The office of the Director of Public Prosecutions (DPP) has instructed the Malawi Police Service to commence criminal proceedings against officers and companies that were involved in the plundering of K12.8 billion at the Export Development Fund (EDF).
“In accordance with the law, the directorate is of the opinion that criminal investigations be instituted against the forensic audit named individuals, their associates and business therein,” reads the letter, dated May 12, 2022 from DPP Steve Kayuni, addressed to the Inspector General of Police.
The DPP has also advised the police to recover all assets realized through the looting of the K 12.8 billion.
“An asset recovery scheme for this alleged fraud cannot go without mention. We thus advise that among the investigators to be assigned on this matter, there should be a deliberate effort towards asset recovery so as to regain what the tax payer has lost hugely in the K12.8 billion fraud,” reads the letter reference number is DDP/ ADMN/EDF/2022/1
The move follows a forensic audit by Fletcher and Evance in 2021 which uncovered the looting at the state-owned company.
The audit had recommended criminal investigations against individuals and private companies that were involved in the fraudulent and dubious transactions.
The audit uncovered that a total of K12.8 billion has been looted by former employees at the public financing institution in the period between 2016 and 2020.
According to the report, some former EDF employees colluded with some individuals and companies to defraud the state-owned financing institution.
It further said management negligence and abuse of office alone contributed to a loss of over K6.5 billion.
The audit faulted both EDF management and board of directors for negligence and gross violation of procedures.
“EDF management responsible for CCM [Commodity Market Making] operated without following processes and procedures, clearly indicating acts of gross negligence and abuse of office. This has contributed to EDF losing over K 6.5 billion in actual loss and potential loss,” the report said.
According to the audit report, some of the private companies that allegedly engaged in fraudulent and dubious dealings with EDF are Transglobe Produce Export, Bridge Shipping and Alliance Capital Limited (ACL).
Transglobe owes EDF $3 million, Alliance Capital Limited (K6 billion plus interest) while AHL Commodities Exchange has $800,000 to pay back.
Executive Director of the Centre for Social Accountability and Transparency Willy Kambwandira has applauded the office of the DPP for finally moving in on the matter.
“It is sad that despite all the stories that we have read about EDF, there is nothing to write home about as regards investigations and prosecutions of those involved in the looting. We have not seen genuine action taken to reprimand those involved in the scheme.
“It is very clear that this was some well carefully crafted syndicate to siphon public funds. We demand speedy investigation of people and private companies named in the report. We must recover what was stolen from Malawians,” Kambwandira said.
On his part, chairperson of the Human Rights Defenders Coalition Gift Trapence has called on government to address financial lapses at EDF to deter officers from taking advantage in order to abuse resources.
“Everyone who is suspected to be responsible for this inhumane act must surely be brought to book,” Trapence said.
In September last year, the Public Accounts Committee took to task Reserve Bank of Malawi for failure to license the company, nine years after it commenced operations.
EDF was established as a Special Purpose Vehicle with the mandate of promoting the growth of Malawi exports.