Mphwiyo not whistle blower but kingpin of cashgate, Malawi govt economist testifies

An economist who was working in the ministry of finance , treasury department and economic affairs division between the period of April and September 2013, Daniel Jenya has told the court that f Malawi Budget Director Paul Mphwiyo, whose shooting on 13 September 2013 led to the unravelling of the systematic looting of millions of government money dubbed ‘cashgate’,  was not a whistle blower as touted by former president.

Jenya who was testifying in High Court on Wednesday on the shooting case of Mphwiyo related to cashgate, Malawi’s worst financial scandal in its 50 years as an independent country.

He appeared as sixth witness of first accused person Macdonald Kumwembe.  Jenya told the court that he was the one who blew the whistle having noted the over expenditures from the month of July to August 2013

Jenya told the court that he was working at Macroeconomic Policy Unit where he was responsible for among other things, compilation, analysis fiscal tables.

Fiscal tables is a table which shows government revenue,  expenditures and financing (borrowing or repayment of debt arising from differences between revenues and expenditure).

He said his responsibility involved working with aggregate figures of the operations of the central government and that his immediate boss was Kettle Musukwa who was reporting to the Director of Economic Affairs Francis Zhuwao .

When he was quizzed by Kumwembe some of the notable things that happened in 2013 between the period of April and September 2013 , Jenya said it was the appointment of Mphwiyo to be Budget Director from Deputy Director of Economic Affairs in July 2013 and  that after Mphwiyo’s appointment he also noted the rise in expenditure figures in the month of July 2013.

Jenya told the court that on average all the items government expenditures could not be more than 40 billion Kwacha per month but in July the expenditures was around 55 billion Kwacha and in August it hit to 70 billion Kwacha he said observed using the fiscal table and cash management tables from the Reserve Bank of Malawi (RBM) that expenditures were almost double the monthly average for the 2012/2013 financial year

The economist said he reported the matter to his boss , Mr Zhuwao who asked Mphwiyo to explain why the expenditures were high for the month of July and August mainly when it almost doubled from average of 40 billion kwacha to 70 billion kwacha.

Mphwiyo started refuting the figures , claiming that if the figures were indeed high the country should have seen rising inflation.

He said then Mphwiyo called him on 7th September who asked him how he said the expenditures were shooting but there was no inflation rising and he explained to him that what Mphwiyo was asking was theory but practically that takes as long as four years to produce results as it is determined by how the expenditure was used whether locally or used to improve goods from abroad.

Mphwiyo then is said to have instructed Jenya to conduct an analysis to find the reasons why inflation was not rising if expenditures were high.

Jenya also disclosed that other notable activities between July and August 2013 was the fact that arrears which were supposed to be spent in the second quarter of the 2013/2014 financial year of K8 billion were all spent in the first quarter of the financial year with over K7 billion spent between July and September 2013

He also said it was surprising that the appointment of Mphwiyo as Budget director came with too much pomp than how it is done all the years as exhibited by the newspaper articles which read “Introducing Paul Mphwiyo”.

Reserve Bank meeting

When Kumwembe asked him to explain of the meeting which took place at reserve bank and what transpired there plus all those who attended the meeting

Jenya replied that the meeting was convened following further investigation into the high expenditures which failed to yield any positive answers , the meeting was convened on 9th September at Reserve Bank in the afternoon.

He said the meeting was aimed at asking the RBM to explain where the high figures came from as it was the Budget Division (Mphwiyo) and the Accountant General (Mr Auzius Kazombo) who did not seem to understand where the figures reported by the RBM came from.

The meeting according to Jenya was attended by  Zhuwao – Director of Economic Affairs; Mphwiyo – Budget Director;  Auzius Kazombo – Deputy Accountant General; Mercy Kumbatira – Acting Director of Banking and Currency ; Chimwemwe Magalasi – Manager in Research and Statistics  and Daniel Jenya – Economist, Macroeconomic Policy Analysis Unit.

He told the court that Mphwiyo and Kazombo asked the RBM  (Mrs Kumbatira) to explain their expenditure figures for August 2013  as according to the funding figures and expenditures in IFMIS, the expenditures could not have been that high.

Kumbatira started mentioning some of the notable expenditures for August 2013 to which Mphwiyo agreed.

Jenya said he could remember some of the expenditures mentioned were for the Malawi Defence Force for Peace keeping and Arms procurement , police for procurement of uniforms and externalised funds whose purpose was not mentioned but Mphwiyo expressed knowledge of it.

He said he was so surprised to note that the same person (Mphwiyo) who refused to explain the figures while in the treasury before going to RBM meeting started acknowledging some of them at the meeting.

In his testimony, Jenya said the meeting agreed that RBM would send the Treasury and Accountant general images of cheques above K50 million to that the accountant general would reconcile with their expenditures and the images were provided the following day of the meeting but despite reminders to the accountant general , such reconciliation was never done.

Jenya said using the images of cheques he noted that there were huge payments from Office of the President and Cabinet (OPC) to International Procurement Services and that in Malawi Defence Force there was several cheques printed on the same dates to the same supplier.

He said as they were continuing with the investigation of what really caused high expenditures was continuing he was provided with Funding table and IFMIS expenditures table by Philip Majiga who was working in the Budget Division.

Jenya told the court that using the tables , he observed that Ministry of Information , Tourism and Culture had spent more than K5 billion than it was allocated in the financial year as it had spend K5.3 billion between July and September 2013 compared to a funding figure of K307 million within that period

He said he reported the findings to his boss Director of Economic Affairs Zhuwao as it also raised questions.

Kumwembe also asked Jenya on who was the first person to defend Mphwiyo after his shooting in which Jenya replied that it was surprising to note that he was defended by the Head of State when government protocols demands that he be defended by his counterparts in the ministry’s department of information

Director of Public Prosecution Mary Kachale then asked the court not to use his evidence and statement in the case as it is part of the state witness in the ongoing K5.2 billion cashgate case that involves Mphwiyo, Kazombo and other 16 but presiding Judge Michael Mtambo asked her what will be the threat if the witness statement be used as part of witness of the case and if his objection was in line with the any law.

Kachale said she was only raising the issue and that it was up to court to decide on the issue and judge Mtambo over ruled her objection and marked the Jenya testimonies as part of the evidence by the defence witness.

The Director of Public Prosecution then urged the court to allow them cross examine the witness in camera due to the sensitivity of the facts at hand as it was to do with National security and Arms deals which are not discussed at public and the judge granted the application and state proceeded to cross examine the sixth witness without the public and the media.

 

Mphwiyo is linked as key player in the looting Mafioso and is also charged  on cashgate cases.

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.

In 2015, 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 .

Western donor nations and agencies, which provide 40% of Malawi’s budget, froze vital aid in reaction to the scandal.

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