Ministry forged bank statement to cover-up illegal withdrawal

The Ministry of Local Government and Housing forged a bank statement to cover-up an illegal withdrawal of 3 million euros from the German funded urban basket for water projects.

Following the discovery, the German Federal Government had to terminate the urban basket and an amount of about 3 million euros was returned to the Federal budget.

German Ambassador to Zambia Achim Burkart in a letter dated September 25, 2017 to then Minister of Water Development, Sanitation and Environmental Protection Lloyd Kaziya raised “unfortunate incidents relating to our cooperation which highly concern my government as your cooperating partner”.

“As you know, the water and sanitation sector is one of the long-standing focal areas of the German – Zambia development cooperation. For financing investments in the sector we have established two so-called “basket mechanisms” which are managed by the Zambian government. In order to cover-up an illegal withdrawal from the urban basket in 2016, a bank statement was forged by the Ministry of Local Government and Housing. As a consequence, the German Federal Government had to terminate the urban basket and an amount of about Three Million Euros was returned to the German Federal budget,” reads the letter.

Ambassador Burkart said that during bilateral negotiations in December 2016, the German side also expressed its concerns and its wish for a transparent and trustful management of the remaining financing basket for rural areas.

“Therefore, both sides agreed in the minutes of negotiations that in the case of irregularities, the German side reserves the right to undertake appropriate steps (e.g. termination of the programme). We have also agreed that an auditor will be appointed by your ministry to undertake an audit on the use of all the funds made available under this basket. As of today, no audit report has bee made available to the German side,” reads the letter. “Unfortunately, it came to my attention that apparently non-eligible costs were made available under the rural basket fund and that the KfW due to the violation of the Financing Agreement suspended disbursements with immediate effect. This has already been communicated to your permanent secretary.”

When contacted, Kaziya said he could not comment on the matter as he was no longer in the portfolio.

He said the letter was written to his office and not to him in his personal capacity.

Kaziya referred queries to the current Minister of Water Dennis Wanchinga.

However, local government minister Vincent Mwale confirmed the theft, which took place before he assumed the office.

He said the erring officer was handed over to the Ministry of Finance. 

“It’s sometime back but it was resolved before I went there. I only heard of the story except what they were pushing for that guy [accountant] to be punished and we surrendered him to Ministry of Finance to do the punishment because ni [he is] accountant who falls under Accountant General…it’s something [that] happened a long time ago. I was also told about it, but it was resolved a long time ago. That was a Water Department [issue],” said Mwale.

Last month, a German envoy said Zambia had some governance challenges.

During the government-to-government negotiations that took place between November 27 and 28 in Lusaka, Germany highlighted its zero-tolerance approach to corruption in all development programming and expressed strong concerns about recent cases of misapplication of donor funds.

According to a joint press release on Zambian-German bilateral negotiation on Development Cooperation issued by Secretary to the Treasury Fredson Yamba and Head of Division for Southern Africa head of German Delegation Alois Schneider a fortnight ago, Germany committed approximately K850 million to Zambia to cover the period 2019-2020.

“The German side emphasized that new commitments for investments in the water sector could be stepped up again if an audit of a rural water programme was concluded and – in case of any misuse of funds – the full misapplied sum would be reimbursed. Concerns regarding governance, particularly in the water sector, had led to a slight reduction of commitments,” reads the statement in part. “As Zambia is at high risk of debt distress, it was agreed that for this year’s commitment, German bilateral aid will be provided exclusively via grants and that GRZ would implement measures to reduce the fiscal deficit, maintain a sustainable debt position and safeguard the vulnerable. It was discussed that as funds are scarce, it was important to make wise and efficient use of the available resources with emphasis on ‘value for money’. Both sides agreed that strong cooperation with the IMF was important.”

Source: The Mast

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