Countering Ntata’s report on Malawi cashgate: Attempting to deal with realities and truth about looting

PREAMBLE 

This writeup is an attempt to respond to a report by Mr Allan Ntata that was published online. Whilst the constitution of Malawi provides every person with a right to freely communicate his or her views it becomes a violation of other peoples right where misrepresentation of facts on the ground considering that investigations on the Cash-Gate Scandal are still on-going and a clear picture as to what really transpired for the reported huge sums of money to be lost by government.

What Mr. Ntata has presented cannot qualify as a report because it was not commissioned by anyone but himself and his party cohorts. It is clear that the write up is aimed at discrediting the Government and leadership of President Joyce Banda as it tries to link the president to issues of public finance management which technically fall outside her control as the Office of the President and Cabinet (OPC) only provides overall policy direction and financial controls are a responsibility of Principal Secretaries who serve as Controlling Officers in the various Ministries, Departments and Agencies (MDAs). It does not have sufficient reference or substantiation to qualify as a report as such it is at best a collation of gossip and social media accounts, rumor presented against a background of very few facts.

The write up attempts to paint a picture that President Joyce Banda is in one way or another implicated in the cash-gate scandal without providing tangible evidence to support such gross claims and deliberately omits facts on the ground in view of efforts the government is putting in place to deal with the scandal. For instance, the Malawi Government (GoM) has openly asked for help from its cooperating partners to assist in the investigations so as to get to the bottom of the matter.

In this regard, the British Government has rendered a helping hand and dispatched members of the elite Scotland Yard to lead in the forensic audit of the IFMIS system. The decision for government to ask for help was sanctioned by President Joyce Banda considering that the National Audit Office (NAO) lack capacity in IT based auditing as it does not have automated audit management tools and that confirms her reiteration not to cover up the looting and let alone shield anyone including members of her cabinet whom might get implicated in the cash-gate scandal. To this effect, already two senior members of the ruling party (Peoples Party), Mr. Ralph Kasambara (Director of Legal Affairs) and Mr. Oswald Lutepo (Deputy Director for Recruitment) have been suspended following their arrest in matters pertaining to the same cash-gate scandal.

Mr. Ntata further claims that corruption continues to be perpetrated by the executive basing his assertion on his experience at the Anti-corruption Bureau (ACB). However, in any case, having served as a Prosecutions Officer during the Mutharika,s reign and thereafter having worked as Special Assistant to the former president, one would be compelled to say that possibly he could shed more light on such matters if reports of self-aggrandizement and squandermania by the former president and his cronies are anything to go by.

In fact, reports question as to how he joined the ACB considering that at the time of his appointment he had not sat for the Bar examinations at the High Court to allow him to practice law in Malawi since he did his legal studies outside the country. It is even not clear if he was licensed even at a time he worked at State House for the former president.

Again, Mr. Ntata is wanted by the Police for questioning on his role in the infamous Midnight Six treason case as it is alleged he was part of those who provided legal advice to have the then Vice President Joyce Banda to take over the presidency following the death of Dr. Bingu wa Mutharika in 2011. It is only logical and fair to say that Mr. Ntata is disgruntled and envious to see that President Joyce Banda successfully took over the reins of power and so far she has done remarkably well by taking bold decisions on reforming the ailing economy which has resulted in macroeconomic stability and won the president international praise and support which was lost during his brief stay at State House.

In this regard, his report is purely bent on malice, character assassination of the President and aimed at serving his political masters in the Democratic People’s Party (DPP) who pray to divert people’s attention from their legitimate expectation of the outcome of the forensic audit which the Government has duly instituted whose outcome is likely to implicate the DPP leadership.

This paper is therefore an attempt to show that the Licence to Loot is in essence a conspiracy theory plot aimed at serving some opposition parties considering that there are simply not enough facts and analysis to declare that the cash- gate is masterminded by the President and not the epitome of a culture that has been nurtured by many sections of Malawian society for close to two decades, since the end of one party era.

The paper makes an effort to give a background regarding how public financial management (PFM) structures and the processes operate to give a reader an insight into economic governance architecture and its dynamics also paying attention to the political governance side as well.

INTRODUCTION

To begin with to say the Cash-Gate Scandal started in the OPC is too simplistic considering the magnitude of the reports of financial abuse in EPICOR based IFMIS central payment system (CPS) of government.  If truth be told this scandal has given room for the society at large to reflect on the scale of the problem, when and how it started and then what needs to be done to stop the malpractice and not the narrow view of the Licence to Loot report which would like to portray a false impression that the reported looting started with the PP led government.

As a background, during the United Democratic Front (UDF) rule (1994-2004) the GoM was using a decentralized accounting system where MDAs operated bank accounts with commercial banks. It was observed that this set up was contributing to huge domestic debts and arrears as there was little control by the Accountant Generals Department (AGD) hence the decision by government to centralize Government bank accounts and payment management processes through the introduction of EPICOR based IFMIS in 2005 on pilot basis through Soft-Tech Consultants using a platform that was used in Tanzania.

Furthermore, the GoM has been dealing with Public Financial Management (PFM) issues over a period of time. In 2002 it produced a Malawi Financial Accountability Action Plan (MFAAP) which elucidated the issues faced at that time relating primarily to financial management. This followed a Country Financial Accountability Assessment (CFAA) in 2001 highlighting some of the deficiencies in the financial systems. Some progress was made on the reform activities but only limited and sporadic attention was paid to this plan until a MFAAP Technical Committee (TC) was formed in 2005 in relation to following up on the issues. However there were some achievements under the MFAAP prior to the formation of the MFAAP TC, notably the legislation of the Public Financial Management Act, the Public Procurement Act and the Public Audit Act in 2003 popularly known as the 3Ps. Also there was the formation of the Office of Director of Public Procurement (ODPP) and the Central Internal Audit Unit (CIAU), a revision of Treasury Instructions and local government regulations.

Certainly government can point to progress in its PFM but it is acknowledged that there is much more to achieve. Progress has indeed been made on many of the activities in the action plans but they have not had full impact as envisaged hence now the GoM is implementing a more comprehensive PFM reform program with support from its cooperating partners through a World Bank Trust Fund.

There are a set of outcomes which are required from the PFM reform agenda. These refer to improvements in linking planning and budgeting, public investment analysis, local revenue forecasting and collection, harmonizing donor resources into a government programme, procurement, financial accounting management including cash management, reporting on finances and outputs, auditing and communication. The vision of the reform programme is to enable MDAs to be effective and efficient in applying economic and financial management to public financial resources and to be fully transparent and accountable for such resources in line with the government’s overall strategy and policies.

The MGDS identifies fiscal management, public sector management, public policy formulation, corruption and fraud, among other issues, as some of the main tenets of good governance.

PFM reforms are coordinated by the Ministry of Finance (MoF) with due collaboration with the OPC. The MoF organizes various forums where progress on PFM reforms is discussed and strategized. The forums comprise of Taskforces and Working Groups which feed into the PFEM Technical Committee. The Committee is chaired by the Secretary to the Treasury (ST) and it reports to the Steering Committee of Principal Secretaries and Chief Executives, which is also chaired by the ST.

The PFM reforms are also discussed at GFEM forum meetings which draw its membership from the Government and Development Partners (DPs). It is chaired by the Secretary to the Treasury and Co-Chaired by one of the leading Development partners. During such discussions areas that are identified to require further strengthening are highlighted and follow-up action duly prescribed. Over the years many recommendations were made to the GoM to deal with issues of non-compliance to the PFM laws hence the current revelations of fraud and corruption are a testimony to the fact that such calls were not met with political will especially by the DPP regime as most of these reform assessments were done at that time.

For instance, with reference to EPICOR based IFMIS which is at the centre of Cash-Gate Scandal it is observed that the OPC commissioned a study in 2009 to assess the operational deficiencies and other challenges in order to make appropriate remedies. The assessment report highlighted several major weaknesses of the system such as the system being based on outdated system technical specifications which were not a true reflection of the GoM requirements at the time of EPICOR 7.2 implementation in 2005 as its operational framework was incomplete and fell short of other key elements and full functionality of the system.

In addition, the system did not any alert system to detect any fraudulent activities or any deviations to normal operations within the system such as overriding system controls without appropriate approval process and any system performance issues let alone a functional audit trail to track system usage. These are very serious issues that needed government attention but surprisingly the DPP led government chose to ignore expert recommendations and that raises eyebrows as why no action was taken hence the calls from the public that the forensic audit should cover the entire period of IFMIS implementation. The assumption is that this looting was allowed by the DPP leadership through its deliberate policy of not acting on recommendations to upgrade and improve the IFMIS. In other words the DPP administration chose policy inaction as its silent tolerance to corruption.

Again, in 2010 when an Accountant working in AGDs IFMIS unit was found with money in excess of MK400 million in his personal account, upon investigations it showed that the money was connected to a fraud case at the Police CPO, the DPP administration decided not to continue with case and apparently the accused civil servant at the AGD was posted to a Diplomatic Mission in Kuwait. One wonders as to why such a person answering criminal charges of theft of public funds is accorded diplomatic privileges. All this points to suggestions of centralized rent seeking behavior of DPP leadership that was perpetuated through patronage of the Mhlakho wa Lomwe whereby all strategic positions of influence were shared amongst the presidents tribesmen to facilitate organized looting which has now come to the open though sadly with the shooting of the Budget Director (BD).

Now for Mr. Ntata and his friends to attribute the looting to President Joyce Banda’s 2 year rule is nothing but over exaggeration. Worse still, to say that President served in the DPP administration as a senior minister and Vice President then she was part of the looting is like escaping through horns as it is an open secret that during her tenure as Vice President she was sidelined on all crucial government business to the extent of being stopped to attend cabinet meetings. Even her office was denied of funding and Government went to the extent of withdrawing her official car as such to say she was an important member of the DPP administration is disrespectful and misleading.

Again, President Joyce Banda served as a Gender and Foreign Affairs Minister in the DPP administration. The two ministries are not PFM institutions hence it is not correct to say the President was fully aware of the looting and more so party to the malpractice. In fact, her track record in the two ministries speaks for itself e.g. while at the Foreign Affairs she presided over Malawi’s switch in its diplomatic ties from Taiwan to Mainland China. Likewise whilst at Gender Ministry, she worked tirelessly to ensure that gender main streaming was achieved across MDAs and society at large.

In view of the above, it therefore important to wait for the completion of the forensic audit as it will provide a basis of the actual scope of the MDAs involved in this scandal. The understanding is that those reported MDAs may not be the only ones hence it is illogical to start pointing figures at this point in time as to who is implicated in the cash-gate scandal let alone make people believe that the looting has only occurred in the past 18 months under the leadership of President Joyce Banda when in actual fact audit reports indicate that systematic looting of public funds started with the advent of multiparty politics in the country as far as 1994 and worsened during the DPP administration.

BACKGROUND

Legal and Institutional Framework

The constitution of the Republic of Malawi sets out the broad parameters of PFM. It states that funds can only be spent in line with the constitution or as authorized by an appropriation law.

The PFM Act (2003) lays down financial management procedures covering the budget process, cash and debt management, accounting, reporting, internal controls and the audit and legislative oversight to be exercised over these functions. The Act also specifies the office of the Secretary to the Treasury (ST) who is responsible for setting polices practices and procedures for all financial management.

The PFM systems in Malawi include a public procurement oversight (ODPP) responsible for policy and regulatory oversight. It also has a procurement appeals body. The Audit Act outlines the role and responsibilities of the NAO and facilitates a degree of independence of the office. Already the GoM has upgraded the position of the Auditor General to same rank with the Deputy Chief Secretary to Government and consultations are underway as to how best to enhance NAOs financial independence following proposals from DPs that its budget should not be determined by the Treasury but rather by Parliament.

 

Parliamentary Oversight

The Budget and Finance Committee has a duly responsibility to ensure that the government through its Budget Division is following a budget calendar that is predictable and gives MDAs enough time to prepare their annual estimates before parliamentary debate to assist in adherence with policy priorities. However, the situation now is that too little time is given to MDAs for their preparation after ceilings are given and also for the National Assembly to debate on the submissions hence most MDAs use incremental model in coming up with their budgets. Also Parliament tend to pass the budget a month or two beyond the date of the start of the new financial year of 1st July and this also affects proper implementation of the budget.

On the other hand, the Public Accounts Committee (PAC) is mandated by the Public Audit Act (2003) to ensure that MDAs are held accountable for their use of public money and public resources amongst other functions. However, looking at the PAC report on the cash gate scandal, it is evident to say that the committee is not examining audited public accounts which is a sign of lack of parliamentary oversight over public expenditure considering that its report indicate that its members did not have information regarding non compliance of PFM obligations by public servants and operational deficiencies of IFMIS which culminated in the reportedly looting of government coffers. In fact, PAC ought to be an important stakeholder in the PFM reform process due to its role hence for the committee not getting involved in the matters it only shows the leadership of parties such as DPP have deliberately allowed it to happen so that no one is held accountable for misappropriating public funds. This is in view that on many occasions the Auditor General’s report has over the recent past taken many years to produce and in the process rendering PAC hearings as a mere talk-show with no follow-up action to punish offenders and also remedy the malpractices.

 

 

Figure1. PFM Systems in Malawi

INTEGRATED FINANCIAL MANAGEMENT INFORMATION SYSTEM (IFMIS)

The Accountant General’s Department (AGD) is the accounting arm of the Government. It is mandated to manage and produce all Government accounts as well as ensure adherence to appropriate financial management control systems, transparency and accountability of funds.  As a development of its accounting systems it introduced the Integrated Financial Management Information System (IFMIS) EPICOR based in 2005/06 financial year which has assisted in obtaining better financial control. The system faces however several issues particularly in getting sufficient transactions to be covered through the system as well as using all the facilities it possesses. It does not as yet provide the capability of providing financial reports. These and other operational weaknesses might have contributed to the reported cases of looting of public funds. However, the GoM decision to roll out IFMIS was meant to renew its efforts towards introducing an improved accounting and financial management system aimed at improving transparency, accountability and efficiency in allocation and usage of resources.

Malawi has the EPICOR based IFMIS which is similar to the one in Tanzania so some of the learning has been done through viewing progress in that system.

The introduction of EPICOR based IFMIS has seen the centralization and consolidation of the Government payments and treasury accounts management system thereby giving the AGD more control which is a major strength of the current system. The system is accessed and used by MDAs on GWAN transport platform and VPN connectivity.

The implementation of EPICOR based IFMIS has yielded many tangible results considering the background of complete manual systems used prior to its roll out which has significantly reduced the amount of effort and time for processing payments and risk of errors often arising from manual processes. For instance, it has assisted the GoM in restoring fiscal discipline through public expenditure management particularly on transactions that are processed through the system resulting in reduction of domestic debt and arrears.

The AGD has also implemented a decentralized payments system with the Malawi Defense Force (MDF), Police and State Residences running own CPOs parallel to the main system for confidentiality purposes. However, recent reports of financial mismanagement in some of these institutions there is need to review the arrangement. Again, the backup tapes from these secondary remote sites are not encrypted hence there is room for tampering with the data before they reach the main data centre at the AGD.

The GoM has also through the National Local Government Finance Committee (NLGFC) introduced another IFMIS (Serenic Navigator) for the local councils which is different from that of the AGD. There is need for enhancing the interfacing of the two systems for smooth monitoring and control by Government. So far the expectation is that the forensic audit in progress now called in the wake of the Cash-Gate Scandal should also cover Local Assemblies to ensure that there is proper usage of public funds considering that huge sums of funds are spent at council level following the decentralization framework.

It is worth pointing out that despite the implementation of the EPICOR based IFMIS being a remarkable and impressive achievement considering the complexity of the system, the GoM undertook an assessment of the system in 2009 which revealed a number of key issues requiring attention by Government. However, it is surprising to note that up to date no action was taken to deal with operational and functionality weaknesses of the IFMIS which raises many questions than answers especially in the wake of the cash-gate scandal. For instance, the assessment revealed that there was need to upgrade the EPICOR version 7.2 to 9.0 so that all modules were activated to enhance operational security considering that only four modules were operational out of the 9 complete EPICOR financials suite which Government fully paid for.

In addition, the EPICOR based IFMIS does not have any electronic interface with key sub systems meant to be part of the entire IFMIS framework except for budget module (Active Planner), hence difficult to provide Government with instant and timely financial data and information which was a major objective of IFMIS as transactions from these systems are captured manually and historically e.g. revenue and transactions from Malawi Revenue Authority (MRA), Immigration, Road Traffic Directorate and Department of Civil Aviation which results in challenges of reconciliation creating room for malpractices difficult to detect. For instance, commercial banks collecting revenue on behalf of MRA remits 80% of the funds to RBM on daily basis while the remainder 20% is remitted in 3-5 days compounding further the problem for RBM to reconcile the books. This is against the backdrop that the IFMIS cash book is also not electronically linked to the RBMs MIDAS payment/banking system to facilitate instant bank reconciliations and instant bank balance reporting.

The current IFMIS Chart of Accounts is not fully GFS compliant as per IMF requirement as it does not have a multi-dimensional classification structure to provide for varying reporting needs across Government. For instance, its structure is based on a cash basis of accounting as opposed to IPSAS cash modified which does not comprehensively cover all Government operations as some elements including pensions, fixed assets, are not recorded and reported. And looking at media reports it is clear that Government property such as houses and vehicles is being sold at less than market value to a few political elites in the country taking advantage of these weaknesses in the system.

This trend started during the UDF regime and continued with the DPP led government. For example recently it has been reported in the media that Prof Peter Mutharika, Dr George Chaponda of DPP and Bineth Trust belonging to late Dr Bingu wa Mutharika bought MHC and Lilongwe City houses on giveaway prices in low density areas of Lilongwe and Blantyre at the time they were in government. It is also reported that Dr Mutharika dubiously acquired his Ndata Farm from the Malawi Development Corporation (MDC) and presided over its dissolution and yet the company was very strategic to the country’s economy with shareholding in major industries. From this kind of organized looting it is surprising that the asset module was not activated in IFMIS in order to pave way for illegitimate transfer of Government assets to personal estates.

The current structure of the CPS within the IFMIS lack appropriate tools and effective controls for checking, verifying and authenticating payment transactions before issuing cheques or effecting transfers to third parties hence difficult to detect any fraudulent payments from within the financial system. For instance, the AGD does not have means for verifying the authenticity of signatures on the payment vouchers and electronic voucher list from MDAs, hence difficult to establish instances of forgery. In this regard, junior accounts staff who are mainly tasked with the responsibility of preparing payment vouchers can easily take advantage to defraud Government huge sums of money as the case now with the cash-gate scum.

Furthermore, the current payment approval structure and process is weak more so at MDA level in that approval authority and delegation limits and structure are not well defined to check abuse within MDAs. Again, there is little involvement of controlling officers and other key staff in the payment approval process within the system. This is compounded by the fact there is significant IFMIS system user knowledge gap particularly with PSs and Directors of Finance who ideally should have control over the operations of the system at MDA level. This also gives room for the Accounts staff particularly junior officers to connive with some units within the AGD to process illegitimate payments and it becomes difficult to detect such cases of malpractices. Now if controlling officers and programme managers are said to lack capacity in managing the IFMIS system at the ministry level, how would it be possible for a whole President to get involved in the issues of financial management as Mr. Ntata wants the public to believe.

The International Monetary Fund (IMF) was also invited to Malawi to review the situation on IFMIS issues. From its East AFRITAC study findings, IMF raised a concern over the dependence on external consultants (Soft Tech Consultants) in maintaining the system. This has not been addressed by Government resulting in the consultants being called on regular basis to provide even minor support that should ideally have been the responsibility of the core support team of the AGD for proper ownership of the system. One of the constraints could be that there are insufficient software personnel to help develop the system hence over reliance on software consultants. Inclusion of fiscal data onto IFMIS interface was another issue observed from the study.

The above notwithstanding, it is fair to say that change management process was not properly planned and the AGD and MDAs do not have specific change agents to champion all system change processes which has been compounded by a normal cultural resistance towards any new system from certain key Government officials who had hidden personal interests in old legacy manual system resulting in having the system easily accepted at all levels. It is an open secret that with the manual decentralized system in place during the UDF regime some senior officials would collude with the accounting staff to defraud Government by processing illegitimate payments and such were not happy with the centralization arrangement which took away their powers of financial control. In this regard, it is being noted that weaknesses in the IFMIS have deliberately been left unchecked for many years e.g. 2005 to date so that for some officials it remained business as usual.

In view of the foregoing it could be duly argued that if the DPP led government under the leadership of Dr. Bingu wa Mutharika had taken remedial measures to improve safety and control measures of the IFMIS system, these reports of massive looting would not have happened. Instead, the DPP government decided not to act on the recommendations and allowed weak PFM controls resulting in looting of public funds. And going by the preliminary audit reports suggesting that over MK90 billion was lost during the DPP rule, and the massive wealth of the former President estimated at over MK60 billion, it points to leadership sanctioned corruption. This is why it is important for the forensic audit to go as back as 2005 when IFMIS was being rolled out so that as a country we understand how deep the hole is in order to be able to come up with solutions on how to avoid re-occurrences and also make sure that those liable are held accountable.

In addition, IFMIS now captures much of the Government expenditure. However, it does not capture much of the development budget, the revenue and some items in the budget which are handled through separate financial systems e.g. the Road Fund Administration and the National Aids Commission. It would therefore be better if all financial sub systems are interfaced with IFMIS for easy reconciliation by the AGD and RBM.

 

PLOT TO LOOT- PFM INSTITUTIONS

NATIONAL AUDIT OFFICE (NAO)

The National Audit Office (NAO) is Malawi’s supreme audit institution and the role of its head the Auditor General is prescribed both under the constitution and the Public Audit Act of 2003. It can be said that during the DPP administration there had been a delinquency in annual audits for several years, including a prolonged period without an Auditor General, which resulted in the NAO failing to conform to its constitutional requirements of reporting within 6 months of the end of the financial year. The audit backlog had also applied to Local Assemblies which were operating without Councilors as the DPP administration stopped the holding of Local Government Elections. And this was the case at a time Government increased funding to the Local Assemblies under the decentralization framework and yet no audits were being done to check usage of those funds.

Furthermore, the IFMIS assessment report (2009) also mentioned of the need to build capacity for the NAO for it to be able to carry out its constitutional mandate by producing annual audited accounts in time for submission to Parliament. In fact, NAO does not have adequate capacity in terms of man power and funding to effectively carry out various types of audits including automated systems. The reports coming out indicate that the audit coverage for the NAO is at 50 per cent and this has been the case for many years resulting in Auditor General’s Report coming out behind schedule. It also has a vacancy rate of over 40% and no efforts were made to address its capacity for IT and performance audits.

In addition, the NAO does not have capacity to audit EPICOR based IFMIS functionality apart from auditing the financial statements (Appropriation Accounts) as it does not have automated audit management tools to enable it carry out that function. This was brought to the attention of the DPP led government and no deliberate effort was made to build capacity in IT based auditing yet Government was fully aware the risks involved if IFMIS was not audited in full.

The above scenario points to an assumption that there was no political will to comply with the PFM legislation particularly the Public Audit Act (2003) that stipulates to have timely annual audit reports which is a very serious constitutional violation as it exposes a culture of impunity on the part of the DPP administration as the Government (Executive) is excepted to account to Parliament on how it used public resources following the Appropriation Bill in the previous year.

CENTRAL INTERNAL AUDIT (CIAU)

After a PFM Situational Analysis it was observed that internal audit function was not robust in MDAs and this was contributing to failure to detect financial malpractices at the source hence the decision was made to set up this unit within the MoF in 2003. The philosophy in strengthening internal audit function is that it would be cost effective to enhance ethics in financial management as malpractices would be minimized instead of waiting for external audit at the end of financial year to detect how much money was lost and not being able to recover the lost resources. In other words, with systems and procedures established for good PFM, benefits could well be lost if there is poor compliance. Internal audit is thus an essential ingredient to good PFM.

However, the DPP administration failed to support this thinking and did not appoint a Director for Internal Audit hence creating a leadership gap resulting in failure for the CIAU to operationalize their plans to set up Internal Audit Committees in all MDAs with the aim of orienting toward a risk based process approach. Even the number of internal auditors is still on a lower side implying Governments systematic ploy to allow financial processes being done without being audited giving room to fraud and corruption across Government.

CIAU has been struggling to get internal audit procedures entrenched into MDAs hypothetically because of lack of political will. However, its pleasing to note that immediately upon assuming office President Joyce Banda appointed a Director for Internal Audit and directed that the CIAU be moved from the MoF to fall under OPC so show her Governments commitment to ensure that internal audit function is given its due importance and help in bringing back sanity in the handling of public resources across MDAs.

 

OFFICE OF THE DIRECTOR OF PUBLIC PROCUREMENT (ODPP)

The Public Procurement Act (2003) gives the ODPP oversight and regulatory authority over procurement matters in Government. The procurement law also calls for the establishment of procurement cadres across MDAs. However, very few MDAs have procurement units to advise on procurement issues and also serve Internal Procurement Committees (IPCs). In many instances, procurement is still being done by Administrators creating room for malpractices and misprocurements.

In addition, the DPP administration administratively hijacked the authority of the DPP by setting up a parallel office in the OPC known as Government Contracting-Out (GCU). The OPC through GCU started to demand that the ODPP refers all high value procurement matters to OPC to scrutinize them before no objection is given to the procuring entity and subsequent award of contracts to the service provider. This was tantamount to interference with the independence of the ODPP as provided by law. It is not surprising that during the DPP rule media reports were rife as to how contracts were only awarded to those businesses whose owners had connections with the party e.g. Mulli Brothers had contracts with Government ranging from drug supply, learning materials to fertilizer and inputs subsidy supply. These arrangements would apply likewise to Parastatals such as Escom, Water Boards, etc involving multi-million dollars. In such cases it is very difficult to ensure a level playing field resulting in contracts awarded to business without capacity to supply leading to Government paying for goods and services that were not supplied considering that businesses would get advance payment of 60 per cent which is against the law.

For instance, about two farming seasons ago, the DPP administration procured fertilizer under the subsidy programme through Mulli Brothers at a cost of MK13, 000 for a 50kg bag at a time when the market price was MK10, 000. There are cases of similar nature across the sectors of the economy which is a clear indication that the DPP administration was bent on perpetuating looting of public coffers. It is therefore realized that there is need to strengthen the procurement supply chain for improved accountability and transparency.

PLOT TO LOOT- ANTI-CORRUPTION AGENCIES

FINANCIAL INTELLIGENCE UNIT (FIU)

The PAC report on Cash-Gate presented in Parliament observes that the FIU has since its establishment been providing financial intelligence reports to law enforcement agents since it’s not mandated to investigate suspects but not even a single case has been concluded, let alone the culprits prosecuted. This raises concern as it is surprising why the suspects were being protected all these years considering that the FIU was set up during the DPP administration following the enactment of the Money Laundering Act in 2006.

In this regard, it can said that the FIU was deliberately not given powers of arrest and seizure of proceeds of crime. This part was arrogated to other weaker bodies like the Police and ACB both of which were being controlled by President Mutharika. Even the provisions of the Money Laundering Act were deliberately weakened to benefit looters in Government and their crooked cronies. For instance, Section 35(2) a provides for the maximum penalty of 10 years imprisonment and a possibility of a fine of MK2 million. So who would fail to pay such a fine considering that these people looted billions of Kwacha of public funds?

In addition, it is reported that most commercial banks are reluctant to divulge information regarding their clients hence fail to comply with set of rules and regulations on reporting suspicious transactions. The DPP administration needed to come out strongly to enforce compliance in this regard if it was committed to fighting fraud and cases of money laundering hence it could be argued that Government allowed this happen in order to protect political and business elites. That said, it is pleasing now to note that the leadership of President Joyce Banda is reviewing the legal mandate of the FIU and that by March 2014 it would be operating under an improved framework that might give it prosecuting powers.

 

ANTI-CORRUPTION BUREAU (ACB)

Apart from the institutional challenges emanating from the current state of the Corrupt Practices Act (CPA) the ACB faces a number of capacity problems. Its staff establishment has not been increased hence does not have enough manpower to deal with corruption issues decisively. The ACB has for many years relied on donor financing which is not sustainable as such one wonders as why Government should fail to fund anti-corruption activities and yet claim to champion a zero tolerance policy on corruption as the DPP administration claimed in its rhetoric.

Another challenge has been the Bureau’s failure to retain lawyers for its prosecution team due to lower pay which has meant its overreliance on private lawyers who would not really pursue corruption cases with same vigor as Government lawyers. This has proved very costly for the ACB and Government at large. This may apply to senior investigators as well who have tended to join International Financial Institutions (IFIs).

On a much more serious note, the ACB has operated for most if not the entire period of the DPP administration without a Deputy Director. This can be said to be a deliberate ploy to stifle the independence of the Bureau as it is easier to control one Director without a Deputy as the CPA only accords these two offices to seek consent from the Director of Public Prosecutions to prosecute corruption suspects. To support this claim Mr. Victor Banda one of the founding members of the ACB had his appointment to the position of Deputy Director rejected twice by the Public Appointments Committee of Parliament. And in absence of a Deputy Director if the Director has links with those accused of corruption there would no one to authorize the opening of the cases.

Again, Dr Mutharika made sure that his fellow tribesman Mr. Alex Nampota was at the helm of the ACB for the larger part of his administration. To the extent that cases involving opposition members were pursued while those in Government were suppressed e.g. Mr. Yusuf Mwawa with close links to Dr. Bakili Muluzi was jailed for misappropriating a mere MK100, 000.00 with no possibility of paying a fine while Mrs. Patricia Kaliati,s case involving millions of Malawi Kwacha was not pursued vigorously. All this points to the fact that the DPP administration allowed corruption to thrive in the country through its control of the Director of ACB despite its claim to be following a zero tolerance policy on corruption.

 

PLOT TO LOOT- STRATEGIC PUBLIC OFFICES

During the DPP administration all key government positions especially those heading PFM institutions were meant for members of the Lomwe tribe, President Mutharika,s kinsmen and folk. This was a deliberate move to ensure centralization of collection and sharing of economic rents under the Presidents control. Dr Mutharika went further to form a tribal grouping for the Lomwes popularly known as Mhlakho wa Lomwe of which he was its Patron on the disguise that he wanted to promote culture and tradition amongst his people but it turned that its leadership was kind of kitchen cabinet for the country as most of them if not all held strategic positions inside Government. A quick snapshot of the positions in question is given below:

Chief Justice- Mr. Lovemore Munlo

Minister of Finance- Dr. Ken Lipenga

Deputy Minister of Finance- Mr. Fraser Nihorya

Minister of Justice- Prof. Peter Mutharika (Presidents brother)

ACB Director- Mr Alex Nampota

Secretary to Treasury- Mr. Joseph Mwanamveka

RBM Governor- Dr. Perks Ligoya

Budget Director- Dr. Dalitso Kabambe

MRA Commissioner General- Mr. Muhara

ADMARC CEO- Dr. Matabwa (Mutharikas nephew)

ESCOM CEO- Mr. Zembani

MACRA Chairman- Mr. Ted Nandolo

MERA CEO- Dr. Alexious Chiwaya

NFRA CEO- Mr. Saukira

Police Chief- Mr. Mukhito

Director of Public Prosecutions- Mr. Kanyuka

Attorney General- Dr Jane Ansah and Later Maxon Mbendera

Deputy Accountant General- Mr. Maseya

Director of State Residences- Mr. Namondwe(Mutharikas uncle) Later Mr Edward Sawerengera

Looking at above list it is evident that all matters relation to public funds were in the hands of the President’s tribesmen and in such a scenario it would be naïve to imagine that professionalism could be guaranteed.  In fact, it was surprising when it was revealed that Government had instructed MRA to borrow money from commercial banks to show as if it was domestic revenue to support Dr Mutharika zero deficit budget philosophy which was championed by the then Budget Director, Dr Kabambe in the wake of policy differences with the IMF on economic fundamentals. This case only showed total disregard for PFM legislation as regards management of public funds considering that such details were not even revealed to Parliament in the budget submission by the Minister of Finance. Now the question to ask is how many other cases of financial impropriety were not reported under the DPP administration for the entire 8 years. In fact, it is not surprising to see the current leadership of DPP arguing against the proposal for the forensic audit to cover as way back as 2003. It is therefore envisaged that the forensic audit might help explaining some of these unanswered questions.

If one considers revelations that the estate of late Dr Mutharika is valued at well over MK61 billion and yet after 8 years in office sky rocketing from a mere MK150 million when assuming office. How was he able to accrue all such wealth within a short period of time bearing in mind that proper business ventures such commercial banks can only register annual profits of about MK2 billion a year. This only confirms the public’s suspicion that Dr Mutharika deliberately put his kinsmen to make sure that public funds were easily transferred or diverted to his personal estate. Likewise his kinsmen get a fair share of the proceeds at the expense of public service delivery and public investment. See illustration below.

RBM AND THE CONSOLIDATED FUND

The RBM is a banker for Government as such relates on several issues related to public financial management. The Consolidated Fund is established by Section 172 of the Constitution.  The PFM Act (2003) allows the ST to open other accounts necessary for proper accounting of moneys in the Consolidated Fund. Other funds including loan proceeds raised for development purposes form the Development Fund and are accounted for in a separate account in the Consolidated Fund.  This implies that RBM keeps all public funds in the Consolidated Fund popularly known as Account Number One and transfers money by way of Imprest to operating accounts for purposes of effecting payment of amounts payable by Government or to other accounts operated at commercial banks by MDAs on the instruction by the ST.

Now of late there have comments in the media by some opposition parties i.e. PPM that once elected into office would close Account Number One and instead create a system that pays money straight into MDAs. This idea seems strange and unrealistic as it is not only unconstitutional but would work in conflict with the Government accounting policy built on a centralized payment framework supported by EPICOR based IFMIS. In fact such statements are misleading the public as it creates a false impression that money is misused at the RBM and yet the looting is mainly done within the MDAs including Local Assemblies through illegitimate processes and demands to the AGD which authorizes RBM to pay.

In the earnest the major challenge RBM is facing is to reconcile daily balances in view that various financial sub systems are not interfaced as such the main concerns for the RBM are the improvement of connectivity to AGD and interfacing of systems. In this regard, what is needed to improve service delivery is to have good cash management with reliable predictability. And it is generally agreed that what is of prime importance is the introduction of the Electronic Funds Transfer (EFT) which will be a more timely and efficient payment process which could as well even reduce borrowing requirements.

In view of the above it is surprising for Mr Ntata to accuse the RBM and its Governor to have been involved in authorizing illegitimate payments. It only shows failure to appreciate the important role of RBM in the economy.

Again, to accuse the president of firing the former Governor, Dr Perks Ligoya and paying him huge sums of compensation is another misrepresentation of facts. The truth is that Dr Ligoya was redeployed by Government which is normal, to serve as Malawi’s High Commissioner to India where he is right now.

Also to allege that President Joyce Banda appointed her three allies to the position of Deputy Governor is not correct. Dr Naomi Ngwira was the new Deputy Governor appointed, who happens to be a seasoned Professor of Economics having taught at both Bunda College and Chancellor College for many years. Dr Ngwira also served as Director of Debt and Aid in the MoF together with Dr Ligoya who was Director of Economic Affairs at a time when Dr Goodal Gondwe was Minister of Finance. In essence it is Dr Mutharika who fired Dr Wilson Banda a veteran economist at the RBM who was its General Manager for no apparent reason other than to make sure that only his tribesmen occupied strategic positions at the government bank. Dr Wilson Banda is now with the World Bank in Washington DC having been offered his post immediately after the DPP Government ordered him to leave.

 

ROLE OF DONORS

Malawi is still heavily dependent on aid as it provides 35 to 40 per cent of Government revenue. The debates for Malawi should therefore focus on what the country needs to do to reduce the donor dependency other than accuse some donors of complicity as Mr. Ntata alleges in his write-up.

The IMF, World Bank and AfDB continue to offer policy advice to the GoM to work on tax administration reforms so that domestic revenue collection is enhanced to lower the aid bracket of the national budget. This is an honest advice that all Malawians need to support if meaningful development would be realized. Then there are macroeconomic fundamentals of enhancing production for domestic consumption but most importantly for exports. Many donors are supporting Government drive towards export promotion hence the current emphasis on aid for trade. That said the development agenda has to be set and owned by us Malawians as donors will only come to supplement our efforts with policy advice and financial resources and whenever they provide their funds they are very keen on accountability.

However, it is fundamental that donors whether bilateral or multilateral try to balance their interests with those of recipient countries such as Malawi as demanded by the partnership commitments of the Paris Declaration and Accra Agenda for Action. For instance, donors are supposed to be more predictable on aid flows to partner countries to avoid disruption of budget implementation and subsequently making aid ineffective. In this regard, donor’s quick and emotional suspension of aid to the Government seems to be against that spirit. The aid suspension might force the Government to resort to domestic borrowing to raise revenue to finance which could raise interest rates and bring inflationary shocks to the economy and erode the gains made so far in recovering the economy. That said donors need to refrain from making emotional and provocative statements in presenting their concerns to Government as in the case of the Cash Gate Scandal where some donor officials particularly Common Approach to Budget Support (CABS) members who were reported to have been rude in their presentation to Government as such sentiments are tantamount to weaken public support for national policies and development assistance.

As for the new donors i.e. China, India and possibly other members of the BRICS, these also bring in their risks which seem not to be highlighted by the public considering the euphoria that loans for instance from these countries do not have aid conditionality terms bordering on good governance. Of late the GoM has borrowed heavily from China and India especially the DPP administration but seems there is a lot of secrecy surrounding such deals which should be a matter of concern to the public. For instance, the Government Projects Monitoring Unit was being denied access to project sites under construction by Chinese contractors. There is need for more transparency so that the public knows how much is spent on these projects and how much debt is being accrued.

The above notwithstanding Mr Ntata blames the US Government for not suspending their aid to Malawi as a result of the Cash Gate Scandal. This is very strange for a Malawian to ask DPs to freeze their financial assistance on a matter that is being dealt with by relevant law enforcement agencies. What we need to understand here is that foreign governments represented here are well informed on such issues possibly more than an ordinary Malawian. He also mentions of daily load-shedding in the country, however, he forgets that it is the US Government which is proving funding through the MCA to upgrade and rehabilitate Escom old infrastructure to help improve power supply. And also that his former boss , Dr Mutharika sat on the plans for the Electricity Interconnection with Mozambique claiming that Malawi was to pay huge sums of money to Mozambique yet such regional projects undergo systematical appraisals i.e. sensitivity analyses to determine cost implications and sustainability before approval is granted.

It should be mentioned here donors that provide direct budget support are few because donors are wary as to how their money would be used when it gets into Account Number One as there are no traceability arrangements to track their funds during budget implementation. So most donors provide their aid through project financing which has strict disbursement procedures as it is accounted for separately outside the Account Number One. And after project completion it is found that some funds were misused then Government is asked to refund the value that was declared non-eligible expenditure. Now to say politicians are buying properties with donor money is too simplistic.

Mr Ntata also accuses donors for pushing for the devaluation of the Malawi Kwacha and says it worked to their benefit as they receive they are paid in dollars. This is a horrendous argument which only shows the man is still thinking like his former boss who opted for a fixed exchange rate regime against expert opinion from within and outside Government. What he needs to know is that the fixed rate of the Kwacha at the time was not its correct value resulting in loss of money for the country’s businesses when they were trading at the international market. Again, this resulted in the country getting off track with the IMF programme hence failure to qualify for the ECF which is by the way a cheap source of foreign reserves to supply the business payments demand. Now the country is paying the price of such bad policies as it lost money simply put as it paid many Kwachas for fewer goods. And if truth be told the major achievement of President Banda is the decision she made to allow the RBM adopt a flexible exchange rate regime as the country’s monetary policy which has so far brought back macroeconomic stability in the economy.

MATTERS ARISING- DELIBERATELY MISREPRESENTED FACTS

LINKS TO PRESIDENT BANDA

Mr. Ntata alleges that President Joyce Banda’s two sons have business connections with Mr Oswald Lutepo who is now in police custody following revelations of his links to the Cash Gate Scandal. Now if the President had something to hide then surely would have tried using her powers to protect Mr. Lutepo to evade arrest considering that is also said that she is linked to the corruption syndicate through him. Mr Ntata even quotes an article from The Business Times that describes Oswald Lutepo as an entrepreneur who has turned out to be a billionaire in just five years. Now the President has only been at the helm of Government for less than 2 years so this does not add up. And looking at the evidence presented in court by Mr Lutepo he is quoted as saying that he was an errand boy for the former president and began taking part of the money he was sent to deliver for himself and thus how he established his business. He is even quoted to say after the death of Dr Mutharika, he started getting death threats from Prof Peter Mutharika and former ST Mr Joseph Mwanamvekha to surrender his wealth to them and this motivated him to join PP to seek protection. All this shows that it is unfair to accuse the President when information coming out seems to be pointing elsewhere.

Mr Ntata further alleges that the president’s sons have illegal business connections with the Portuguese construction company Mota Engil without providing details of what these deals are. But it is an known fact that the DPP administration had a cozy relationship with the said company. For instance, it is Mota Engil that built the famous elegant Ndata Mansion for the former president. Again, all major road projects in the country were awarded to the same company. It is even alleged that the company bought a tourist villa for Dr Mutharika in Portugal.

He further goes to accuse the Presidents two sons of being responsible for the arson that took place at the Escom headquarters building recently as was meant to conceal evidence over illegal business contracts. Surely this is outrageous considering that the investigations to ascertain the cause of fire have not been completed by the competent authorities. And how would one conceal evidence of business contracts by burning a building when such information is also kept in electronic copies with backup copies stored on remote servers.

In his write up Mr. Ntata also alleges that President Joyce Banda has refused to declare her assets, which is not correct. However, the truth is that the president has re-declared her assets despite the constitution not obliging her to do so as she already did so when assuming office of the Vice President. And in the wake of the cash-gate the president called for Parliament to convene and deliberate on the way forward. She went on to ask Parliament to review the Assets Declaration Bill so as to expand coverage of officials required to declare their assets and so far the Bill received support from both sides of the House. It is worth noting that if the MPs were committed to support the Presidents idea possibly the new framework would have extended to everyone in the public sector from Office Assistant to the President as the case in Rwanda. For instance, why should someone working for MRA not declare their assets and yet one handles Government revenue. So everyone should declare including those working for Parastatals such as Escom, Water Boards, etc. This should be the course of debate from now onwards and not on the President alone.

 

FUNDRAISING SYNDICATE

The issues that Mr Ntata brings up under this sub heading are based on uncompleted investigations as it would be very difficult to comment competently on information that law enforcement agencies are still digesting to connect the dots. However, a few issues need to be clarified as the write up deliberately distorts facts in its presentation. For instance, it alleges that the PS for Human Resources Mr Sam Madula was being investigated for depleting the Pension Fund resulting in his suspension by the DPP administration. However, the truth is Dr Mutharika was very bitter with him as he suspected to have leaked the memorandum that indicated that Government was paying former First Lady Callista Mutharika for doing charity work as Safe Motherhood Ambassador.

Mr Ntata also claims Mr Max Namata who is linked to the Cash Gate case is married to Alice Kaluwire, a daughter to the President,s Advisor on Agriculture. But this is a fabrication as the Advisor to the President is a Kenyan nation…Mrs Kanyowili…….with no relation to Alice Kaluwire. This shows how desperate Mr Ntata and his political masters are in trying to link the looting to the President.

In addition, he also wants people to believe that Mr Paul Mphwiyo was appointed Budget Director (BD) on a plan to siphon money to finance the PP campaign which is malicious and outrageous. He goes on to say even the former and current Chief Secretary to Government refused to have him appointed. It has to be said that the President has prerogative powers to choose anyone she duly sees fit to serve in her Government. That said, Mr Mphwiyo is well qualified for the job as he has post-graduate qualification in economics from Chancellor College and Columbia University. He also served as Deputy Director for Economic Affairs together with a seasoned economist and technocrat Mr Saulosi Nyirenda as the two were deputizing Dr Ligoya who was then Director of Economic Affairs in the MoF.

 

DRUG SHORTAGES

Mr Ntata also alleges that under the leadership of President Joyce Banda poor health service delivery has become a regular feature in the media. Honestly here he is just being very economical with facts as Malawians remember very well the acute drug shortages that hit our hospitals during the DPP administration. The reasons given were that local companies awarded contracts to supply drugs to the Central medical Stores had no capacity and were charging high prices affecting budgets. And the owners of these companies had links to the leadership of DPP.

In fact, upon assuming office President Joyce Banda had to plead with the donors to buy medicine for the hospitals which they did outside Central Medical Stores. The president even went further to convene a meeting with health managers and medical doctors from across the country at the State House to hear from the horse’s mouth on what needed to be done in order to arrest the drug shortage in the country. It is everybody’s expectation that authorities are following up on the recommendations made at that meeting. Possibly, recent leadership changes at the Ministry of Health (MoH) are a sign that Government is keen to sort out problems being experienced in public hospitals.

EVIDENCE FROM MINISTRY OF TOURISM

Mr Ntata would like to accuse the former Minister of Tourism Rachel Zulu for complacency in the reports of wanton looting at the Ministry. However, assessment reports on EPICOR based IFMIS indicate that senior management in Government including Directors of Finances are not fully involved in the payment processes which resulted in junior officers taking advantage to engage in forgery and other malpractices. In this regard, to accuse the Minister without evidence is not acceptable. As for other allegations it is better to wait for the outcome of the investigations.

However, it cannot be denied that so far the Ministry of Tourism seems to take centre stage in the Cash-Gate Scandal. Interestingly, only two names are very prominent in the investigation reports namely Mrs. Tressa Namathanga Senzani (PS) and Mr. Leornard Kalonga (Chief Tourism Officer). Again, it is better to wait finalization of police investigations at the Ministry before we start pointing figures. But still, one is clear here, the accused PS is a sister to Mrs Anna Kachikho former cabinet minister in the DPP administration hence its possible this looting at the Ministry started many years ago but was being covered up by the authorities.

AGD IFMIS STAFF

It is alleged that the IT staff in the IFMIS unit of the AGD have resources beyond their means. However, this is a sweeping statement as no background information is provided on these officials. For instance, how long have they served in the unit, what business interests do they run? Again, it is alluded by the ACB summoned them but still without giving dates as to when that happened and why they were not charged if their wealth was through proceeds from looting Government coffers. This information is deliberately omitted to create a false impression that this was happening now and yet it is spread over a number of years.

In fact just by looking at their profiles most of the officers if not all are computer science graduates from the University of Malawi and possibly graduated many years ago and surely one would not expect them to be poor to not afford even a car. This is not say they could not steal but it is fair to wait for the outcome of the forensic audit to see if they actually abused their user rights in IFMIS to enrich themselves from the public pulse.

In addition these people form the core team supporting IFMIS in the country and the implementation being still a project for about 10 years now, these people travel for training outside the country frequently and draw huge allowances from Government. That said, they cannot be accused and judged to have looted funds through IFMIS before the forensic audit is done hence it’s only fair to wait for the outcome of the audit and not accuse them beforehand.

CREDIBILITY OF INFORMATION

Mr. Ntata claims to have accessed information through his connections in Government and law enforcement agencies which is very doubtful considering that he is wanted by the Police. Apparently most information regarding investigations on cash gate matters are well documented in the local newspapers of The Nation and Daily Times and he uses such information but deliberately twists some facts to create a false emotiveness.

On the hand it can be told that Mr. Ntata is receiving help from some quarters that are well connected possibly some political functionaries looking at the level of allegations leveled against President Joyce Banda in view of the forthcoming Tripartite Elections. On the same note, at the end of the write-up he attaches a copy of an email correspondence allegedly sent by the Presidential Press Officer Mr Steven Nhlane. However, what is intriguing was received on a mobile device supported by Airtel network, so the question is if the communication indeed took place how did his source hack into Airtel network?

It could be well said that his motive is to seek popularity as well as employment opportunities out it if his background is anything to go by. Mr Ntata was initially forced to leave his employment in Malawi in 2007 when his former wife of British origin found out that he had impregnated a girl in Blantyre. Now considering the wife was coming from a well off family he pleaded with her to leave with her to Australia and start a new lease of life. But it seems whilst there things did not work out and his wife walked out on him as she could no longer trust him. And left without money as their property was sold, he had to come back to Malawi. Then he started contributing columns to The Nation newspaper,s My Turn column writing about Muluzi,s corruption case. In his articles he prosecuted and convicted Bakili Muluzu of his corruption case and that got Dr Mutharikas attention and offered him a job at State House as one of his Assistants (Legal). He tried to use his position to push the ACB management to sell him an official car for the Director (Mercedes Benz) under a board off arrangement yet the vehicle was relatively new. And when his boss died and his name appeared on the Midnight Night list he sneaked out of the country. Mr Ntata has so far demonstrated that he is someone who cannot be trusted, he is very crafty and an opportunist and now he wants to use the cash gate scandal to be noticed once more by powers that be hence masquerading as a patriotic Malawian writing to serve the public while inside he knows pretty sure his motive.

 

CONCLUSION

There is no doubt that there are lessons to be learnt from the Cash Gate Scandal. One lesson which is fundamental to us all is that finally the suspicion people had all along regarding financial malpractices in Government has now come out. Therefore what is needed is to focus on to stop the looting of public funds which seem to have been entrenched for many years now.

It is pleasing to note that the present Government of Dr Joyce Banda has accepted responsibility that indeed we have a problem which ought to be fixed as such it is taking lead in the investigation efforts with the aim of rooting out the malaise within the public service and beyond. So far the GoM has openly asked for technical assistance from its cooperating partners to assist the NAO in the audit exercise and the British has responded favorably by sending members of its elite Scotland Yard to lead in the forensic audit. This is a welcome development and encouraging to many concerned Malawians who want answers as to how their resources were being looted without attracting the attention of authorities and law enforcement agencies over a decade now going by the media reports.

Another important lesson is that information coming out indicates that Government with support from DPs has been carrying PFM reforms over the years aimed at improving transparency and accountability in the use of public funds. However, with the Cash Gate scum it shows that these reforms are either resisted or there has been no political will to champion governance reforms in the country despite Improved Governance being one of the themes in the MGDS.

In fact, one thing coming out as a contributory factor in the IFMIS abuse is that senior management in Government including PSs and Directors of Finance are not always kept abreast on the nitty gritty of financial processes resulting in junior accounting staff to take advantage and engage in malpractices such as forgery and processing payments for illegitimate claims which result in them defrauding Government huge sums of money.

In terms of the approach to moving forward there has to be a realization that Government should take a new approach in its PFM reforms paying more attention to aspects of budgeting and accounting. There has to be a deliberate drive to make sure that all identified operational weaknesses in EPICOR based IFMIS are closed with no room for non-compliance. Those suspected to tamper with the systems should be apprehended to offer deterrence to those harboring thoughts to defraud Government.  In the past especially during the DPP administration many civil servants answering charges of stealing public funds have been left scot free and some even sent on diplomatic tour of duty creating speculation that such officers were looting under instructions from higher authorities hence are being rewarded with state protection and diplomatic privileges.

For the society at large the revelations of fraud and corruption should provide an opportunity for soul searching in the view that the private sector is featuring highly in terms of colluding with public officials by providing false invoices for services not rendered at all to Government. Issues of corporate governance and ethics need to be promoted so that businesses compete at on a level playing field as opposed to what has been observed through the UDF to DPP administration where one has to have close links with the ruling party to get lucrative business deals from Government. It’s high time this malpractice was stopped so that our business climate becomes open and conducive to private sector growth which the country so far needs if the economy is to grow.

So far President Joyce Banda has done well in saying that she will not shield anyone linked to the Cash Gate. In this regard, we can only pray for a speedy forensic audit and other subsequent investigations in the matter being done by other law enforcement agencies such as the ACB and the Police so that all issues related to the looting are brought to the open and the law takes it charge. The appeal to Government is that all logistics to facilitate smooth investigations and prosecution of suspects be made available to avoid delays so that no stone is left unturned. We are mindful that funding is usually a challenge so it’s anticipated that funds are set aside for the Cash Gate cases. In the same vein, in our public system wherever there are issues of special funding senior officials would always want to be involved in the actual investigations and other processes when in due sense are supposed to provide leadership role. The plea to the Police and other law enforcement agencies here is that junior officers who normally handle these investigations should be involved as well and not be sidelined because money in form of allowances is an issue.

Another lesson is for the Parliament. The Cash Gate Scandal has also exposed elements of weak parliamentary oversight on budget implementation. The two parliamentary committees on Budget and Finance and Public Accounts have very important roles to check the Executive (Government) on the use of public funds as demanded by representative democracy which Malawi is following. However, from the reports it is evident that these two committees are not doing their rightful role. Again, the importance of the NAO cannot be overemphasized here. It is imperative on Parliament to ensure that NAO is independent to perform its constitutional obligation of conducting annual audits hence has to be adequately funded.

For the grassroots, the lesson is that it is high time criminalization of politics was stopped from getting institutionalized in our society. As the country moves towards the elections it is our expectation that people will now learn to choose political leaders with self-less spirit to serve for the public good and not for their greedy and personal enrichment as the case with the previous administrations of the UDF and DPP.

As for one Ntata and his political cohorts, they should realize that Malawians are watching and that history will judge them accordingly. However, they should stop diverting people’s attention on such crucial matters of national importance with their narrow and selfish interests. In fact, if Mr Ntata harbors political ambitions as it appears the constitution does not bar anyone to run for public office, and registration is still open let him get out of his hiding place and join the race through legitimate political arenas and stop misusing media freedom to attack Government and the President on issues are still under investigations.

As the way of concluding remarks on the proposal floated by Mr Ntata in his write up to have a special directorate to investigate the Cash Gate case and also that its Chief Investigator report to a broader stakeholder including the donor community cannot be supported by our laws. In fact, the idea could be said to be calling for suspension of the legitimate authority vested in the OPC. This is preposterous. One is compelled that the guy has a corrupting effect of one’s sense of nationhood and patriotism. In the same vein the NAO that technically managing the forensic audit is duly independent to come up with audit reports which Government will have to address after Parliamentary deliberations. In other words the call has to be made on Parliament to make reasonable recommendations to how they want Government to move forward in rectifying the problem of financial abuse which is not only restricted to Capital Hill but spread across all sectors of the economy.

As for some of us the Cashgate has been part of along term degeneration disease that is a result of the effects of the last regime where this country had commenced on a state collapse whose signs the Late President had enshrined into the Malawi society. State collapse is not a short term phenomenon with a few early warning signs, it is a long term degeneration disease whose outcome is inevitable. It is a process that may be likened to the movie version of a car falling slowly, in stages down a cliff—or to the progress of an object tumbling down a staircase, landing and tittering on each step it hits, then either regaining its balance and coming to rest or losing its balance again and bouncing down to the next step, where the exercise is repeated.

 

Leaders in government going through the process of state collapse have a tendency to view slippery slopes as merely grades on the normally bumpy terrain of politics, making it difficult to focus their attention on the gravity of the problem until it is too late and difficult to prescribe preventive measures or it is far too late to engage in any meaningful dialogue and reconciliation.

 

Nonetheless, the slippery slope has some notable characters near the bottom and these do serve as ultimate warnings. Five ultimate sign posts that have been identified by various authorities including Yoffee and Cowgill (1988) are:

 

  • Power devolves to the peripheries when (because) the centre fights among itself. Those in central power are too busy defending themselves against attacks from their political competitors, the media, civil society and the clergy to hold on to reign of power over the country. Local authority and popular support is up for grabs. This happened during Bingu’s time.

 

  •  Power withers at the centre by default because central government loses its power base. It no longer pays attention to the needs of its social bases and does not heed advice. The centre instead relies on its inner most trusted circle: this may be an ethnic or regional group, or a functional group or a legal group or such groups operating in cliques unknown to leadership. Attention to the needs and demands of the smaller group diverts allocations from the broader social sources of support (the electorate).

 

The smaller groupings galvanize their cohesion to the leadership by systematic rumour mongering, malicious gossip against political adversaries, creating fear of the unknown on the leadership, in fighting for greater leadership attention, and get-rich-quick syndrome creeps in sharing contracts limited resources in government. This happened during Bingu’s time.

 

  • Government malfunctions by avoiding necessary but difficult choices. As a result, such measures mount in urgency and difficulty, facing the state with a governing crisis. Decisional avoidance can take place either because of institutional incoherence, in which the mechanisms of government are inadequate to their challenges, or because of political flabbiness and inexperience, in which the politicians themselves are incapable of biting the bullet. This happened during Bingu’s time with the Donors all running away.

 

  •  The incumbents practice only defensive and scapegoat politics, fending off challenges, making threats, intimidating, manipulating and arresting political competitors, concentrating on procedural rather than substantive measures and issues. Such measures include both repression and coercion using state machinery, taken to get the opposition off their back. What is seemingly absent is a political agenda for participation by all and development programmes. The leadership behaviour closes off to alternative views and limits evaluation of alternative ways of resolving problems. Elections are postponed; platforms for public speech are absent, the media is muzzled and persecuted, civil society is destroyed, the state enters into propaganda phase, and attempts are made to interfere with the judiciary through appointment of Judges on the basis of being cronies or from the same homestead. Further attempts are made to force compliance by the Judiciary without question. This happened during Bingu’s time.

 

  • Probably what we see now is the last stage is the process of state collapse where public servants entrusted with management of taxpayers money begin to operate their own cartels with some private citizens. For some of us the revelation that President Mutharika had MK61 Billion in his estate was just an indicator of a larger scheme that was operating during his reign. To blame President Joyce Banda would be simplifying the whole Cashgate scandal.
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