As the fallout from the recent stinky and fraudulent K2.7 billion food rations deal for Pioneer Investments at the Malawi Police Service continues to make headlines, we all must come face to face with the disturbing truth that indeed “the entire Malawi Government is a criminal enterprise.”
Criminal enterprises tend to defend their turf using any means necessary, including assassinations. They also tend to put up smoke screens that mask the true picture and throw investigations into the wrong way. Remember Chasowa? Remember Njaunju? Remember the failed assassination attempt of former budget director, Paul Mphwiyo, who was turned from hero to villain?
I am sure, you are wondering, “ So what is the point and what are you driving at?” My point is that had we really been serious about stamping out corruption, our law enforcement agencies would have easily discovered facts that have been hiding in plain sight.
As I have written before, as an anti-corruption specialist, I was among the first that investigated and re-investigated cashgate. Folks, Pioneer Investments is not a new animal at all in the Malawian corruption circus. From the investigations I carried out in 2013 and 2014, I have managed to connect the dots. On 13th September, 2013, the office of the Secretary to the Treasury, writing to the Commissioner General of the MRA on Tax Investigations on Lido Electricals owned by Karim Abdul Batatawala asked the latter not to just investigate Lido Electricals, but to extend its investigations to fifteen other companies.
The third company on that list is – you’ve guessed it- Pioneer Investments. The language used by the office of the Secretary to the Treasury is quite telling. In asking the Commissioner General to extend investigations to these fifteen more companies, the letter states, ”It would also be appreciated if the same kind of investigation is extended to other companies who are claiming that Government owes them money…” You only need to look at the date on the letter and the person who signed it on behalf of the Secretary to the Treasury for loud alarm bells to start ringing and unanswered questions start lingering in your mind as to whether our investigations went the right direction or whether they were just a smoke screen designed to hide the actual perpetrators in a typical Mafioso style.
My fellow Malawians, if the whole office of the Secretary to the Treasury becomes suspicious of a company or companies claiming to be owed money by government, it should not be a matter of rocket science to see that the office does not believe that the companies in question are actually owed any money at all. Unsurprisingly, my investigations reveal that almost all the companies on that list, which include Pioneer Investments, were claiming money from the Malawi Police Service for alleged goods and services provided between 2009 and 2012!
To put the matter further into context, my investigations revealed that Lido Electricals alone was claiming in excess of K4.2 billion. In total, by August 2013, Malawi Police Service had submitted to Treasury claims against them by these companies and a few others in excess of K130 billion. Luckily, despite these huge claims of arrears being allegedly verified by the office of the Auditor General, my investigations were able to ascertain that the Secretary to the Treasury then, acting through his Budget Director, refused to settle any of those claims and suspended payment of any claims of arrears from Malawi Police Service. In other words, Pioneer Investments and its friends were thwarted in 2013. They lived to fight another day, however, and, as we have all seen, was to work another, more successful scam with the same DPP administration in the MK145 million scandal.
Not that these companies’ underhand dealings were going to be completely unsuccessful. Disturbingly, it now seems that from 2014 up to date, a couple of the arrears that were rejected in 2013 were being paid out through the issuance of Treasury promissory notes. As I continue to dig deep into these issues, I will provide a comprehensive list of all arrears settled that had been rejected before.
Some of you will remember that back in early August 2013, former Minister of Finance, Ken Lipenga, accompanied by then Budget Director Paul Mphwiyo, held a press briefing at Ministry of Finance, lamenting fraud in government and announcing that Treasury would be putting in place new measures to check and curb fraud.
In September 2013, just days after the shooting of Paul Mphwiyo, The Nation newspaper carried an article by Leonard Sharra applauding Paul Mphwiyo for championing changes in government payment processes which included, among others, that expenditure from ministries should be matched with funding by allowing Treasury to verify all payments issued by Accountant General’s department and requiring controlling officers to counter sign all payments from their ministries.
Indeed information from both the Office of the President and Cabinet and Office of the Secretary to the Treasury establishes that in mid August 2013, former Secretary to the Treasury Randson Mwadiwa wrote a memo to then Chief Secretary Hawa Ndilowe asking her to issue and release a circular on the proposed payment process changes for them to take effect. No response was given and the circular was never issued. Should anybody really wonder, therefore, why billions were paid from OPC in 2013?
I am giving this historical information here to point us to the fact that we should not be surprised that Pioneer Investments, after being paid in the shadiest of transactions, made a hefty donation to the ruling DPP account where the President is the sole signatory. History has a tendency of repeating itself! And people who have had dirty dealings before tend to continue their relationships.
My fellow Malawians, we have had now close to a decade of watching greedy politicians and officials playing Russian roulette with our public purse. Cashgate in 2013 sounds like the biggest financial scandal in our nation’s history but looked at from a broader perspective, you soon discover that it was also Cashgate that has helped Malawians to open their eyes to the how politicians have totally captured and corrupted our central government. In this Regard, Cashgate was at once a discovery of serious corruption and also a bust of a criminal enterprise that had been going on for a long time.
The forensic audit report that gave the figure of K236 billion as potentially defrauded from government between January 2009 and December 2014 tells the whole story. An economist friend of mine from London School of Economics helped me to understand this figure in the proper context.
He explained to me that if you exclude the K24 billion cited in the 2013 Baker Tilly report, you remain with K212 billion as money potentially defrauded from Government between December 2009 to June 2013, a period of 42 months. What this means is that during this period, government was, on average, being defrauded about K5 billion every month or K15 billion every fiscal quarter. When you consider, for instance, the dollar value of K15 billion in 2010 or 2011 before a massive devaluation in 2012, you begin to see that we have been operating a much bigger house of cards from way before 2013.
My point here is that we should not forget that this Pioneer Investments was right in the thick of this kind of destructive activity at the time.
As I have said before, For Malawi to be truly transformed, simple condemnation of corruption and mere demonstrations cannot do it. The political parties as we know them today can speak against corruption but I can bet my whole career that in the current governance framework, a change of party or leadership alone in government will not solve this deep rooted problem.
Perhaps what we really need indeed is to consider carefully the words of everyone’s favourite parable man that “Kusintha mtundu wa nkhuku sikusosola nthenga koma kusintha tambala” [To really change a kind of chickens one should not just remove the feathers but bring in a new rooster and change the DNA].
Allan Ntata’s Column can be read every Sunday on the Maravi Post