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Another Admarc scandal

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The Agricultural Development and Marketing Corporation (Admarc) is in trouble again over a short cut transaction, which involved a third party, to procure maize that was not fully delivered involving over K2.8 billion.

A memorandum to the chairperson of Budget, Audit and Finance committee dated 6 September, 2017 titled Serious Anomalies on the Alliance Capital loan Audit, which we have seen, says Admarc flouted procedures and it involved itself in corruption based on corporate capture.

This has been revealed in the ongoing audit on Alliance Capital loan.

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The audit has exposed that the maize, booked in Admarc ledgers, is under the name of Pride Commodities and not Admike Import and Export where it was bought.

The audit also notes that the delivery was made somewhere else at Charteland, and not Lilongwe Depot as specified in the contract.

The audit report says only 2,609,444 kilogrammes of maize was delivered amounting to K652 million, when the total loan drawn in favour of Admike against Admarc is K2.8 billion meaning that less maize was delivered.

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“This amount was paid direct from the loan account to Admike, completely by-passing clearly laid down procedure as per loan agreement. There is no documentation in the finance department supporting the payment to Admarc. To date, Admarc has incurred MK156 million interests on the unauthorized draw down,” reads part of the on-going audit on the said loan.

It also points out that: “The transactions are unprocedural bordering on fraudulent activities. Given the third parties involved, there is also a strong element of corruption based on corporate capture.”

We have learnt that in April 2016, Admarc was borrowing money from various financial institutions in order to buy maize, to cater for the 2.8 million people projected to be affected by acute hunger.

Some financial institutions agreed to lend them the money for the purchase but on the understanding that they would use the same maize as their collateral, which would have restricted Admarc against moving the maize from one district to the other.

Admarc felt restricted because it needed to move the maize to other districts in need. For this reason, the public grain marketer approached Alliance Capital Limited which accepted to lend them K5 billion, at an interest of 33 per cent.

According to the documents we have seen, Alliance Capital paid K3.6 billion directly to Admarc (between April and July 2016), which it might have used to pay suppliers on its own.

We can reveal that out of a total amount of K5 billion which Admarc borrowed from Capital Alliance, it is supposed to repay K7 billion.

We have also learnt that Admarc was supposed to repay the whole amount at once by August 31, 2017, but it has since asked for an extension of three more weeks to clear it.

Chief Executive Officer (CEO) for Alliance Capital Limited, Christian Majavinala confirmed to have had dealings with Admarc and was quick to say he is aware of some ‘slight’ misunderstanding, claiming they are working on it with Admarc.

“Admarc will probably give you comprehensive information on the issues you are raising on Monday or Tuesday since by then they would have had reconciled their reports on this matter,” he said.

Admarc Board Chairperson James Masumbu said he is not aware of the issue and referred Malawi News to the CEO, Margret Loka Mauwa, who did not respond to our questions yesterday but requested a questionnaire.

This is not the first time the institution is sailing through troubled waters due to flouting procedures to do with maize procurement.

Last year, the institution bought 100,000 metric tonnes of maize worth K26 billion from Zambia Co-operative Federation Limited (ZCF) through a process that was fraught with a lot of irregularities.

Two commissions of inquiry, one established by President Peter Mutharika and the other being the joint agriculture and public accounts parliamentary committee, found that procedures were not followed in that deal.

Former minister of agriculture, irrigation and water development, George Chaponda, together with Director of grain trader Transglobe Produce Export, Rashid Tayub and businessperson, Grace Mijiga are facing charges over their involvement in the dubious maize purchase from Zambia.

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