Financing of a new water treatment plant for Lilongwe Water Board (LWB) hangs in the balance as the funder, European Investment Bank (EIB), has queried the recruitment of Godfrey Itaye as the board’s CEO despite his alleged involvement in fraud.
In a letter dated October 7 2020 addressed to Minister of Finance Felix Mlusu, EIB, which is expected to pump in 15 million Euros (about K13 billion) for the construction of the treatment works (TWIII) project in the capital city, has also expressed concern on Capital Hill’s decision to sideline it in the recruitment process despite an agreement to do so owing to previous corruption reports at LWB.
Itaye, who is currently on police bail for alleged fraud and abuse of office while he was Malawi Communications Regulatory Authority (Macra) director general, moved to LWB in June this year.
The water project is being closely coordinated with the World Bank and EIB expects to get approval from its executive management later this month.
But in the letter, co-signed by the bank’s head of division (sub-Saharan Africa) Diederick Zambon and senior investment officer (sub-Saharan Africa) Jim Hodges, EIB, which says it had hoped to conclude a finance contract with the Ministry of Finance by the end of the year, bluntly states that Itaye’s recruitment may affect the process.
Reads the letter in part: “The charges raised against the chief executive officer [CEO] of Lilongwe Water Board will negatively impact our ability to conclude the finance contract with the Ministry of Finance as we are unable to have persons under criminal charge involved in our project, particularly given the relatively recent incident of irregularity.”
The bank further states that the ministry is aware of irregularities at LWB about three years ago during the procurement of pre-paid water meters that led to an investigation by the Anti-Corruption Bureau with support by EIB’s Fraud and Investigations Division.
It says the investigations led to charges against a number of individuals who are currently awaiting trial, and that the Ministry of Finance had assured the bank that a new CEO for the water board would be competitively recruited.
It reads in part: “On 9th April 2020, we received written assurances from the Ministry of Finance that a new chief executive officer for the Lilongwe Water Board would be competitively recruited and that the EIB and World Bank would be updated once the recruitment process is completed.
“Unfortunately, we did not receive such an update and consequently, it is difficult to determine if a competitive recruitment process was undertaken.
“It was with much disappointment when we learnt of reports in the media that the newly appointed chief executive officer of Lilongwe Water Board had been arrested and may be facing criminal charges. This development, of course, causes us considerable concern.”
Asked to shed light on the recruitment process of the LWB CEO as raised by EIB, Secretary to the President and Cabinet Zanga Zanga Chikhosi declined to comment on the matter, saying he was yet to see the EIB letter.
He said: “Ask [Ministry of] Finance. I don’t know anything about the [EIB] letter.”
In an interview yesterday, Treasury spokesperson Williams Banda confirmed receiving the letter from EIB.
He, however, declined to comment on the alleged LWB irregularities and recruitment process.
When contacted, Itaye declined to comment on the matter, saying: “We have not been copied the letter, so how can I comment? The better people to comment would be the Ministry of Finance that have been written that letter.”
Meanwhile, the EIB has since asked the Ministry of Finance to provide the status of Itaye, potential charges he may face and actions the government is taking to remedy the situation, adding that it looks forward to receiving such information in very near future given the need to start work on the water treatment plant.
The Lilongwe Drought Resilience Programme intends to construct a new water treatment plant for Lilongwe City to increase the capacity to supply clean water to the city and suburbs of Lilongwe.
EIB is one of the world’s largest lenders for the water sector and is owned directly by the 28 European Union member States.