By Lord Denning SC, Political and Legal Analyst
This analysis arises from public demand. I will attempt to deal with this matter in components.
The first component shall be the reproduction of a memo, quoted by the Malawi Electoral Commission (MEC) Chief Election Officer as the authority from Government that enabled them create the, now, controversial account.
The second component will highlight the applicable laws governing the opening of bank accounts in Malawi.
My subsequent analysis component will, then, be premised from these two components.
MEMO FROM TREASURY TO MEC CEO AS WRITTEN ON 24TH MARCH 2014
Government has observed with concern that despite my earlier communication in Circular Ref. N0. OA/1/15/13/270 dated 19th September, 2013 item 2 where it was directed that cheques over MK500, 000 should be deposited rather than encashed over the counter, your Ministry is not complying with this requirement.
In order to adhere to this requirement whilst acknowledging the feasibility part of it, I have approved that you open an operating current account with a bank of your choice in the name of Chief Elections Officer. Only those special payments that require to be cashed over the counter should first be processed through IFMIS payable to Chief Elections Officer. Thereafter, the cheque will be deposited to your operating account where you will draw open cheques to the ultimate beneficiaries.
I wish to highlight that this account will be on the database of Accountant General’s Department and shall be subjected to normal audit. Additionally, you are reminded that this account shall be used strictly for this purpose. As a requirement, you shall be obliged to do monthly bank reconciliations on this account and the reports submitted to Accountant General and copied to my office and Auditor General by 14th of the subsequent month. This arrangement means that no open cheque above MK500,000 shall ever be processed by your office.
MALAWI’S APPLICABLE LAWS GOVERNING OPENING OF BANK ACCOUNTS
Section 20 of the Financial Crimes Act contains some of the relevant laws in the regulation of bank accounts. That is to say there are other laws in others instruments such as the Public Finance Management Act which also provides the regulation. Sought at the moment is a quick preview of the relevant parts of Section 20 of the Financial Crimes Act:
s.20(1) A reporting institution that maintains accounts shall maintain them in the TRUE NAME of the account holder. (Emphasis mine).
s.20(2) The reporting institution shall NOT open, operate or maintain any anonymous account or any account which is in a fictitious, false or INCORRECT NAME.
The starting point of my analysis should be the contention so far taking centre stage in corridors of discussions. Many people are asking: “Does the law allow a CEO of an institution to open a bank account in that name?”
At law, there is a natural person and there is a legal person. In simplest explanation that I can afford for an understanding of everyone, a natural person is a biological human being such as you and I. A legal person is any entity (call it a company, organisation or an institution) which has been assigned a status of possessing some duties and rights by virtue of its being registered under the applicable laws. The understanding of these concepts is key to capturing the central idea in this analysis.
MEC is a registered entity under the applicable laws in Malawi and it qualifies the description of a LEGAL PERSON. Mr Alufandika, for example, is a NATURAL PERSON by virtue of his being born a human being in the biological sense. For the purposes of identification under law, MEC and Alufandika are all TRUE NAMES before the law. A position occupied by a natural person within a legal person is just a position and not a name. For example, MEC Chairman; MEC CEO; MEC Spokesperson, etc are all positions occupied by natural persons within the legal person entity.
We have been told by s.20(1) of the Financial Crimes Act, as read with s.20(2) of the same, that only a TRUE NAME can be allowed to open and maintain a bank account. And the meaning of a TRUE NAME has been explained in the immediate paragraph above. Apart from the said explanation above, Section 20(4) of the Financial Crime Act is also assisting me in fortifying the explanation as it reads: “For the purposes of this section, “true name” means the name of that appears on the identifying document that a customer presents at the time of commencing a business relationship.” Thus on the identification document it can either be, in a case of a legal person, the Malawi Electoral Commission (MEC) or, in a case of a natural person, Sam Alufandika NOT the CEO nonsense (excuse my language).
The said Government authority (the memo) which was issued to create this illegal account clearly contravened the law. The only fate such an authority meets, therefore, is its nullity upon the discovery that it was void ab initio. As observed from the date on the material memo, we see that it was created during the Peoples Party (PP) regime (March 2014).
My suspicion compels me to submit that even after the forceful introduction of IFMIS, the PP government became very creative in syphoning of government funds through all sorts of illegal transaction. The opening of this account is therefore fitting with such schemes.
DPP should have stopped this illegal transactions which is clearly not in line with the provisions of both the Financial Crimes Act and the Public Finance Management Act. What we see is the DPP government continuing to abuse public funds using this illegal account despite them being ferociously critical of the PP government’s corruption then.
I felt extremely sorry when I heard the applied reasoning in the defence that was shot forth by the implicated CEO. I simply can’t spend time discussing those lame excuses here. What I can state in its place is that there cannot be a defence of this illegal transaction, it doesn’t matter how many departments have these type of accounts or when such illegal accounts were opened. The fact of the matter is that this is illegal and, prima facie, fraudulent.
The very instrument (the said memo from Treasury) which MEC relied to open this illegal account is even stated an aspect of conscience, obviously meant to be used as a bait. It provided that MEC shall be obliged to do monthly bank reconciliations on this account and the reports submitted to Accountant General and copied to Treasury’s office and Auditor General by 14th of the subsequent month. In this case, since the cheque was deposited on the 2oth of May 2019, the reconciliation should have been prepared and submitted by the 14th of June 2019. I hope such reconciliation is available for scrutiny and inspection by the public showing that it was submitted and reviewed by the stipulated authorities.
The memo restricted payments to MK500, 000 and that the CEO should not process any amounts exceeding this under the issuance of open cheques to beneficiaries. I can only believe that such was strictly followed when paying the so-called service providers and that none of them was paid in the ranges of millions by the CEO. We shall see all this in the audit trail which we, hereby, demand.
The memo did not define “Special Payments” but I am very keen to understand why “Special Payments” cannot be processed through a normal account. What are these special payments? Why would special payments amount to MK4bn and not be payable under the normal account?
My fellow Malawians, I submit to you that the intention of this account was clearly to bypass controls and audit trail to attempt to hide the elections fraud and bribery. Bribing various elections operatives can only be the only plausible reason taking into account how the elections were conducted with allegations of Zimbabwean operatives allegedly hired to assist in the election rigging scheme.
My fellow Malawians, let us, as we pursue our democratic and Constitutional right to demonstrate, call upon the existing governance institutions such as the Financial Intelligence Authority (FIA), the ACB, Fiscal Police, the Director of Public Prosecutions, and the Accountant General to immediately tell the public how this fraud happened under their watch. Are we now not in a position to understand why the government has been dilly-dallying in recruiting a competent independent Auditor General?
This Babylon MUST INDEED FALL!
Disclaimer: Views expressed in this article are not necessarily the views of the Publisher or the Editor of Maravi Post