A Reserve Bank of Malawi (RBM) fund has lost over K12 billion due to acts of gross negligence and abuse of power, a special audit report has revealed.
The money was lost to the Export Development Fund (EDF), a subsidiary of the Reserve Bank of Malawi established in 2012 as a private development finance institution (DFI) for exporting companies.
EDF management launched the Commodity Market Making (CMM) initiative in 2017 to help local businesses that could not access commercial loans but had the capacity to secure export supply contracts
A report by private forensic accountants Fletcher and Evance found that EDF management was performing CMM without following established procedures, resulting in the loss of the money between 2017 and 2020.
“EDF’s board of directors had shortcomings in corporate governance and the oversight role. These shortcomings have contributed to EDF suffering a total of actual and potential losses amounting to more than 12.8 billion Kenyans,” the report reads.
Auditors recommended disciplinary action bordering on non-compliance with established procedures, gross negligence and abuse of authority against officers responsible for CMM operations, risk mitigation and finance .
They also called for an investigation into the alleged questionable transactions due to indications that a forex outsourcing crime may have been committed.
The auditors further stated that EDF should outsource internal audit services to complement the internal audit service provided by RBM, which is the company’s sole shareholder.
They also advised the shareholder to review the composition of EDF’s board of directors.
EDF board chairman Neil Nyirongo told Weekend Nation that the company will implement the recommendations “as it sees fit”.