Germany grants Malawi $25m to probe 'Cashgate' scandal

The Cashgate scheme is the biggest financial scandal in Malawi's history, and helped push former president Joyce Banda out of power during elections in May. (AFP)

The Cashgate scheme is the biggest financial scandal in Malawi's history, and helped push former president Joyce Banda out of power during elections in May. (AFP)

Germany, one of the countries that suspended aid to Malawi after a massive public sector graft scandal, has granted the impoverished southern African nation $25-million to conduct an audit into the fraud, a diplomat said on Saturday.

“The German-funded audit is to quantify the amount misappropriated over the period 2009-2013,” Katrin Pfeiffer, head of development co-operation at the German embassy, said in a statement. Last year, Malawi uncovered a corruption ring involving government officials, in which at least $30-million was swindled from state coffers, according to an audit already done by British auditors. 

The scandal, dubbed “Cashgate”, prompted foreign donors – who provide around 40% of Malawi’s budget – to pull the plug on aid of around $150-million. The pilfering of public funds is said to have taken place over just six months, from April to September 2013, during former president Joyce Banda’s term in office. 

Banda fired her entire cabinet in the wake of the scam which she blamed on “loopholes” in the public payment system introduced by her predecessor Bingu wa Mutharika. Pfeiffer said there were suggestions the looting actually took place over a longer period dating back to 2009 when Mutharika, who died suddenly in 2012, was in power. 

The audit will be conducted by PriceWaterhouseCoopers. The German embassy gave no details about what period of time it would cover. The Cashgate scheme is the biggest financial scandal in Malawi’s history, and helped push former president Joyce Banda out of power during elections in May. A number of government officials implicated in the fraud are facing criminal charges, and a first official was jailed last month for three years over the scandal.

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