Nearly K4.6 billion (about $11.5m) is suspected to have been looted from Malawi’s Ministry of Tourism between July and September 2013 through dubious payouts that have also led to the arrest of two senior officials at the ministry, The Nation investigations show.
has reviewed more than 90 cheques and other documents covering the period between April and September 2013 as part of our investigative project into Capital Hill cash-gate.
During the six-month period, the ministry paid out more than K5.8 billion (about $14.5m), of which K363 million (about $907 500) was paid between April and June 2013 whereas K5.5 billi (about $13.7m)on was paid between July and September this year.
Of the K5.8 billion that the ministry paid to various suppliers of goods and services during the six months, authorities suspect that K4.8 billion was looted, largely through suspected fraudulent transactions involving 44 private companies (see below for details of payments).
Of this loot, K4.6 billion was ransacked between July and September this year and the remaining K322 million vanished between April and June 2013.
Arrest of the ministry’s PS
Authorities have deemed these payments suspicious, prompting official investigations that have led to the arrest of the ministry’s principal secretary Tressa Namathanga Senzani on October 21 and chief tourism officer Leonard Kalonga on October 17 this year.
Namathanga was arrested for instructing the ministry “to make payments in favour of her company, Visual Impact, for no service supplied or offered to government”, according to the Anti-Corruption Bureau (ACB).
On the other hand, said ACB, Kalonga is suspected to have “corruptly employed the services of various people owning companies and defrauded Malawi Government of large sums of money.”
Of the 44 firms that may have dubiously benefitted from the Tourism Vote, most of them are construction companies.
We have also established that of the K4.8 billion suspected to have been looted, K4.5 billion went through the construction firms.
The dominance of the construction clientele is also curious for a ministry whose core business is “development and promotion of tourism, conservation and management of wildlife, preservation and promotion of national heritage.”
The ministry’s only planned construction projects, according to the 2013/14 output-based budget document, were continued construction of electric fences around Vwaza Wildlife Reserve and Kasungu National Park, a handful of office blocks, 3.1 km access roads at Senga Bay in Salima and other small development projects whose budgets are decimal fractions of the billions that have been paid out of the Tourism Vote within six months.
Transactions as indicated by investigators
Apart from the suspicious nature of the transactions as indicated by investigators, our investigations raised three questions;
—First, in the 2013/14 national budget, the Ministry of Tourism was allocated K3.7 billion, of which K2.5 billion was development expenditure whereas K1.2 billion was recurrent. Now, if the ministry has already spent K5.5 billion in the first quarter of this financial year—roughly K1.5 billion more than its annual allocation—how will it sustain itself to the end of the financial year in June 2014?
—Second, given that its development budget for the fiscal year is K2.5 billion, how has it managed to pay contractors nearly double the amount nine months before the financial year is out?
—How possible is it for any major construction project worth billions to be completed within three months and payments made within such a period?
Rachel Zulu, who was Minister of Tourism during the six months period we have reviewed, said in an interviewon Monday she had no idea about what happened.
Asked what she was doing at the ministry if she did not have an incline of what was happening there, Zulu said Cabinet ministers do not sign cheques and she cannot, therefore, be asked about her culpability.
Solution to the puzzle
But a well-placed senior civil servant, speaking to The Nation on Monday on condition of anonymity, appeared to provide a solution to the puzzle that has officially remained unsolved.
He said: “These people do not steal directly from the annual allocation to the vote. What happens is this: People with Ifmis rights get into the system, transfer the amount they want—say K1 billion—from Account Number One into the vote, say Tourism; then they facilitate the printing and signing of cheques through a syndicate.
“Once those cheques have been cashed from the bank, the transaction—transfer of money from Account Number One to the vote they want to steal from—is reversed and then deleted from Ifmis. So, you see, the allocation to the ministry remains intact. That is why so many billions can be paid from a vote whose budget allocation is billions of kwacha less,” he said.
The second tactic, added the senior government staffer, is the notorious instruction to the effect that commercial banks must always honour all government cheques from any of their branches for any amount without any limit on behalf of the Reserve Bank of Malawi (RBM).
Our investigations reveal that during the month of April, K42 million was paid from the Tourism Vote. Of this, K33.5 million paid to two companies is suspected to have been dubious.
In May, about K211 million was paid out, out of which K199 million to five companies cannot be justified.
In June, the ministry paid out K110 million; but an amount of K90 million to eight firms cannot be supported.
In July, K259 million, of which K191 million went to eight companies may have been suspiciously paid.
The mother of all the payments under review was K4.7 billion in August, of which authorities say K4.3 billion may have been looted through dubious payments to around 30 firms.
Out of the K550.5 million paid out from the vote in September, K14.4 million paid to one company is suspicious.
Our sources at ACB, RBM, the Ministry of Finance and the Ministry of Tourism, told us that authorities are still trying to find out what services the ministry was paying for in a space of six months.
List of suscipicious payments made at ministry of tourism
In month of April total payments were K 41,732,565.48. Questionable payments are
Kanengo Building Contractors K20,139,840.00
WEK Construction K13,428,560.00
A total of K 211,370,145.44 in payments was made in May 2013. Questionable payments are
Afro Oriental K128,400,756.43
W G Construction K18,672,508.80
Madula Building Contractors K17,233,948.80
Friendly General Suppliers K17,486,471.30
Tower General Dealers K17,576,460.12
K 110,196,707.38 in payments were made in June 2013. Questionable payments are
Tapita Building Contractors K18 567 821.48
Domekis Construction K16 301 376.38
Afro Oriental K13 624 125.12
R C Commodity Suppliers Ltd K9 629 636.20
Tower General Dealers K9 014 840.00
Shajira General Dealers K8 914 513.40
Gratho Investments K8 744 394.80
Ziuya Construction K5 400 000.00
K259 075 880.43 was disbursed in July 2013. Questionable payments are
Hury Civil and Building Contractors K 75 941 304.94
Kanengo Building Contractors K 27 359 630.43
WG Construction K 24 236 430.38
WEK Construction K 21 860 466.27
Megan Construction K 17 433 890.56
Cross Marketing K9 739 154.29
Standard Freight K8 109 573.36
Hardline Construction K7 395 431.20
Out of K 550,523,366.63 payments in September 2013 about K 520 million went to Automotive Products ltd. Questionable payment was
F J Construction K14 423 366.63
Month of August saw total payments of K 4 720 404 304.44. Questionable payments are
Vihama General Dealers K20 383,276.60
Tapita Building Contractors K9,600,000.00
Ziuya Construction K9,656,652.40
Business Advertising Agency K11,260,450.00
Afro Oriental K11,343,360.00
Cross Marketing K14,439,966.50
ZTC Civil Engineering K15,560,032.50
Standard Freight Services K60,402,469.70
Sky Civil Engineering K18,987,040.78
Clive Engineering Company K20,800,078.61
Visual Impact K63,542,083.30
Compu Net works Limited K30,654,078.61
Covs Landscape Recreation and Nursery K30,965,868.40
Protem Civil Engineering K81,763,250.00
Carmu Civil Engineering K84,963,341.14
Faith Construction Company K105,973,548.32
Zozama Civil Engineering K77,696,014.00
Makhausi Construction K135,413,930.24
Walusako General Dealers K78,649,120.89
Wymbansu General Dealers K40,953,287.47
Sky Blue Construction K42,656,788.00
Pawooh Logistics K44,520,682.89
Megan Construction K131,794,051.21
Kanengo Building Contractors K167,791,703.20
W G Construction K313,999,668.69
Hurry Civil and Building Contractors K60,111,742.00
Mchemani Civil Contractors K72,985,640.98
Image Investments K516,764,228.54
Dan Civil Engineering and
Building Contractors K401,088,915.75
Stadal Building Contactors K712,308,766.60
International procurement Services K849,598,097.06
O G Construction K396,023,569.10
—Tomorrow read about how the Ministry of Local Government and Rural Development was looted