Malawi: Cashgate, Politics and the Election

President Mutharika

By Mabvuto Banda

Chimwemwe Lusungu was one of the first beneficiaries of Malawi’s much-touted economic miracle, a large-scale national programme which subsidises agriculture inputs, mainly fertilisers and seed for maize production.

Within five years, her maize yields doubled and her life changed: she had enough to feed her six children and surplus to sell. But now the 45-year-old widow from Lilongwe has neither maize to feed her family nor cash to buy food or pay other vital expenses such as school fees.

“I was struck out from the list of beneficiaries because I was told that government didn’t buy enough fertiliser to distribute to everyone as per usual,” she said when asked why she could not get fertiliser last year.

Lusungu blames her situation on “Cashgate”—a corruption scandal in which senior public officers, bankers and businessmen allegedly siphoned an estimated 6.1 billion kwacha ($15.5m) from government coffers, according to Baker Tilly, the British audit firm hired by former President Joyce Banda to investigate the stealing of public funds.

“I ended up voting against President [Joyce] Banda because Cashgate happened under her and money that could have been used to buy me fertiliser was stolen,” she said.

Lusungu is not the only one who voted against the incumbent in the May election because of the scandal.

So did Edward Phiri, a primary school teacher who works near Lilongwe, the country’s capital. He claims that he went without pay for three months, from September to November 2013, because the Cashgate theft affected the country’s payment system. Worse, he blames the theft for indirectly killing his 5-year-old daughter.

“I lost my child in hospital because the hospital had no drugs to treat malaria and it’s all because of corruption,” he said “How can people steal such huge amounts of money from government?”

President Banda, 64, initially enjoyed huge goodwill from the many who hated the autocratic style of her mercurial predecessor, Bingu wa Mutharika, who died in office in April 2012.

She won the backing of foreign donors and the IMF when she pushed through austerity measures, including a sharp devaluation of the kwacha, to stabilise the farming-dependent economy.

Cashgate

Her administration’s stellar beginning, however, was tarnished by Cashgate. The first hint of the scandal came when Paul Mphwiyo, the government’s budget director, was shot three times and left for dead by unknown assailants in September 2013.

In the wake of his attempted murder, police raids targeting several high-level officials uncovered wads of cash hidden in their cars and homes.

Banda responded by sacking her cabinet. This was followed with the arrests of more than 80 people, which included bank tellers, senior and low-level civil servants and businessmen.

The Anti-corruption Bureau, working with the police, confiscated wealth that could not be explained and sealed off mansions that belonged to humble government clerks.

They stand accused of exploiting a loophole in the government’s payment system – the Integrated Financial Management System (IFMIS).

In addition to the Cashgate transactions, the British auditors found payments without supporting documents accounted for an additional 4 billion kwacha and supply contracts had been inflated by 3.6 billion kwacha.

All told, the state was defrauded of about $32m, almost 1% of Malawi’s annual GDP, in the six months between April and September 2013.

Among the arrested was Ralph Kasambara, former Minister of Justice and Constitutional Affairs, who is now on trial for money laundering. Mr Kasambara is also facing charges related to the attempted murder of Mr Mphwiyo.

The Aid Freeze

But this was not enough to change the hearts and minds of an angry nation heading into an election. Urban voters in particular criticised Banda’s response as ponderous and ineffectual.

Foreign donors, who contribute almost 40% to Malawi’s annual budget, also lost trust in her administration. Donors  decided to withhold $150m for the 2013-2014 financial year.

They stipulated that the aid would only be released when the Banda administration sealed the IFMIS loopholes and persecuted those involved in the multi-million dollar heist.

So Banda went into the May election crippled by a disheartened donor community and a disillusioned electorate to face 11 other presidential candidates.

A stolen election?

These polls turned into the most closely contested election since the end of the one-party rule 20 years ago. Opposition parties went on the offensive accusing Banda of allowing corruption to flourish and promised to get to the bottom of Cashgate, a message that resonated with the electorate.

On May 24th, four days after voting, the Malawi Electoral Commission (MEC) released preliminary results based on a 30% vote count that showed Peter Mutharika, the younger brother of the late president, leading with 42% of the vote followed by Banda with 20%.

On the same day, Banda and two powerful opposition parties, the United Democratic Front (UDF) and the Malawi Congress Party (MCP), demanded a recount protesting that the vote was rigged.

The election was “fraudulent and with rampant irregularities”, she said, claiming that hackers had broken into the MEC computers and that in some constituencies ballot tallies exceeded the number of registered voters.

In Machinga, a rural town in southern Malawi, 184,223 people voted when only 33,778 voters were registered, the protesting parties claimed. In Dowa West, a district in the central province, a stronghold for the MCP, 70,845 people registered but the final tally sheet showed only 1,164 voted.

“In the central province, we found out that more than 4,000 people voted when only 2,000 were registered,” said Gustav Kaliwo, the MCP’s secretary-general.

The electoral commission admitted that it had problems: voting materials turned up at polls several hours late and ballot papers were sent to the wrong voting stations. The MEC had to extend voting in some urban areas into a second day. Initial counting was held up by a lack of lighting and generators at polling stations.

Mrs Banda used these suspicious glitches and her evidence to demand new elections within 90 days. To guarantee a credible outcome to the new polls, she promised that she would no longer be a candidate. Her decision triggered protests in Limbe outside the commercial hub of Blantyre, where demonstrators smashed shops.

The MEC and Mutharika challenged her demand in court alleging that Mrs Banda lacked the constitutional power to annul the elections.

The high court ordered the elections body to do a manual vote recount within eight days as demanded by the electoral laws. The ruling, however, was a pyrrhic victory for Mrs Banda. It was made on May 30th, exactly eight days after voting closed on May 22 and thus a recount could not be done.

In the end Mutharika, won the election with 36%, followed by Lazarus Chakwera, the MCP candidate, with 27.8% of the vote and Banda trailed in third place with 20.2%.

In the months following the election, the debate about the election turns on two issues: was the election stolen from Mrs Banda? Did Mrs Banda lose because of Cashgate and the scandal surrounding the sale of the presidential jet last year?

“She lost the urban vote and the same is true in most rural areas where the electorate believes Banda stole their money meant for maize, said Dr Henry Chingaipe, a political science lecturer at the University of Malawi. “But then again, the election was flawed,” he added.

Others think Banda lost because she challenged a very powerful syndicate. “Joyce Banda paid the price for doing two things; first for allowing such large scale of stealing to happen on her watch and secondly, for taking head on powerful people that were behind the looting of public funds,” argued Unandi Banda, a political commentator.

Banda lost because the Baker Tilly audit was meant to help restore confidence in her administration but that didn’t happen because the auditors refused to release the names” linked to the findings citing a legal issues, said another observer Robert Mhango.

Other allegations may have affected Banda’s chances of re-election, including the sale last year of a presidential jet to a controversial African arms group, according to several press reports.

But despite losing the election, Banda will never be forgotten because she managed to reverse fuel shortages, which were crippling the economy, and won back the donors who had suspended aid.

“It’s a pity that I chose not to vote for her because of corruption in her administration, otherwise she was a much better president than the ones we had before,” Mrs Lusungu said, summing up what many still feel almost six months after removing her from power.

Hopeless

The Mutharika administration has vowed to win back the international donors and to pursue the Cashgate criminals but last month’s revelations that the governments’ spy agency and the First Lady took millions from NAC — a donor  funded organisation fighting Malaria and HIV/Aids —has just made the donor community more angry.

The other thing donors are not happy about, is the recent payouts by State House to journalists which they [Donors] are now interpreting as an attempt by the Mutharika administration to buy the media.

“These two incidences reflect the thinking of the current administration and just reinforces our stand on budget support…the status quo won’t change,” said one diplomat in the capital, Lilongwe.