/ 20 November 2014

Cashgate: Malawi ministers put public first

City slicker: Bheki Dube
City slicker: Bheki Dube

Two Malawi Cabinet ministers violated a provision of the country’s Constitution when they released to the public a 124-page audit report into the systemic theft of $48-million in state funds.

The ministers bypassed Parliament, which should have seen the report first.

The theft, known locally as Cashgate, saw some Malawi public servants – in collusion with various contractors – siphon millions of dollars from government coffers for goods and/or services not rendered.

As a result of the scandal, Malawi’s major donors suspended up to 40% of their aid to the country.

The audit report, prepared by British firm Baker Tilly Risk Advisory Services, covered the period from April to September last year and was presented to auditor general Stephenson Kamphasa two months ago. It details specific transactions and the names of individuals and the businesses involved.

The authors of the document warn in the report that it is “not for public release outside of the office of the auditor general and [the] relevant law enforcement office of the police and Anti-Corruption Bureau”.

Overwhelming public interest
However, Justice Minister Samuel Tembenu and Information Minister Kondwani Nankhumwa cited overwhelming public interest when they released the report on October 31 at a ceremony in the capital Lilongwe.

“This report was supposed to be confidential. But we thought of making it public so there is no speculation on what is contained in it. The emphasis is not about names, but it is about the findings,” Tembenu told the Malawi Daily Times last week.

It has since emerged that the two violated the constitutional provision that says the auditor general should submit all reports to Parliament before they are released to the public.

Parliament’s public accounts committee chair Alekeni Menyani told the Mail & Guardian that the law mandates his committee to receive such reports before they are made public.

Finance Minister Goodall Gondwe said the release of the report was unconstitutional and unprocedural, and that the government was moving to correct the error. “We will comply with the constitutional provisions and present the report to Parliament at the next sitting.”

Authenticity questioned
After the release of the report, many Malawians, including local auditors, questioned the authenticity of the document, saying the language was not what they would expect from auditors.

But Kamphasa said the report is genuine and has not been tampered with.

A preliminary report by the same firm released in February this year said about $30-million had been stolen, but the recent final report puts the figure at $48-million.

One of the companies named in the latest report is Top Prima/Rumage Pace, which is owned by an Indian national who purportedly did business with the Malawi Defence Force and Malawi Police Service, and was paid almost $24-million.

Two companies, International Procurement Services and OG Construction, owned by businessperson Oswald Lutepo pocketed $6.2-million. Lutepo is being tried by the high court on charges of laundering, theft and attempted murder.

The South African-based Thuso Group, owned by Alexander Banda and Nelson Kauwa, is alleged to have received $4.8-million.

Malawi’s Anti-Corruption Bureau has said that more than $48-million vanished during former president Joyce Banda’s two-year rule and $214-million went missing during the eight-year rule of former president Bingu wa Mutharika.

The German government pledged $25-million to the Malawi government to conduct another comprehensive audit from 2009 to 2012.

Malawians have wanted the state to make the report public because it was taxpayers’ money that has been looted, they said.