A British-funded forensic audit into the massive plunder of the Malawi government coffers has uncovered that over 13 billion Malawi kwacha (over US$ 30 million) was looted by politicians, business persons and civil servants.
The audit, conducted by British accounting firm, Baker Tilly, covered the period between April 2012 and September 2013. Coincidentally President Joyce Banda took over power on 7 April, 2012, following the sudden death two days earlier from cardiac arrest complications of President Bingu wa Mutharika.
The scandal unravelled in September last year after the attempted assassination of the finance ministry Budget Director Paul Mphwiyo, who was reportedly on an anti-corruption crusade in government. Just days before, a junior civil servant was found with stacks of cash totalling more than US$300,000 in the boot of his car.
More cash was confiscated from some civil servants’ homes and car boots.
Malawi’s donors have reacted by withholding US$ 150m pending further investigation into the scandal. Up to 40 per cent of Malawi’s annual budget is donor-funded.
According to the forensic audit findings, politicians and business tycoons connived with civil servants to infiltrate the government finance management system. They used to delete all the transactions after encashing the pilfered money.
“We have seen funds transferred between unrelated companies, individuals withdrawing funds from unconcerned organisations and inflated prices paid to companies with limited or no trading history,” reads the report.
According to the report, some companies were registered as recently as May 2013 but immediately started transacting with government in deals worth millions of dollars. Some companies were found to be paid for goods and services not even rendered to government.
The audit report does not mention names of individuals and companies involved in the historic theft but at least 70 people are currently in court answering to fraud and theft charges linked to the scandal, dubbed cashgate by the media.
The audit report, coming less than three months before Africa’s second female president faces voters in May, is crucial to President Banda. According to studies by the Catholic Commission for Justice and Peace and the National Democratic Institute (NDI), ‘cashgate’ will be a crucial issue in these elections.
Meanwhile, civil society organisations, under the banner of the Grand Coalition, are planning to hold nationwide street demonstrations this Thursday to protest the handling of the ‘cashgate’ affair and issues surrounding the controversial sale of the presidential jet.
Media reports say proceeds from the sale (US$ 15 million) of the jet to a Virgin Islands company cannot be traced as they did not go through Account Number One at the central bank as is normally the case.
Mutharika controversially bought the jet from the US at US$22 million. Britain protested by cutting down £3 million annually in aid since London believed part of British aid financed the acquiring of the jet.
When she took over power, President Banda promised to sell the jet because it was expensive to maintain.