The $15 million (about K6.3 billion) proceeds from the sale of the presidential jet have vanished, with Nation on Sunday investigations revealing that both fiscal and monetary authorities never received it.
Two highly placed sources from the Reserve Bank of Malawi (RBM) on Thursday separately confided that the central bank has no record of the money.
Another well placed source at Treasury also confirmed that the jet proceeds never reached the Consolidated Fund or what is sometimes called Government Account Number One domiciled at RBM where all public revenue goes.
One of the RBM sources explained: “There is no single transaction that hit the RBM dollar account or any other account of the bank from presidential jet proceeds.”
The other source corroborated, saying the central bank—which receives all government funds originating from foreign sources—has been asking OPC about the jet money without getting a concrete response.
“At one of the meetings on Tuesday [last week], the very same question about the whereabouts of the presidential jet proceeds was raised.
“Ideally, when money is received from anywhere outside Malawi, we expect it to hit the account of government at RBM, but as I am talking to you today no single money from the jet sale ever hit the RBM dollar account,” said the source.
On his part, the Ministry of Finance source said only OPC can explain where the money went because “Treasury certainly did not receive it and RBM tells us that they never got it.”
These revelations raise questions as to who received the jet proceeds that the Office of the President and Cabinet (OPC) said would be allocated as follows: $5.8 million (K2.4 billion) to Malawi Defence Force (MDF) for peace-keeping operations; $4.2 million (K1.8 billion) for the Farm Input Loan Programme (FILP), $4 million (K1.7 billion) for buying medical drugs and $1 million (K420 million) for procurement of legumes and maize.
Apart from the question of who received the money, there is also the matter of where the funds are and no one in government appears ready with the answers.
Throughout last week, main players in the management of public funds—RBM and the Ministry of Finance—ducked Nation on Sunday’s questions.
RBM spokesperson Mbane Ngwira said on Friday that Capital Hill was in a better position to respond.
Treasury publicist Nations Msowoya did not respond to our questionnaire while his boss, Maxwell Mkwezalamba, referred Nation on Sunday to the Ministry of Information.
On his part, OPC spokesperson Arthur Chipenda said: “The $15 million realised from the sale of the presidential jet did not necessarily need to be deposited into Government Account Number One, which is a kwacha denominated account. This would have meant converting the $15 million into kwacha and yet government was to use the proceeds for activities that required use of forex such as purchase of medical drugs. If the proceeds were deposited into Account Number One then government would have been required to convert the funds into forex again to purchase the drugs. The proceeds, therefore, went into a government foreign account so that it would be easier to use the forex and not externalise any forex. This is just an accounting matter.”
But one of our RBM sources said yesterday that government has no Foreign exchange Denominated Account (FDA) anywhere in the world.
“Government has one main account and that is Account Number One at RBM and five other operating accounts, which they use when transferring money from Account Number One for operations.
“All foreign money, donor aid, grants, loans come into the country through RBM and it is the central bank that gives government the kwacha for operations. The forex forms part of the country’s foreign reserves. So, where is this government foreign reserve account held? If the jet money had come into the Reserve Bank account, we could have seen a significant increase in the country’s foreign reserves.”
In an interview yesterday, former finance minister Friday Jumbe described OPC’s claims that the jet proceeds were deposited into an offshore account instead of Account Number One as “a serious anomaly, unprocedural and smacks of a high degree fraud.”
He said since boarding of government assets is authorised by the Ministry of Finance, it is surprising that the proceeds are not in the Consolidated Fund and that Treasury as well as RBM do not appear to know where the funds are.
Jumbe said all government money—whether from within or outside Malawi—must be first deposited into Account Number One at RBM before transferring it elsewhere.
“No single person, not the State President, not OPC, not even the Minister of Finance, would decide where to keep government’s money.
“If the jet money did not appear in Account Number One, then government is breaking the law and that is serious illegality. Any expenditure of money that is not coming from that account is illegal,” said Jumbe.
Government sold the jet in July last year to Bohnox Enterprises, a British Virgin Islands-based firm that Nation on Sunday investigations revealed to be a subsidiary of Paramount Group.
Paramount Group, Africa’s largest privately owned defence and aerospace company, is owned by Ivor Ichikowitz, whose family foundation paid British public relations firm Bell Pottinger to spruce up President Joyce Banda’s cashgate soiled image.
Meanwhile, our sources say OPC has been pressurising RBM to transfer billions of kwacha to Paramount Group without supporting documents.
The RBM sources said a few months ago, the central bank transferred an equivalent of K5.2 billion to Paramount for military equipment and that there are now fresh directives from OPC to pay more to the South Africa-based firm, but which RBM is now reluctant to execute.
“The pressure is raising concern within the bank. On Tuesday [last week], three instructions from OPC were issued to pay more money to Paramount Group, but there are no invoices issued. The decision to pay has been pended waiting for the direction from the governor [Charles Chuka],” said one of the RBM sources.