Who is interfering with MACRA’s mandate?

It’s a sad state of African politics that sometimes influential people attempt to hijack the institutional and democratic processes of doing things, for personal gain. Often money, lots of it, must have changed hands, and you end up with bigwigs attempting to influence or hijack decision-making in matters such as awarding of contracts, in legal or constitutional affairs, when the law is clear about how such things should be handled. This is bad for our countries across Africa, and is singularly the most common reason why our institutions fail to function properly. Leading to abuse that deprives the continent of billions. Because some people are willing to sacrifice the common good. In Malawi, a few days ago a story broke out on Nyasa Times alleging that one Ben Phiri is apparently pulling the strings behind the scenes to influence the Malawi Communications Regulatory Authority (MACRA) to award a licence to Lacell Private Limited. Now Lacell has an interesting history in Malawi. In 2008, they failed in its bid for a mobile license because they did not meet the criteria.  Lacell came 5th in the tender process after the other participants were either disqualified or pulled-out. It seems that after months of lobbying politicians (see another link here) they threatened to sue the Malawi government, claiming that they had been led to believe that they would be awarded a license. That they had participated in pre-contractual negotiations and had invested in Malawi, therefore deserved a license. But the ‘license’ they claimed, for which they received some media coverage, never got authorised, let alone gazetted. The Malawi Communications Act 1998 stipulates that a license is not awarded unless it has been gazetted. You can engage in negotiations or receive political promises but unless a tender has been advertised, bids received and reviewed, the bidders vetted and the preferred bidder selected, the succesful bidders are then passed to the president through the relevant ministry…and after some obscure governmental protocols at the highest level, a winner selected. The resulting licence is gazetted, and only then is the licence said to have been awarded under the laws of Malawi. Any contract award that does not follow this set out procedure as laid out in law is in contravention of the law. Thus, for renegotiation with Lacell to begin out of the legally accepted procedure stipulated by the law, outside the tender process, is not in line with the laws of Malawi.

But this resumption of talks is not entirely surprising. In appointing boards of MACRA, the Department of Statutory Corporations [which is part of Office of President and Cabinet (OPC)] issues lists of competent persons which are recommended as members for nomination to parastatals. The President then approves such appointments. But for the current board of MACRA, which was appointed in November 2014, rumour has it that the recommendation list was largely ignored, or the legal process was not entirely observed. Whether this was politically motivated or not is anybody’s guess. What is clear is that when selecting a new board for a regulatory authority, it is required that the composition of the board have people who possess the skills, knowledge and expertise relevant to the functions and mandate for that institution. For MACRA, the Communications Act states that certain numbers from the outgoing board should be retained for continuity. This makes sense because a new board unversed in the operations, intricacies and current affairs need time to adjust. To examine all the issues which the board has been wrestling with, and come up to speed. But when more than half, or all of the previous board have been replaced, what’s to stop a noisy, disgruntled and desperate former bidder who for years has been claiming the moon, to take advantage of the situation and try to bulldoze its claims, perhaps helpfully assisted by some monetary gifts to important people within a newly elected government. This it appears, is where Lacell comes in. Because  the last board of MACRA was replaced in its entirety, and surprise surprise, Lacell, who popped up during Bingu’s regime causing many headaches, who showed up again and again during Joyce Banda’s tenure, has once again showed up.

According to the OPC website: The Department of Statutory Corporations mandate is to ensure parastatal sectors optimal utilization and management of resources, in compliance with Government regulations, thereby contributing to national development. The Department provides financial, administrative and managerial oversight to the parastatal sector. Doesn’t the in compliance with government regulation mentioned in this mission statement mean that MACRA must operate by the law? Why then is Kondwani Nankhumwa, the minister of Information, Tourism and Culture, talking as if a deal with Lacell could be hashed outside the law? Disregarding the lawful processes. And the institutions that have been mandated to police and protect the processes?

Something fishy is going on. President Peter Mutharika would be best advised to put a firm stop to this fishy business, because it is not going to help Malawi in the long run. Our public institutions must be allowed to operate independently, without duress, and in line with the law.

OECD Forum on Africa focuses on turning uneven economic growth into shared and sustainable economic transformation

 

…It was a day of many harsh truths: “Africa’s 5, 6, 7% growth is all very well, but China has managed an annual 10% for 30 years”, said Mallam Sanusi Lamido Sanusi, Governor of the Central Bank of Nigeria. “We have much further to go. And where does our money go? It goes on things like salaries, overheads, production subsidies – and not where it ought to go. In Nigeria, we are sitting on $25 billion of pension money, which we could be investing in meeting our own infrastructure needs, or in building our manufacturing and processing capacity. We grow tomatoes, and yet we import tomato paste.”

All agreed that the first challenge of natural resource management is to secure its full revenues and to use them wisely and fairly. Government tax revenues from natural resources for 2011 may have been up by 40%, but profits for international companies went up by 110%. This is a huge mismatch. Africa is said to be losing over $60 billion a year in illegal outflows and price manipulation in the extraction of minerals, with most of the proceeds going offshore. The easiest and the worst option for governments is merely to take the short-term rent paid by international companies for the right to discover and develop the continent’s natural resources, rather than do the hard work of creating jobs and ploughing back the proceeds into where they are needed most, in areas like health and education.

OECD Forum on Africa focuses on turning uneven economic growth into shared and sustainable economic transformation

President Uhuru Kenyatta’s Speech During the Groundbreaking of the Greenfield Terminal at Jomo Kenyatta International Airport

“Airports today are important vehicles for propelling economic growth. An airport, being the first point of contact by the visitors, be they tourists or businessmen, has a lot to tell about the community and country in which it is located. It can, therefore, influence positively or negatively the level in Foreign direct Investment and indeed the number of people wishing to visit a country….

My Administration is keenly aware of the aviation infrastructure deficit that currently exists not only in Kenya but also on our continent. Without sufficient aviation infrastructure, our region will remain unexploited and expensive for commerce and business.”

Full speech here:- President Uhuru Kenyatta’s Speech During the Groundbreaking of the Greenfield Terminal at Jomo Kenyatta International Airport

I have often laboured with this point on this blog a number of times (see previous articles here, here, here and here). And it’s because it’s a very important point. Before any economic development occurs, one of the critical factors which must be addressed by the leaders of African countries, and which must be a top priority, is the development of first points of contact such as airports to such a level of excellence that they meet global standards.

In other words our Airports across Africa should generally have the same facilities and be of the same standard as the airports in Bangkok, Durban, Moscow, Manchester, Santiago or Wellington.

When that begins to happen, Africa will have moved towards a place where it can compete with other countries across the world.

Manchester Airport : Fact Sheet

IFMIS : What did UDF, DPP and PP know?

IFMIS

Reports can be fantastic pieces of literature. Absolutely wonderful things…informative, revealing, ridiculing, attesting – marvelous!  More so if they happen to be government-funded.

Whenever political leaders are busy paying lip service, telling lies, denying allegations and generally being unpleasant to their electors (and those who didn’t elect them), a little bit of research can quickly reveal who amongst the herd is Pinocchio.

The report above which is a summary can be downloaded here: Summary of key findings and recommendations of GOM IFMIS Review-2. It is dated 18th November 2009, and is a summary of a Report commissioned to asses how the IFMIS was functioning. It is titled QUICK ASSESSMENT OF THE INTEGRATED FINANCIAL MANAGEMENT INFORMATION SYSTEM.

The original report (which I imagine can be obtained from the Public Financial and Economic Management section of the Ministry of Finance) is over 200 pages long (and don’t ask how I got my hands on it), but this summary is only 34 pages long. According to this summary:

As part of the continuous PFM reform processes in a bid to further enhance public expenditure management, the Malawi Government through the PSRMU of the OPC engaged the author through UltiNetS2 to undertake a quick impact assessment of the EPICOR* based IFMIS implementation with a core objective to identify any system operational or functionality challenges and make appropriate recommendations for improvements.

*EPICOR is the company that makes such software

In other words the report was commissioned to highlight the benefits and challenges of the IFMIS and ask questions such as:

(1) What is the IFMIS?

(2) Why was it chosen by the Ministry of Finance (MOF)?

(3) Is it working as intended / achieving its purpose?

(4) How well is it performing ?

(5) What are the problems / operational issues ?

(6) Where are these problems / operational challenges?

(7) What can be done to improve its performance/ resolve these problems?

… and so on.

At the time of commissioning, Bingu Wa Mutharika had been in power for some 5 years and 6 months.

Before we look closely at this summary, a notable point is somewhat appropriate: the version of IFMIS Malawi installed on its systems / computers is based on a version Tanzania installed. We all know that not too long ago, Tanzania’s president sacked his cabinet ministers due to corruption. Was this related to IFMIS?? I think someone needs to find out?

Earlier in 2006, the OECD Journal on Budgeting carried an article by Jack Diamond and Pokar Khemani titled Introducing Financial Management Information Systems in Developing Countries that explored the merits of the IFMIS system and looked at case studies in developing countries including those across Africa.

According to the OECD article, attributes of a well-designed FMIS include:

attributes-ifmis

Yet if you take a look at the summary of the IFMIS in Malawi, it’s indisputable how hollow and a shambles the whole rollout was. Everything was dysfunctional, from the contracting phase to the implementation phase and support, everything was a disaster!

According to the UltiNetS Summary, the positives include:

– The successful implementation of the EPICOR based IFMIS significantly contributed to the debt cancellation for Malawi as a country under the HIPC initiative

The implementation of EPICOR based IFMIS has to some extent assisted the Government in restoring some fiscal discipline through public expenditure management particularly on transactions that are primarily processed through the system.

The introduction of EPICOR based IFMIS has significantly checked the proliferation of Government bank accounts by the MDAs* thereby giving the AGD* a better control.

The introduction of the EPICOR based CPS* has significantly restored the credibility of Government cheque payments to its creditors.

*[AGD: Accounts General Department; CPS: Central Payment System; MDA’s: Ministerial Departments and Agencies]

Yet in spite of all this, we are then informed that:

– The conditions of contract were more in favour of the contractor (Soft-Tech Consultants) than the client (Malawi Government) which clearly shows that the client did not have much input into the document before engagement.

There was no valid justification for the training to be conducted for almost the whole year and at every site of implementation, hence proved too expensive for the Government considering similar implementations.

– The IFMIS contractual costs are too high than anticipated (almost USD $1.7million) more particularly on the user licences, consultancy, training services and travel which account for almost 91% of the total cost.

– There was non strategic procurement of bout 240 system concurrent user licences for all 32 sites for all the modules when only a few of these licences are currently used.

–  The EPICOR based IFMIS architecture, design and operational framework is incomplete to constitute an ideal Government IFMIS system design and operational architecture as it still falls short of
other key elements and full functionality of the sy stem.

In other words, the Malawian government has been using an incomplete and system that is not fit for purpose. The observations continue:

There is a great deal of system underutilization considering the number of procured modules and other key features within the existing functional modules that are currently not functional.

The system does not have any alert system to detect any fraudulent activities or any deviations to normal operations within the system such as overriding system controls without appropriate approval
process and any system performance issues let alone a functional audit trail to track system usage

If post-Cashgate you wanted to know why junior accounts assistants (see most recent revelations here) were found with millions of dollars, this is precisely why.

The current Chart of Accounts is not yet fully GFS compliant as per the IMF requirement and does not fully respond to the performance measurement indicators of the current MGDS.

From a budget execution perspective, the EPICOR based IFMIS system is working perfectly as a budget expenditure control system since no funding or expenditure can take place where there is no budget unless overridden, however the system does not block budgets that have already been expended to the equivalent of expenditures 

In other words, a user can Overspend. In principle, this means that a user can generate a cheque and get the Reserve Bank of Malawi to honour it, even when on his budget, that money doesn’t actually exist.

The IFMIS infrastructure does not have any intrusion prevention and detective system or mechanism to easily gain visibility and monitor any potential security threats considering that the access in mainly by user ID and password which can easily be accessed

So who can say whether foreign criminals haven’t laid their hands on some of this money??

Some of key control features particularly in the payment management approval process within the IFMIS are not yet activated and functional to improve the entire system internal control framework.

The current payments management system is weak and prone to exploitation or abuse by colluders as access into the system and Accounts Payable module in particular is not physically authenticated beyond normal user ID and passwords due to lack of appropriate tools.

Again, like above, misappropriation withing IFMIS is easy, so long as you have a username and password. And people could collude to steal money, so the Cashgate scandal should not be a surprise at all.

The current core accounting system and financials suite of the EPICOR based IFMIS has an Electronic Funds Transfer (EFT) module which is more secure mode of payments which if implemented could help reduce some instances of cheque frauds and frequent delays in processing and dispatching cheques. In addition, it could eliminate risks associated with the MALSWITCH link used for cheque list transmission.

So they knew that there was cheque fraud happening? Or is this just a hypothetical situation?

The current structure of the CPS within the EPICOR based IFMIS lack appropriate tools and effective controls for checking, verifying and authenticating or validating payment transactions within key units before issuing cheques or effecting transfers to third parties, hence difficult to detect any fraudulent payments from within the financial system. For instance the Receiving unit of the AGD’s CPO does not have any means for verifying the authenticity of signatures on the payment vouchers and electronic voucher list from the MDAs, hence difficult to establish any instances of forgery.

There was no capacity to check if signatures are fake, meaning forgeries could have occurred, or did occur?

– The NAO [National Audit Office] does not have adequate capacity to audit the EPICOR based IFMIS functionality apart from auditing the financial statements (‘ Appropriation accounts’) as it does not have automated audit management tools to enable carry out that function

The NAO does not have adequate capacity in terms of man power and funding to effectively carry various types of audits covering automated systems.

All this advice was given to the Office of the President under DPP’s watch, when Mutharika was at the helm. Further the 2006 OECD report at page 19 / 115(last paragraph), states that:

In general, the implementation phase has not progressed well, primarily because of clearly limited involvement and some neglect of the system by the main players, including the Ministry of Finance, the Accountant General and pilot ministries. There are several significant issues to be addressed before the system can be made fully functional and rolled out.

Neglect?? That’s a strong word. When they received this advice, why didn’t DPP act?  And if they claim to have acted, what did they do to solve the above problems? More importantly, when PP came into power, did they know of this report and its findings, given the fact that the Ministry of Finance is a crucial ministry in any country?

I think the Malawian people deserve some answers. Malawians need responsible leaders who will help develop the country, not a hopeless and clueless bunch who are only interested in self-enrichment…

Reviewing this summary, it is absolutely clear that the Ministry of Finance knew the dangers of the IFMIS and the fraud that was happening ? They must have known. There are no two ways about this. But they ignored the problems/ fraud, or took advantage of them. In my view, the silence / inaction suggests some people was benefitting from the mess. Clearly, Lipenga and his juniors were hopelessly incompetent, and Joyce Banda must take responsibility for bringing in such a useless man into such a respectable office.

It all simply begs the question, how can such massive amounts of money be embezzled when the inherent problems were known? Those responsible for the plunder must pay back what they stole…Every single penny! And face the arm of the law.

The fact that successive governments knew there was a problem, but didn’t act strongly suggest there was a conspiracy to defraud the Malawian people, such that our syndicate theory may in fact be broader and far-reaching than us ordinary folk think?

Why do Malawians elect incompetent officials who can’t even do the basics?

Similare Articles

No smoke without a fire

I believe that banking institutions are more dangerous to our liberties than standing armies.” – Thomas Jefferson

I wonder, why would Jefferson say that?

The death of Lincoln was a disaster for Christendom. There was no man in the United States great enough to wear his boots and the bankers went anew to grab the riches. I fear that foreign bankers with their craftiness and tortuous tricks will entirely control the exuberant riches of America and use it to systematically corrupt civilization.” Otto von Bismark (1815-1898), German Chancellor, after the Lincoln assassination

Oh, so the tricks and craftiness we see now began a long time ago right? Wow.

“When a government is dependent upon bankers for money, they [the bankers] and not the leaders of the government control the situation, since the hand that gives is above the hand that takes… Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.” – Napoleon Bonaparte, Emperor of France, 1815

Thanks to Napoleon, which is why no one should be surprised by all the banking scandals. In 2012 alone there were over 10

Money plays the largest part in determining the course of history.” Karl Marx writing in the Communist Manifesto (1848).

It is well enough that people of the nation do not understand our banking and money system, for if they did, I believe there would be a revolution before tomorrow morning.” Henry Ford, founder of the Ford Motor Company.

Even industrialists like Ford, who were normal, informed, pro-capitalist people (and not anarchists or communists) understood the threat.

Let me issue and control a nation’s money and I care not who writes the laws.” Mayer Amschel Rothschild (1744-1812), founder of the House of Rothschild.

For different / a multiplicity of views (i.e. to help one get an objective perspective) regarding Rothschild, see (  http://www.youtube.com/watch?v=Y_wkVJcH65s  – YouTube video) or read the historian Niall Ferguson’s account here (a free part-summary via New York Times can be found  here: http://www.nytimes.com/books/first/f/ferguson-rothschild.html ). There are several other good balanced sources/ books online aswell.

Money is a new form of slavery, and distinguishable from the old simply by the fact that it is impersonal – that there is no human relation between master and slave.” Leo Tolstoy, Russian writer.

Despite numerous warnings against it, US President Woodrow Wilson signed the 1913 Federal Reserve Act. A few years after the signing he wrote:

I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of  credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most  completely controlled and dominated Governments in the civilized world no longer a  Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men.

He saw the influence those who give the money have on public policy and what gets done. He had just signed off his country away. Look around you today, see how many third world countries, including Malawi suffer at the hands of their lenders. If you analyse their lending conditions, is it helpful for the recipient country in the long run? Will it benefit it and help it to be independent in the long run? Or is it designed to serve their purposes alone – keeping the country in perpetual poverty – while they perpetually make profit out of it? Will it enrich them while ordinary Malawians suffer, in poverty, with rocketing prices, without a good level of education, and battling disease?

It is said that President Franklin Roosevelt knew of the danger of giving too much power to banks and was aware of his predecessor’s (Andrew Jackson) actions in curbing the second Bank of the US (an earlier type of the Federal Reserve System). Yet, after Jackson’s administration,  bankers’ influence was gradually restored and began to increase, finally culminating in the passage of the Federal Reserve Act mentioned above.

The real truth of the matter is, as you and I know, that a financial element in the large centers has owned the government ever since the days of Andrew Jackson “-Franklin D. Roosevelt (in a letter to Colonel House, dated November 21, 1933)

The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread.” Anatole France (1844-1924), The Red Lily, 1894, chapter 7

Links

1. The largest banking crisis of the 21st Century

2. List of Corporate scandals [note that most of them involve money]

3. Well’s Fargo in $175 million discrimination settlement [note that these guys are the largest mortgage lender in America – but this story wasn’t reported in mainstream media and not as many people know this happened. Why isn’t this news, but a black cop with a gun on the rampage is said to be news??? – If a bank is doing this, what sort of people work there? What do they think of others? How do they value those that are different from them? Can we really ever trust such people?]

4. BofA Coughs Up $335 Million To Settle Discriminatory Lending Case With DoJ  [If a bank is doing this, what sort of people work there? what do they think? How do they value others different from them? Search “discriminatory lending” AND “Africa” in google and you will be shocked by what you find]

5. ‘Discriminatory’ lending practices based on risk here to stay [ some self righteous justification here]

6. 12 year old girl gets it..WHY DON’T YOU [ the simplest explanation i’ve encountered as to why certain banks are definitely not good for our countries]

7. Catching Up with the City Boy Who Spilled the City’s Secrets

8. Iceland President: Let Banks Go Bankrupt

9. Iceland President Olafur Ragnar Grimsson on the recovery of the country’s economy