Former budget director Paul Mphwiyo, who is facing charges of theft and money laundering of K2.1 billion ($4.7 million), has been fingered as cashgate ‘mastermind’, Director of Public Prosecutions (DPP) Mary Kachale told High Court in Lilongwe after presenting an affidavit of convicted Leonard Kalonga, former assistant director of tourism at Ministry of Tourism.
Kalonga has been convicted on his own plea of guilty for stealing K3.7 billion in the cashgate affair.
The top prosecutor told the court that Kalonga has “boldly determined to accept personal responsibility for his part in the frauds. “
She said Kalonga has “helped unlock the secrets of others involved with him, from one of the main architects, Paul Mphwiyo, to many others who should have known and behaved better.”
Mphwiyo is a victim of the shooting outside the gate of his Area 43 residence in Lilongwe when he was budget director in the Ministry of Finance.
Former justice minister Ralph Kasambara, Pika Manondo and McDonald Kumwembe are defending themselves on the attempted assassination of Mphwiyo.
But DPP said Mphwiyo was key player in the looting Mafioso.
She said ‘Cashgate’ 2013 remains a blemish upon the reputation of Malawi.
“ It was a sinister conspiracy by criminals who betrayed her people in defrauding them of approximately MWK 20 billion. It was a highly organised, in part highly technical and certainly a highly placed raid on the Reserve Bank of Malawi,” Kachale aid.
“No explosives, weaponry or disguises were necessary to rob the Bank- just a toxic combination of self-promotion, ingenuity and personal greed. The indifference and avarice of the principals remains difficult to comprehend: they were completely ruthless in stealing public money meant for the people of Malawi, in the provision of public services,” she added.
Kachale said despite the number of participants, inside and outside many government departments and institutions, the planners and facilitators of the conspiracy did not fear exposure.
“Despite the inevitability of the discovery of huge, unsustainable losses, they believed in their own impunity. They relied on the complicity of those with whom they conspired and acted, all tainted with their own brand of criminality; and they were and are intimidated by the fear of retribution if they expose their fellow criminals and by the prospect of conviction and State punishment. They relied on the tenuous mutual security offered by a further conspiracy- of silence as well as protection from the long arm of the law,” summed up Kachale about the cashgate.
In his affidavit, Kalonga told the court on Wednesday that Mphwiyo was in-charge of cashgate operations, saying he “stressed that there were a lot of players involved in the system.”
“ He (Mphwiyo) assured us that he was going to make everything available and he gave details on how he was going to do so, so as not to attract suspicion when it comes to single payments involving millions ,” reads in part Kalonga’s affidavit.
He adds: “He [Mphwiyo] told us to select suppliers who were in the construction industry, to avoid raising suspicions when they were drawing large sums of money.
Kalonga said per instructions from Mphwiyo he recruited Angella Katengeza’s company, Faith Construction, among others, to share the proceeds of fraud.
He said Faith Construction later recruited Mchemani Construction.
Reads in part Kalonga’s affidavit: “I was recruiting as per the scheme and the companies knew that they were just being used to have cheques cashed.”
Kalonga was first arrested on October 17 2013 by ACB for allegedly conniving with different people to defraud government. He was charged with money laundering and theft by public servant.
According to Kalonga, it was Mphwiyo who explained the scheme to him and later asked him to sell the idea to people who matter at the Ministry of Tourism.
“Initially the scheme entailed actually requesting for extra funding and production of fake documents to process the payments, but once Mphwiyo became budget director, the modus operandi changed. There was no longer need for the Office of the Director of Public Procurement to issue no objection letters to the department of buildings to issue fake interim completion certificates. It was said that the Accountant General Department was fully on board,” reads the court statement.
Kalonga said Mphwiyo assured the cashgate team that “there would be no problem at all as people were already in place at all levels to make sure that these transactions passed through without any problems at all.”
He said Mphwiyo did not specify the people but Kalonga later discovered that they were:Accountant General, Terence Kandoje; and Mr Madzi, in the Accountant General Office- responsible for making sure that the cheques were duly processed and signed.
“I never met Mr Kandoje but heard from Mr Mphwiyo and Mr Madzi that he was a cheque signatory and one of the influential persons in the scheme,” said Kalonga.
Reads the affidavit: “The first round of funding, payments and collection of cash was towards the end of April 2013, involving just four suppliers. Mr Mphwiyo was responsible for collecting cash from WG Construction and I collected cash from Kanengo Construction, WEK Construction and Madula Construction. During the scheme, my suppliers would call me and we would arrange where the cash should be delivered, mostly at my house in Area 18. “
Kalonga said when he was arrested by Anti Corruption Bureau (ACB), during questioning by investigator Kondwani Zulu, he expressed his desire “ to tell the whole truth regarding Cashgate issues,” on condition that they consider treating him as a State witness.
Kalonga, who was also linked to the procurement of five 65-seater Scania Marcopolo buses allegedly on behalf of the ministry, said: “From my limited involvement in taking instructions from Mr Mphwiyo to deliver a MWK 520M to Mr. Limbikani Gumbo in relation to the buses at Automotive Products , I believed at all material times and still believe that Mr. Mphwiyo was behind the purchase of the six buses from APL.”
Mphwiyo’s shooting outside the gate of his Area 43 residence in Lilongwe on September 13 2013 is widely believed to have exposed the plunder of public resources at Capital Hill in what many suspect it was an attempt to his life after a deal had gone sour.
Forensic auditors from British audit firm, Baker Tilly, established that under the administration of Joyce Banda, about K24 billion was looted at Capital Hill between April and September 2013 through inflated invoices and payments for goods and services not provided to government.
Earlier this year, a financial analysis by PricewaterhouseCoopers (PwC) also established that about K577 billion in public funds could not be reconciliated between 2009 and December 2014 owing to abuse of the central payment system, Integrated Financial Management Information System .
The first person to be convicted in relation to the high-profile case was former Principal Secretary in the Ministry of Tourism, Tressa Namathanga Senzani, who was sentenced to three years in jail.
Several others have since been jailed, including Maxwell Namata, Caroline Savala, Luke Kasamba and Wyson Dzinyemba Soko.
Western donor nations and agencies, which provide 40% of Malawi’s budget, froze vital aid in reaction to the scandal.Follow and Subscribe Nyasa TV :