

Kamphasa also noted that bank reconciliations for June to December 2015 and reconciliations for draw-downs from the government’s Payment Management System against cash received at the Reserve Bank holding account were not prepared for the period under review.

The report was submitted to parliament, the finance ministry and President Peter Mutharika, but has not been released to the public.

It particularly highlights the problems with financial management in the health sector, and implicates by name several health officials it accuses of defrauding the government.

The audit queries range from unauthorised payments to suppliers to misallocation of funds, fraudulent manipulation of data and payments without supporting documents for verification.

In the health department, the following abuses are listed:

• MK399-million (R7.9-million) was paid in allowances to health officials whose names were not traceable and could not be validated because of incomplete information. The report says the names were not written in full and could not be checked against the database of government employees, adding: “We therefore concluded that these individuals were dubiously included in the programe with intent to defraud the government.”
• MK265-million (R5.3-million) was paid to people who were not bona fide civil servants for such activities as clinical review meetings, palliative care training, and TB and HIV support supervision, which normally only involve technical officials from the ministry and other implementing partners.
• MK61.5-million (R1.2-million) was paid in allowances to staff members who were not entitled to them. These included officials from the finance, administration and human resources departments, as well as secretaries, messengers and staff from other support departments. “We believe these officers were included for the sake of drawing the allowances for an assignment [in which] they never participated. [They] should be disciplined accordingly and the funds recovered,” reads the report.
• About MK75-million (R1.5-million) was paid in daily subsistence allowances to officials that were not on the approved list and most of the beneficiaries could not be traced, “indicating an element of fraud”.
• The health ministry overpaid MK6-million (R120,000) to workers as a result of data manipulation. The report says all personnel connected with this abuse “were interviewed and admitted to have received the excess amount”.

In one case, when excess money was paid to a dead man, the supervisor claimed the man’s wife was the beneficiary. However, the report adds that there was no valid evidence for the remittance and “the accountant vanished during the questioning”.

At Dowa district hospital, in central Malawi, a laundry attendant admitted to receiving extra money in his bank accounts, claiming that a data entry clerk at the health ministry headquarters in Lilongwe was responsible for making irregular changes.

The report points a finger at health officers at the Chiradzulu and Manza district hospitals in southern Malawi, where “irregularities arose around the payments of arrears … other differences [between what was and should have been paid] involved personnel from the accounts section and human resource departments responsible for processing salaries”.

At Kamuzu Central Hospital, the country’s biggest referral hospital, it says irregularities were facilitated by a supervisor in the accounts section, whom it names.

Minister of Finance Goodall Gondwe downplayed the audit findings, saying they did not necessarily mean theft of public funds but might indicate a failure by certain officers to follow procedures.

In 2014 the Malawi media splashed an Auditor-General’s report revealing that billions of kwacha had been stolen from government through dummy contracts where goods and services were provided at inflated prices – or not at all.

The Cash Gate scandal led to the suspension of direct budgetary assistance to the Malawi government by foreign aid donors who wanted the government to tighten its financial controls.

Despite the arrest and jailing of some officials, the aid ban remains in force. Another audit in 2014 revealed the loss of billions of kwacha through government mismanagement. No remedial action has been taken to date. DM

This story was produced by the amaBhungane Centre for Investigative Journalism.

Photo: Mothers with severely malnourished babies wait for medicine to be dispensed in the Nutritional Rehabilitation Unit at the Queen Elizabeth Central Hospital in Blantyre, Malawi, Friday 14 October 2005. Photo: EPA/JON HRUSA

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