Audit exposes rot at neef
Newly rebranded government- owned microfinance facility National Economic Empowerment Fund (NEEF), formerly Malawi Enterprise Development Fund (MEDF), has been thrown into turmoil after an independent audit probe which Secretary to the Treasury commissioned in July 2020 has exposed gross abuse of funds.
The audit report by Central Internal Audit Unit has unraveled shocking levels of fraud and gross abuse of loans meant for youths and women by highlighting that millions were disbursed to ghost beneficiaries, loans for groups ended in individual bank accounts and senior management connived with business persons.
The audit report, which The Daily Times has seen, shows that, out of K8 billion which the auditors sampled, K543,675,000—representing 30 percent—was not used for the intended purpose and K45, 335, 000 was disbursed to beneficiaries more than once.
There also uncovered the issue of over disbursement of K22, 875, 000.
The audit report also shows that K64 million was disbursed to beneficiaries who could not be traced by the audit team and MEDF officers while a total of K450 million was misallocated from the bank account of women and youth loan to the bank account of the government payroll loan.
The audit report further exposes that K2.5 million that was meant to be disbursed to groups ended up in the pockets of individuals who claimed to be intermediaries between MEDF and the intended beneficiaries while K7, 490, 000 was disbursed to groups but was used by individuals for personal activities without the knowledge of the intended groups as the money was deposited into bank accounts of individuals without the group’s knowledge.
The report also notes total non-adherence to procedures for disbursing loans to women and youth as MEDF senior management and head office were performing duties that were supposed to be performed by field officers and MEDF branch offices, respectively, raising the fear of underhand dealings, suspected fraud and gross abuse of funds.
“The loan application and assessment procedures were rated as weak because of the following findings: A total of 158 loan files, which is 16 percent of the sample with [the] loan amount [of] K287, 564, 456.33 were processed by MEDF head office having bypassed the procedures that were supposed to be performed by the branch,” the report reads.
The audit report has also states that, in other instances, MEDF records indicated that loans were disbursed but, when visited, beneficiaries denied receiving loans from MEDF.
It notes that K71,930,000 was disbursed through personal bank accounts instead of group bank accounts, contrary to MEDF loan regulations.
The report has also patched holes in the loan approval and disbursement procedures, citing differences between funds approved and funds disbursed.
“A total of 88 loan files, which is nine percent of the sample files, had differences between approved and disbursed amounts, of which 72 had an excess of K56, 295, 246.71 as compared to the approved amount,” the report indicates.
Centre for Social Accountability and Transparency Executive Director Willy Kambwandira has described findings of the audit report as deeply shocking.
He also asked Tonse administration to restore integrity in operations of the government-owned microfinance institution.
“From the report, it is clear that no one was in control at MEDF as senior management was also involved in the plunder of loan funds. This was surely an organised fraud. It is, however, unfortunate that such audit assignments are only sanctioned when there is a problem and funds have already been abused,” Kambwandira said.
Meanwhile, Human Rights Defenders Coalition appealed to the Anti-Corruption Bureau to investigate allegations of abuse of funds at MEDF.
