Over US$12 million (K4.8 billion) is suspected to have been siphoned out from the 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.
During the six-months the Ministry paid out more than K5.8 billion, of which K363 million was paid between April and June 2013 and K5.5 billion was paid between July and September this year.
Of the K5.8 billion that the Ministry paid to various suppliers of goods and services, authorities suspect that K4.8 billion was looted, largely through suspected fraudulent transactions involving 44 private companies.
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.
The Financial Intelligence Unit (FIU) and the Anti-Corruption Bureau have tagged the payments as suspicious and are currently investigating leading to the arrest of the Ministry’s principal secretary Tressa Namathanga Senzani and chief tourism officer Leonard Kalonga.
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 government of large sums of money.”
Of the 44 firms that may have dubiously benefitted from the Tourism Vote, 29 or 65 percent 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 firms is also curious for a Ministry whose core business is development and promotion of tourism.
The Ministry’s only planned construction projects, according to the 2013/14 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 among other small development projects whose budgets are decimal fractions of the billions that have been paid out of the Tourism vote within six months.
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 interview on Monday that 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.
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 kwachas 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 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, a total of 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.
“We are still trying to find out exactly what was supplied, it’s quite a complex undertaking,” said a source at ACB.
The allegations of corruption and embezzlement have been a setback to President Joyce Banda, who has been on a drive to restore donor confidence.
She dropped two Cabinet ministers and has instructed the ACB to set up a unit within the bureau to confiscate unexplained property, among other measures to end the wanton thieving that appear to have reached a free-for-all affair between 2009 and early 2012 when the National Audit Office said more than K90 billion was either lost or mismanaged.
So far, there are reports that between 2012 and to date, around K20 billion may have been pilfered, bringing the total looted to roughly K110 billion.
But donors want more from the Banda administration if the credibility of the country’s Public Finance and Economic Management System (PFEM) is to be restored.
“Confidence has been lost and it will take a long time and a lot of effort to restore that,” said one senior diplomat in Lilongwe.