A Reserve Bank of Malawi (RBM) fund has lost over K12 billion through acts of gross negligence and abuse of office, a special audit report has revealed.
The money was lost at Export Development Fund (EDF), a Reserve Bank of Malawi subsidiary established in 2012 as a private development finance institution (DFI) for export businesses.
EDF management introduced Commodity Market Making (CMM) initiative in 2017 to assist local enterprises which could not access loans from commercial backs but had capacity to secure export supply contracts
A report by private forensic accountants Fletcher and Evance has revealed that EDF management was running CMM without adhering to the laid down procedures, resulting to the loss of the money between 2017 and 2020.
“EDF’s board of directors had gaps in corporate governance and oversight role. These gaps contributed to EDF incurring a total of actual and potential loss amounting to over K12.8 billion,” reads the report.
The auditors recommended disciplinary action bordering on non-compliance with set procedures, gross negligence and abuse of office against officers responsible for CMM operations, risk mitigation and finance.
They also called for a probe into alleged dubious dealings due to indications that a crime of forex externalization may have been committed.
Auditors further said that EDF should outsource internal audit services to complement the internal audit service provided by RBM which is the sole shareholder of the company.
They also advised the shareholder to review the composition of the EDF board.
EDF board of directors chairperson Neil Nyirongo has told Weekend Nation that the company will be implementing the recommendations “as and when it is felt fit.”