The murky details surrounding the controversial sale of the presidential jet have finally come to light and it has become clear that military equipment supplier Paramount Group duped the Malawi Government by bidding for the plane for $14.5 million through its subsidiary Bohnox Enterprises knowing they would not pay Malawi a tambala.
Malawi’s Finance Minister Maxwell Mkwezalamba was on Wednesday at pains to explain the secrecy surrounding the sale, which was finalised on July 29 2013, but government had not come out with the truth until now.
The Office of the President and Cabinet (OPC), which facilitated the sale of the jet, has admitted that it was not aware that Bohnox Enterprises was part of Paramount Group until later in the deal and only after Bohnox Enterprises disclosed this fact.
During a news conference in Lilongwe last evening, Mkwezalamba confirmed that the $15 million (about K6.3 billion) never went into government’s consolidated account and instead the Attorney General facilitated the transfer of the funds from Bohnox Enterprises, which bought the jet, to Paramount Group, its mother company.
Said Mkwezalamba: “Government owed Paramount Group $19.2 million [about K8.2 billion] in respect of military equipment procured sometime back. Government cash flow could not meet the demand for payment of the equipment. So, it was agreed that Bohnox Enterprises clear the amount with Paramount Group.”
With government’s plans on how to spend the proceeds shattered, Cabinet decided to reallocate funds meant for procurement of military equipment from Paramount Group for peacekeeping missions to procurement of maize and drugs.
“There was a budget provision [for Malawi Defence Forces (MDF)] to clear the arrears with Paramount Group. Part of the amount was reallocated to cover arrears as per Cabinet directive.
“There was no cover up at all. If it had not been for arrears, proceeds would have gone into Account Number One and all transactions would have gone as planned,” Mkwezalamba explained.
Contrary to President Joyce Banda’s remarks, no funds from the proceeds of the sale were allocated to the Farm Input Loan Programme (Filp) and only less than $4 million (about K1.6 billion) has been spent on drugs, as the money was reallocated from MDF towards these transactions.
Minister of Defence Ken Kandodo explained that Malawi had to buy military equipment for United Nations (UN) peacekeeping missions which is reimbursed using a formula worked out by the UN.
But Kandodo failed to explain when exactly the MDF equipment was purchased and delivered.
Mkwezalamba said $7.3 million which was expected to be spent on military equipment for peacekeeping missions as Cabinet agreed went straight from Bohnox Enterprises to Paramount Group.
On the planned spending of $4 million for drugs, Mkwezalamba said so far, K1.5 billion has been spent as agreed by Cabinet, as a reallocation from MDF to the drugs budget, which totals K6 billion as approved in the 2013/14 national budget.
Mkwezalamba said all scepticism about the process used would be made official in the Mid-Term Budget or the 2014/15 national budget.
Meanwhile, government still owes Paramount Group $4 million in arrears after it subtracted $15 million from the sale of the jet.