Monday, September 7, 2009

MEC defies AG order

Malawi Electoral Commission (Mec) has defied order from Auditor General (AG) order not to engage PricewaterHouse Cooper, an audit firm without seeking permission from the AG office. Malawi News can reveal that Mec has arbitrary reengaged PricewaterHouse Cooper without following the procedures.

At the meantime two auditing groups, one from government’s national audit office and the others from private audit firm are currently auditing Mec despite the reservations from government in engaging the private firm.

Mec spokesperson Fegus Lipenga confirmed that Pricewater House Cooper was auditing the Commission along side government auditors from the Office of the attorney general in Blantyre, however National Audit office spokesperson Luka Tchoka said Mec did not follow the procedures when engaging Pricewater House Cooper firm.

In a letter dated 24 April 2004, duly signed by the deputy Auditor General L. S. Gomani chided Malawi Electoral Commission for engaging Pricewater House Cooper, an audit firm, without following the procedures.

The letter, reference number MEC/16/2 admonished the Mec for failing to comply with Section 16 of the Electoral Act which requires that engagement of a private sector auditors to audit the commission’s books of Accounts should be approved by the Auditor General.

“In the light of the above observations, your request to engage Pricewater House Cooper to audit Commissions financial transactions for the period of October 2008 to September 2009, have not been approved.

“You may wish to know that the auditors did not carry their first assignment properly, resulting in issuance of incomplete report on alleged misappropriation of public funds. : “The auditors should not have published their report before gathering adequate evidence to support the unprecedented loss of public funds at the Commission,” reads part of the letter.

The letter also accused the Commission of failing to seek the approval of the Director of Public Procurement to use a single source procurement method when procuring the audit services contrary to sections 30 and 36 of the Public Procurement Act.

“The Commission is therefore, advised to start again the procurement process to comply with the provision of the Public Procurement Act and the Public Audit Act… Since the audit services are urgently required, you may wish to seek approval from the Director of Public Procurement to use the request for proposal method as stipulated in Section 34 of the Public Procurement Act. You are also advised to submit the terms of reference for the audit to this office for review and approval before soliciting proposals from private sector audits,” the letter said.

Deputy Auditor general responsible for the Southern Region …Chiluzi said while they were auditing Mec they were surprised to see another team of auditors from the private firm started auditing the same institution.

National Audit office also refused to honour Mec request to provide an official to witness private firm’s auditing saying they do not know the terms of reference for the private firm auditors.

“We were told that the auditors from the private firm were sent by DFiD. It was a donor requirement. The request to provide a witness was refused because it could have been confusing to witness something whose terms of reference wee do not know,” he said.

Chiluzi said Mec did not follow the procedures in procuring the service of the private firm as stipulated in the Public Tendering Act.

Mec spokesperson Fegus Lipenga said PriceWater House Cooper was engaged by the donor community who were supporting the 2009 elections. He said the donors wanted to be sure that their monies were being used for the intended purpose saying the donors identified the firm to conduct the auditing using their own procurement procedures.

On the consultations with the office of Auditor General, Lipenga said the AG was therefore to be consulted not approve the audit adding that: “The Commission recognizes that its books are to be audited by the AG and that is the reason why auditors from the National Audit office are also auditing MEC books. MEC agreed with the Auditor General that the firm should start auditing and the AG will be involved in final stage of the auditing.”

However DFID Malawi Strategic Communications Officer Andrew Massa said has no comment on this issue. We believe this is an issue for Electoral Commission.

“So we kindly ask you to direct the questions to Mr. Fergus Lipenga, Electoral Commission's spokesperson,” she said.

BP Malawi, ex-employees differs over pension scheme

Leading petroleum company, British Petroleum (BP) has threatened to forcefully grant pension benefits to about 20 ex-employees who are not willing to withdraw their pension benefits because of calculation differences.

Disagreements have ensued between the company and its former employees over the system of calculating pension benefits as employees opts for Defined Contribution (DC) scheme while the company insists to calculate the terminal benefits using the Defined Benefits scheme.

The disagreements have been going on since those who were retrenched last year putting the number of those on the waiting list to benefit from the new scheme to 20.

However, in a letter dated August 18, 2009 and duly signed by the company’s Acting General Manager Dasford Kamkwamba, the company told the ex-employees to withdraw their pension with the Defined Benefits scheme as the company’s trustees have not yet make a decision on which scheme to calculate their pension.

Some of the employees speaking on condition of anonymity observed that the company’s insistence to use the Defined Benefits scheme deny them the lump some amount of their benefits and leavening the those managing the trust fund with surplus.

“What would the company going to do with the surplus as the belongs to the employees. The irony that all BP associates in Africa moved from Defined Benefits to Defined Contribution why should BP Malawi find it difficult to do the same.

“Pension fund schemes are supposed to be managed and controlled by elected trustees within a company for BP Malawi they want it to be controlled in London,”

But the said letter management told the ex employees that: “You have up to 8th September if you wish to make use of the options provided. If we do not hear after the said date, we will witdraw your benefits on option 4 (lump sum cash benefit). In recognition that your exist from the organization was not voluntary, the company and trustees have resolved to pay a once off exgratia payment. This is over and above the withdrawal benefits under the DB scheme.”

Kamkwamba said there was nothing they could do to satisfy the ex-employees wishes as the company has not received a go-ahead from their office in London to implement the Defined Contribution scheme.

“The date they left company the scheme was Defined Benefits so we can not calculate different from where they left,” he said.

Kamkwamba said he could not discuss the surplus money to be realized from the change to Defined Contribution because the company have not reached that level: “Lets reach the bridge first.”

Part of the letter reads: “In 2007 BP management communicated the trustees’ proposal for the conversion of BP Pension Fund from the current Defined Benefit (DB) scheme to a Defined Contribution (DC). In view of your preference, management, in line with BP Global Reward’s (BP London) requirement that any proposed change to employee benefits be approved by BP London, notified BP London of the proposed conversion.”