10 December 2012

Zambia: Ex-AFS Directors Cite Fraud in BOZ Audit Report

FORMER Access Financial Services (AFS) Limited directors have submitted in the Lusaka High Court that the latest Bank of Zambia (BoZ) internal audit report on the liquidation of AFS has exposed irregularities and fraud activities by central bank officials during the liquidation process.

In an affidavit in support of the summons for production of inspection of documents and appointment of a referee signed by former directors at AFS and Access Leasing Limited (ALL), Faustin Kabwe and Aaron Chungu stated that both findings of the internal audit report and the risk assessment allegedly exposed grave misconduct and theft that took place at AFSL and ALL during possession by the BoZ.

In the matter, the duo was accusing BoZ of having mismanaged billions of Kwacha at AFS and ALL in the nine years that it was possessed by the bank and applied to have the internal audit report be given to them as part of their evidence.

Among the findings in the audit report, were that, the then BoZ's liquidation manager Marshal Mwansompelo had been recommended for reprimanding together with his supervisors for mismanaging the liquidation process of both companies.

The report established that there were 24 findings that needed corrective action and were summarised in six categories; weakness in oversight from BoZ and non-compliance with the Banking and Financial Services Act, weaknesses in the oversight by the liquidation management and administration of tax and staff emoluments.

Others included weaknesses in securing both tangible and intangible assets, assets management and in the management of properties for Tedworth properties.

Another recommendation was for the BoZ management to have the whole liquidation exercise reviewed.

This was aimed at ensuring that similar incidences of mismanagement were avoided and ensure that a specific forensic audit was conducted to focus on the outcome of the internal audit.

And BoZ's assistant bank secretary, Leonard Kalinde advised in the audit report that recommendations to reprimand Mr Mwansopelo should not be undertaken as it was going to result in unfavourable judgment against the two directors.

Dr Kalinde said any adverse findings against Mr Mwansompleo would confirm allegations of mishandling the liquidation of AFS and ALL, thereby compromising the bank's defence in the court where the bank argued that there was no mismanagement in the manner the liquidation was handled.

He also advised that once Mr Mwansompleo was dismissed, it would raise the possibility of him being turned into a hostile witness to testify against the BoZ, which would cost it huge sums of money in form of payments for damages.

Dr Kalinde advised the bank to find another way since Mr Mwansompelo had already been removed as liquidation manager which he claimed was a good step saying singling him out as responsible for the state of affairs would be an act of selective injustices.

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