The Reserve Bank of Malawi (RBM) has rescinded its decision to appoint Grant Thornton as Forensic Auditor for audit Alliance Capital Limited (ACL).
This follows an uproar from stakeholders that the decision would flout corporate governance virtues as Grant Thornton was the auditor of ACL when people’s investments were allegedly being mismanaged.
The RBM made the decision to appoint Grant Thornton as forensic auditor in November last year before an abrupt halt due to the stakeholders’ outcry.
But in an advertisement, reference RBM/FSR/001/2023, published in one of the daily newspapers on Wednesday, the central bank invites bids for provision of forensic audit services to ACL.
“The Reserve Bank of Malawi (the bank) intends to engage an audit firm to provide Forensic Audit Services to the Alliance Capital Limited (in liquidation). The bank therefore invites sealed proposals from eligible bidders for the provision of Forensic Audit Services,” the advert reads.
In November last year, Malawi Law Society President Patrick Mpaka said Grant Thornton may not be suited to conduct the forensic audit as at law a fiduciary cannot act at the same time both for and against the same client.
“The company’s disqualification is based on the inescapable conflict of interest which is inherent in the situation. Depending on what the scope of the works [is] and comparison between the RBM assignment and the ACL audits, Grant Thornton may not be suited to conduct the forensic audit,” Mpaka said.
Corporate law expert James Kaphale said appointment of Grant Thornton contravened the duty to avoid conflict of interest under Section 240 of the Companies Act 2013.
At the time, RBM Governor Wilson Banda indicated that they were not aware of that piece of information.
“We have engaged other parties in society such as the Institute of Chartered Accountants in Malawi; we’ve engaged the Attorney General for advice. When they were submitting [an application] for this job, they didn’t disclose to us, we didn’t know, but now that we know, we are basically going to review everything,” Banda said.
A High Court ruling determined that ACL be wound up for being insolvent and appointed RBM as the liquidator.