Fraudsters have swindled the Malawi Government K362 million out of a crucial basket fund that supports Malawi’s health services, prompting three donor countries of, Norway, the United Kingdom, and Germany, to suspend operations of the fund, which tap its resources from a foreign domiciled account.
Documents sourced by the Platform for Investigative Journalism (PIJ) show a total of EUR327 000 –approximately K362 million kwacha— under the Health Services Joint Fund (HSJF), which the fraudsters have hit, is operated by DT Global, a US-based fiscal agency on behalf of the donors and Malawi government?.
?A senior government source told PIJ donors have reacted to the development by suspending the account.
“The account, managed by a fiscal agent from the US, was subjected to authorized push payment fraud. Of course, MOH wasn’t at fault, but donors have temporarily suspended withdrawals from the account and payments into the account until control measures are put in place,” said the source.?
The move has prompted the Malawi government, through the AG’s office, to ask DT Global to account for the funds. The firm says fraudsters hacked an email address of a senior official at a Germany-based implementing partner and instructed the company to change bank details for money transfers.
According to the documents, DT Global was contracted to provide financial oversight services for the fund. At the same time, Management4Health, a Germany-based firm, was contacted to provide technical support on infrastructure, procurement, and programme management.
DT Global’s role hence included management of bank accounts, and it is alleged that an email address for a director of Management4Health, Susanne Manns, was allegedly hacked by unknown fraudsters and used to send emails to a DT Global official –Eudosia Andoh—managing the Fund’s account.
Using Manns’ email account, the scammers/fraudsters allegedly provided Andoh with new banking details for the Management4Health, switching accounts from the Frankfurter Sparkesse, a bank domiciled in Germany, to TSB, a bank in the UK.
The documents show that the Ministry of Health was still sending the Fiscal agent old invoices bearing details of the first bank, Frankfurter Sparkesse. Yet, DT Global proceeded to make payments to the new bank account.
In response to the Attorney General’s demand letter, DT Global refused to take responsibility for the fraud, arguing the firm is still investigating the exact circumstances.
“DT Global is currently conducting an investigation into facts and the circumstances surrounding the allegations raised in the letter of demand. Our investigations involve multiple donors, several banks and various other parties and are presently at a preliminary stage. Accordingly, at this point in time, DT Global is unable to admit or deny the allegation in the letter of demand,” reads the letter, dated 5th June 2023, signed by Merlyn Asked, the company’s General Counsel.
Malawi’s Attorney General, Thabo Nyirenda was not available for comment.
The Principal Secretary for the Ministry of Health, Samson Mndolo, asked for more time to respond to a written questionnaire but added: “What I can say now is that the funds have not been stolen at the Ministry of Health. There is no fraud at the Ministry of Health, but give me time to respond to your questionnaire.”
The UK, Norway and Germany were not immediately available for comment.
The Health Services Joint Fund is one of the crucial funding baskets supporting Malawi’s health services.
During the recent cholera outbreak, for example, the UK and Germany used the fund to channel over K700 million in emergency support to fight the outbreak that killed over 1500 Malawians early this year.
The development comes as the country grapples with its public finance management system, with taxpayer and donor funds regularly swindled.
The development highlights the leakage of funds in a fund mostly run by the donor partners or their selected management firms.
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