Finance Minister Maxwell Mkwezalamba said on Wednesday that Malawi government used the proceeds made from the sale of the Presidential jet to pay arms dealer Paramount Group of South Africa to clear outstanding debt.
Mkwezalamba providing a breakdown to journalists of how the proceeds from the jet sale were spent, said at a news conference at Capital Hill in Lilongwe that government owed Paramount Group $19.2 million in respect of military equipment procured earlier in the year.
“Since it was the beginning of the year, the Government cash flow could not meet all the expected demand on the budget for payment of the equipment,” said Mkwezalamba who was flanked by Minister of Defence Ken Kandodo, Chief Secretary Hawa Ndilowe and Attorney General Anthony Kamanga and various Principal Secretaries.
The 14-passenger aircraft was auctioned off at $15 million to a Virgin Islands company, Bohnox Enterprise Ltd.
“It was therefore, agreed that Bohnox Enterprise Limited should pay Paramount Group part of the arrears, this was cognisant of the fact that Bohnox Enterprise Limited is an associated company of Paramount Group,” Malawi Finance Minister said.
Mkwezalamba added “actually, no single Kwacha came to Malawi.”
Quizzed if the jet was just used to settle the loan since Bhonox is a subsidialy of Paramount Group, he said at first government was not aware of the relationship.
Bohnox had a $14 583 768 bid and its two closest competitors: General Aviation Services of the United States and Africa Dune Investments of South Africa had their bid prices placed $10.14 million and $10.2 million respectively .
“The highest bidder carried the day but after discussions, we agreed to sell the Jet at $15m and it was sold on July 29, 2013, so a further agreement was entered into for it to settle part of the arrears and was cognisant of the fact that Bohnox is an associated company of Paramount Group,” he said.
The Minister said the process requiring Bohnex Ltd to pay Paramount was consummated upon seeking and obtaining legal advice from the Attorney General.
“In order to comply with the Cabinet Directive on the utilization of the proceeds of the sale of the Presidential jet, the ministry of finance reallocated the resources that were appropriated for the ministry of defence vote for procurement of equipment to be used for procurement of maize and drugs,” Mkwezalamba said.
Mkwezalamba said government allocated K2.8 billion for the peace keeping mission, K1.5 billion into maize purchasing and K1.5 billion on medication drugs.
The jet – Dassault Falcon 900 EX, formerly 7Q-ONE, but now registered as ZS-FCI after the ownership change to Bhonox Enterprise, -had been bought by Banda’s predecessor, Bingu wa Mutharika who died from a heart attack in 2012.
When she took over office, Banda introduced a gamut of cost-cutting measures and uses commercial airlines to travel outside the country.
Recently, the Catholic Commission of Justice and Peace (CCJP) of the Episcopal Conference of Malawi called for the presidential jet sale puzzle to be solved by instituting a commission of inquiry.
CCJP national secretary Chris Chisoni said apart from setting up a commission of inquiry, citizens have an option of taking the matter to court since government has not been forthcoming to explain the whole transaction.—(Additional reporting by Wanga Gwede, Nyasa Times)Follow and Subscribe Nyasa TV :