Why Donors should halt all COVID-19 Aid to the government of Malawi until there is full accountability regarding the usage of funds

COVID-19 statistics for Malawi as of 12th February 2021. Source: PHIM
  • US$1 = MWK 780.22  – Source: xe.com (13th Feb 2021)
  • Officials in Malawi, including people at the Department of Disaster Management Affairs(DODMA), have misappropriated the majority of K6.2 Billion (US$7.948 million) of Government funds which were earmarked for fighting Covid-19 and issued to government appointed Covid-19 Cluster committees- which are made up of civil servants.
  • According to credible reports from several sources, in one instance out of K85 Million ($109,000) earmarked for the purchase of Personal Protective Equipment(PPE) for Blantyre district, only K10 million was used for PPE, with K59 million being used for allowances. In Machinga, K30 million was spent on allowances with nothing on PPE. In Chitipa K22 million was spent on allowances, and nothing on PPE. In Chikwawa district for example K16 million was spent on allowances, with a meagre K4 million being spent on PPE.
  • There were several instances where significantly more money was spent on fuel than on PPE.

If you were looking for the perfect excuse not to waste your country’s citizens’ taxes to help the citizens of some poor country in East Afriica, one where officials have the nerve to steal COVID19 funds, now you have the perfect excuse.

Officials in Malawi have been accused of misappropriating a significant chunk of K6.2 billion meant for fighting Covid-19. The scandal now informally named COVIDGATE has revealed just how rampant, insensitive and endemic corruption continues to be in Malawi, and how little accountability there is in Government spending.

Despite the rhetoric from the Tonse Alliance government that they are serious about fighting corruption, or “clearing the rubble” to use President Lazarus Chakwera’s own words, the scandal has revealed just how little in practical terms the government has actually achieved towards that end. And how a lot more needs to be done.

Commenting regarding the scandal, one Malawian I talked to noted:

“If they can steal billions while Malawians are dying of COVID19 every day in our hospitals, while the hospitals are ill-equipped and overwhelmed and struggling to cope, while we have an acute shortage of PPE, what else won’t they do? What does that tell you about the kind of rot that we have in the civil service in this country? I understand poverty but these people are heartless, their brothers and sisters are dying everyday and they’re still stealing?!! They don’t deserve any mercy. Every single one of them needs to be fired!”

These people are heartless they don’t deserve any mercy

One Malawian commenting about the K6.2 Billion scandal.

Another commenter said: “If you donate to the government, your donation will end up into a politician’s stomach.”

Malawians on social media are equally enraged:

Meanwhile the office of the Director of Public Prosecutions in Lilongwe has ordered the Inspector General of Malawi Police Service to commence criminal investigations into the scandal. How long that process will take remains to be seen. However, historically such type of corruption or embezzlement cases in Malawi tend to take a long time. And in previous adminstrations, there were allegations that the lack of urgency and speed in prosecuting people who have embezzled Government funds pointed to a lack of political will.

The leader of opposition in Malawi’s p
Parliament Kondwani Nankhumwa MP

The leader of opposition in parliament Kondwani Nankhumwa MP has called for a forensic audit to ascertain weather DODMA and other Government officials misappropriated the funds.

However, until all the culprits are brought to book, and until there is total transparency regarding expenditure of Government funds, and until allowances on matters such as healthcare emergency spending are banned (all of which may take some time), I believe donors and international agencies working in Malawi should with immediate effect route all COVID19 aid funds either via charities and NGOs or via the COVID19 Private Citizens Response initiative (which so far has had an excellent record of transparency and of accounting for each and every single penny that has been donated).

Such a drastic action will focus minds within the Government of Malawi to do something decisive and to do so urgently against the scourge of corruption in Malawi.

Malawians are tired of being abused and taken advantage of like this. They want to know who was responsible for the embezzlement, how much was stolen by each official, and to see those people not only prosecuted and jailed, but also named and shamed, and forced to return the stolen funds back to the Government. And if they can’t return the misappropriated funds, then assets of each guilty person equivalent to the misappropriated funds should be confiscated. There has to be a very strong deterrent to stop this kind of thing happening over and over again.

The Governments of Britain, Germany France, the US and the EU should take note of this sad case of embezzlement, and be firm with officials in Malawi. This is an opportunity to force through much needed accountability and transparency in public service.

President Chakwera has on numerous occasions said he wants his leadership style to be a servant leadership style. This wanton embezzlement of emergency healthcare funds unfortunately frustrates such noble sentiments, and must be met with a tough response.

Nkhalidwe wonunkha kwambiri uwu. This behaviour must end now.

Why President Lazarus Chakwera shouldn’t have visited former president of Malawi Peter Mutharika

The Christmas holiday season is a strange time. One where friends, families, acquaintances and others who don’t fall into any of these categories meet to catch up, for food, celebration, for worship and generally for festivities. Suddenly, far removed from the ordinary day to day preoccupations most of us are usually accustomed to the other 11 months of the year, the petty-dislikes, by December many of us begin to plan for Christmas. Where we’ll spend the day, with whom, and for how long: we begin buying presents, buying gifts for the children, close friends and family, our choice of Christmas cards (even for those who we’re only obligated to do so), we begin planning the feast that is the Christmas meal/dinner, complete with all manner of indulgences from expensive drinks we don’t usually buy to calorie-rich desserts that do no justice to our health. It happens everywhere, even in countries where Christianity is not a big deal

President Lazarus Chakwera & the first lady meeting the former president and former first lady.

And so it was no great surprise seeing President Lazarus Chakwera and the first lady stop by Mangochi to visit the former president of Malawi Peter Mutharika and his wife.

However, Malawian are divided as to whether the visit was a smart move, and there has been a lot of harsh words on social media as to whether the visit should even have taken place. There are some hailing the visit as a sign of leadership and of building unity. But others think in terms of preserving the integrity of the presidency and giving out the right messages, the visit wasn’t a smart move.

As a private person, Lazarus Chakwera has the right to visit who he likes, when he likes, and at a place of his choice. But as the President of Malawi, I believe those personal liberties are constricted by the office of the presidency, and need to be exercised a lot more cautiously.

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

The above picture is a beautiful picture of two leaders spending some time together, but I think the concern for most Malawians is that any interactions between Lazarus Chakwera and Peter Mutharika should not influence due legal process, or give the wrong signals to those in charge of discharging that due legal process.

There is also the idea that a President who won the country’s support on the back of the noble and overdue anti-corruption ideal “of cleaning up the rubble” to quote Chakwera’s own words should not associate with a former president who is either facing an impending investigation, or whose very close associates are facing corruption / embezzlement charges. And refusing to associate with a former leader whose colleagues are under investigation is not tantamount to punishment. Instead it’s saying that the Presidency should be above disrepute, and so any associations that can potentially tarnish that Office must be avoided.

That’s the reason why some of us were very angry with what some South Africans were suggesting regarding who smuggled the controversial self-proclaimed ‘prophet’ Shepherd Bushiri out of South Africa.

In any case, now you have a man of integrity in President Lazarus Chakwera – by any measure an honest and conscientious leader. But what happens the day Malawi somehow gets a dishonest and rogue leader; a tinkerer who after such a visit to a former president starts insinuating without proof that the former leader is in fact innocent? Or starts casting doubts or throwing aspersions on the legal process, or interfering in any impending investigation? What happens if at a different time and in different circumstances a Malawian leader indulges in behaviour – much like what the outgoing US president Donald Trump has often done in the US – to try to undermine Malawi’s institutions and legal process?

That’s when Malawians will realise that it’s not a great idea for a sitting president to be chummy with someone who has a grey cloud over their head, or in Mutharika’s case – someone who presided over the monumental racketeering of state resources, embezzlement of government funds and wholesale corruption like never seen before in Malawi.

The Jappie Mhango allowances fiasco is only the tip of the Iceberg of corruption in Malawi

If you’ve followed this blog for any length of time, you’ll know that Malawi has a big corruption problem. It is a fact and there’s no getting away from it. At least not in the present scenario where Peter Mutharika’s DPP is in government.

But for the benefit of those who are not aware of the scale of corruption in Malawi, or what this post is all about here goes; a few days ago, Malawi’s Health Minister Jappie Mhango, and Malawi’s Minister of Information, Civic Education and Communications Technology Mark Botomani were caught by a video recording discussing how they would hide the hefty allowances they were drawing from Covid19 Emergency fund. This is despite Mark Botomani appearing earlier on TV denying allegations that ministers were benefiting from any Covid19 related funds.

As would be expected people in Malawi have been outraged by this development with one Human Rights organisation, HRDC calling for the resignation of the ministers within 7 days.

As thousands of health workers continue to be poorly paid, it is reprehensible that these ministers would connive to cheat Malawians including the Health services even in an emergency situation. Just last week, there was a leaked circular from the Treasury’s recently dissolved Special Cabinet Committee on Covid-19 indicating allowances (termed “Risk Token”) per day for each Minister as MK450,000 (~US$611) and for each MP as MK350,000 (~ US$475) as remuneration for their tours in preparation for the pandemic. Those figures do not include accommodation and fuel allowances, which when factored in push the daily allowances to around MWK700,000! That’s more than twice the monthly salary of a Registered nurse in Malawi! and nearly 3 times that of lower bands of nurses (e.g. diploma holders from the Malawi College of Health Sciences).

No surprises then why people are outraged. Such exorbitant allowances cannot be normal or justified when the government has not provided adequate Personal Protective Equipment (PPE) to health care workers including nurses and doctors, in preparation for the Covid-19 pandemic.

Normally, the Office of the President and Cabinet (OPC) and the Treasury approve allowances structures and once that is done OPC dispatches circulars to government departments for noting and filing. Now in this emergency situation where there was a short notice, who approved the allowances?

Jappie must have discussed with Treasury Principal Secretaries that the government system is completely off bounds, because the way the government system works is that when a transaction is decided, Ministry of Finance and Treasury have to approve the expenditure. What’s happened here is that Jappie and his Controlling Officer (who is the PS) decided to breach that process.

This smacks of lack of discipline at the highest level in government. However, according to allegations from a source who declined to be named, Jappie Mhango’s corrupt ways are not new.

The allegation says that a few years ago, when Jappie’s sister (one Mrs Kaunda) was Secretary of the then manager at the Ministry of Education Division in Lilongwe (Central West), Jappie, his sister and one Thoko Chimuzu who was the Principal Planning Officer then (and is now PS at the Ministry of Information) used to supply maize and beans to schools in a racket that targeted schools. When funding from Education Headquarters to Education Division had been issued, Jappie and his clique would first deduct money that was due to them from their supply activities, and only then would the rest be used to towards the mandated payments for which the funds were issued. There was no restrain, no acknowledgement that there may be a conflict of interest.

Today even though Jappie has a constituency seat and a ministerial position, my source says that the trend never stopped, and the source is baffled how educated people behave in this shameful way.

The source said Jappie is extremely opportunistic and does not think of the effect of his actions or the conflicts of interest that arise. So the thieving team of Thoko Chimuzu and Jappie Mhango is still in operation today, and Mark Botomani is just the latest addition. Apparently, the racket included one Justin Adak K Saidi (a PS at Education) who rose from being a primary school teacher, and who was a protégé of Patrick Mbewe. Apparently, their dodgy operations have included using teachers to rig elections for UDF, and recently in 2019, for DPP. In fact the very idea of Tippex originated from this clique. They monopolize every opportunity to the extent two of Saidi’s children were awarded 2 scholarships to China.

If these allegations are true, then they simply confirm everything many of us have been writing about all these years. Peter Mutharika’s DPP government, as illegitimate as it is, if full of selfish people whose number 1 aim is to plunder the state for personal gain. If Peter Mutharika was truly interested in fighting corruption, he would have fired all these loose cannons and corrupt officials out of his government long ago.

These people will use whatever means to deprive Malawians of resources. They are not public servants and they do not have the best interests of Malawians at heart. Jappie Mhango has shown you his true colours, he is only interested in self-enriching himself. Please believe him.

The Anti-corruption Bureau needs to take note and begin investigating such rackets, including looking at these kinds of payments and allowances across the chain of command at the Treasury, the OPC and the Accountant General’s office, and whether they fully comply with the law.

Government officials including ministers and MPs should not take advantage or benefit from public schemes that are designed to help Malawians. There should be absolute transparency, a clear distinction and a clear separation between “public official” and “Supplier”. Simply put, if you want to be a supplier to the government, you shouldn’t hold a public office, and shouldn’t be in a position where you can influence the awarding of contracts for your own personal benefit, or to benefit your company, your relatives’ company or a company belonging to your friends. That is the only way we will ensure that public resources are safeguarded, and are not misused or fraudulently diverted by such rackets.

Saulos Chilima & the Devil

There comes a point in a leader’s life when they have a critical choice over an important matter. The decision they make defines them forever.

Saulos Chilima & wife
© AFP. Saulos Klaus Chilima, accompanied by his wife, Mary, waits to be screened at Lilongwe High Court, where judges later annulled the May 2019 election,Lilongwe, Feb. 3, 2020.(Photo by AMOS GUMULIRA / AFP)

There is a little known African proverb which says Cross the river in a crowd and the crocodile won’t eat you.

It’s a metaphor which has been interpreted to mean people can achieve great things as a group rather than as individuals even when faced with danger; its the classic proverb meant to encourage collective action against innumerable or otherwise monumental challenges, even when there is danger (symbolised by the crocodile) and an obstacle or uncertainty of large proportions (i.e. the river).

But the metaphor can also be invoked to mean if someone undertakes an action together with a majority, they are unlikely to face the wrath of the masses (symbolised by the crocodile) sometime down the line since when making the decision, the person didn’t think only about themselves but took the decision (i.e. crossing the river) together with the crowd.

However, the kind of ‘crowd’ (and more generally partners) one chooses to mingle or intertwine themselves with when faced with a challenge matters.

While some crowds can elevate you, and propel you to greater heights far beyond your original standing, other partnerships can pull you down or even destroy you altogether (‘feed you to the crocodiles’). Knowing one from the other can be the difference between survival and catastrophe.

Malawi has recently experienced a monumental and historic moment in its democracy. In a landmark judgement, Saulos Klaus Chilima & Lazarus McCarthy Chakwera v Arthur Peter Mutharika & Electoral Commission, a unanimous bench of the High Court of Malawi sitting as a Constitutional Court nullified the country’s May 2019 elections and ordered that fresh elections be held in 150 days. Malawi is the second African country to nullify a presidential election, after Kenya. The court further held that a proper interpretation of section 80(2) of the Constitution of Malawi requires that presidential candidates garner 50% + 1 votes to be duly elected, effectively striking down the first past the post system for presidential elections.

However, now that the Constitutional Court has clarified the 50% +1 issue, it means it will now be difficult for any political party to win an outright majority in an election. It means parties must enter into alliances to be able to form a government, as is the case in many other countries around the world.

Critically, it also means Saulos Chilima and his United Transformation Movement (UTM) party will most likely become the kingmakers. This gives him a lot of influence because it means whoever he decides to work with will have to offer concessions or policy promises which appease the UTM block, which only has 4 MPs in Malawi’s 193 member Parliament.

There has been speculation that Saulos Chilima is open to working wth the Democratic Progressive Party (DPP) of Peter Mutharika, the same party from which he resigned in 2018. In particular, several sources have told me that senior advisers around Chilima think it is feasible and not preposterous for UTM to get into an Alliance with DPP to contest the upcoming fresh elections, which the Constitutional Court ordered should be held within 150 days of its judgement.

Mind you, this is the same DPP which has been called by some Malawians as “our common enemy”. It is the Same DPP which has presided over numerous corruption cases, over accusations of nepotism and cronyism; a government that tried to intimidate those protesting in the streets and labelled them terrorists, shielding police officers when they committed sexual assault and raped women and girls in Msundwe. The DPP government has abandoned our hospitals in Malawi as people die because of inadequate medical care and lack of medicines while party cronies swim in unexplained wealth, and can afford medical attention abroad; this is the party that said nothing regarding an attempted bribery of the judges presiding over the Constitutional Court case – resulting in an unknown magistrate quashing the warrant of arrest of one of the suspects of the bribery (later the warrant was restored by a High Court Judge).

But most of all, the DPP government has presided over a corrupt, rotten and unprofessional electoral body, the Malawi Electoral Commission (MEC) which the Constitutional Court revealed conspired with DPP to defraud the people of Malawi, of a free and fair election.

Is that really the kind of party Chilima now wants to associate, let along re-align with?

When Saulos Chilima left DPP, he insinuated many things about his old party’s excesses. Among the things he said were the following words, which many thought pointed to the rot within DPP. In an interview with Reuters News Agency, Chilima said: “I have been vice president for the last four years. I’ve had no support within to fight corruption, so the best way is to run for the highest office and then take corruption head-on”

I have been vice president for the last four years. I’ve had no support within to fight corruption, so the best way is to run for the highest office and then take corruption head-on

So contrast those words with the murmurs that a UTM – DPP alliance is still on the cards, and it’s easy to see why some of his supporters are livid.

Whether he realises it or not, this is the moment when ‘the dark side’ attempts to coerce an upstanding leader who up until now has made more right moves than wrong ones; this is the moment dark forces attempt to seduce someone into lowering their political standards against their better judgement, with potentially catastrophic consequences; a wanton and reckless decision devoid of any wisdom or forethought, one that would destroy their reputation, including any good fortune, high esteem held or respect the public had of them.

Here, a bit of context is necessary in that most of the people around Chilima have never held political office, either as elected representatives, or by being appointed to an official role besides an elected representative. So you’d think some of the advice they give will at best be taken with a pinch of salt.

But Chilima’s predicament is not unique to him or indeed Malawi. Many other leaders throughout history and in literature have been faced with challenging situations of one type or another.

This is the moment narrated in the Gospels of Matthew, Mark and Luke, when Jesus no doubt exhausted and hungry from fasting forty days and forty nights in the wilderness, is taken by the devil to a very high mountain and showed all the kingdoms of the world and their splendour. The devil says to him in Mathew 4 verse 9: “All this I will give you,” he said, “if you will bow down and worship me.” to which Jesus replies: “Away from me, Satan! For it is written: ‘Worship the Lord your God, and serve him only”

When Geroge W. Bush was president, the unholy cabal of Dick Cheney, Donald Rumsfeld and other hawks convinced the malleable Bush with feeble if not dodgy intelligence that Saddam Hussein had Weapons of Mass Destruction (WMD). A decision to go to war led to the deaths of over 300,000 Iraqi civilians, (500,000+ people according to other estimates[Washington Post]) and forever labelled ‘Dubya’ , as he was nicknamed, as the US president who took the US into a phoney war. Not only did the Iraq War completely destroy large parts of Iraq, but it spurred hatred against the US in the region, and directly led to the rise of extremist groups, including that known as ISIS.

This is the moment Nick Clegg, former leader of the UK’s Liberal Democrats Party made the ultimate political error by allowing the UK’s Conservative Party under David Cameron (with whom the Liberals were in a coalition government, following an election that produced a hung parliament) to overrule his most important policy commitments on University Tuition fees; a mistake so grave it angered his party’s core supporters who punished the Liberal Democrats at the next election (held in 2015); his party’s MPs were fumigated from parliament like rats flushed out of a rat hole. They lost a whopping 49 seats and Clegg resigned as leader!

This is the moment in July 2011 when faced with demonstrations in Blantyre, Lilongwe, Mzuzu and Karonga, Bingu Wa Mutharika ordered a crackdown instructing riot police to fire teargas and live bullets in confronting them, leading to the deaths of 18 people. Malawians never forgave Bingu for that one single act.

It is akin to the moment Aung San Suu Kyi, once celebrated internationally as a champion of democracy, ignored widespread allegations of mass murder, rape and forced deportation in Rakhine state in Burma, and did little to act and protect the lives of hundreds of thousands of persecuted Rohingya Muslims, even after a UN fact-finding mission investigated the allegations and found compelling evidence that it said the Burmese army must be investigated for genocide against Rohingya Muslims in Rakhine.

Malawians have been taken for fools for a long time, and their peaceful nature and hopeful trust in strong-men (“abiggie”), abused by politicians of all colours; the kind who make false promises (“I will turn Malawi into Germany“) that can’t possibly be fulfilled.

But if there is one certain thing the recent protests in Lilongwe and across the country have shown, it is that Malawians will no longer be taken for fools. Going forward, no one will take the people of Malawi for granted anymore: Not donors, not foreign election observers, not local political parties, not local party leaders, not chiefs, not foreign investors, not Chinese investors …. NO ONE!

So, whatever Saulos Klaus Chilima decides to do now, whether to listen to the blue imp perched on his left shoulder whispering falsities into his left ear, or whether to heed the red imp on his right shoulder – the tambala wakuda – he can be certain without a shadow of a doubt of one thing: that the Malawian people are watching his every move. And that what he does next will most-definitely be his legacy that will define him forever.

Construction Sector Transparency Initiative (CoST)

Construction Sector Transparency Initiative (CoST) is an initiative recently launched in Malawi

Launching the CoST Malawi website, on Monday evening, Vice President of Malawi Saulos Chilima said that:

“I hope that respective governance structures, project implementing agencies and construction industry stakeholders will take this as an opportunity to demonstrate to the world that Malawi can be a shining example of good governance and prove to ourselves that it is possible to develop our country”

Chilima said he was committed to ensure that reforms incorporate CoST principles so that disclosures cover the whole value chain of construction activities in Malawi.

This is an interesting development in the construction sector in Malawi because as some readers will know, the Cashgate corruption scandal badly portrayed the construction sector in Malawi.

So one can only hope that the sector will fully embrace these reforms, because clearly there are advantages be realised.

However, lets look at the issue in a bit more detail.

According to CoST’s international website:

It is estimated that upwards of $4 trillion annually is lost through mismanagement, inefficiency, and corruption in public infrastructure – on average 10 to 30 percent of a project’s value. These losses have a negative effect on the quality, safety, and value of the built environment. Specific investigations have found much larger losses in some cases, including projects that were paid for but never built and projects that collapsed with injury and loss of life. 

In terms of inefficiency and mismanagement one can understand why the stakeholders would want better efficiency and management. It would reduce waste and introduce a greater level of safety.

But when it comes to corruption, I’m not quite clear why a sector that has struggled with endemic corruption for decades would suddenly want to reform itself, simply because it is being asked to publish details of the procurement process?

Let me put it this way, publishing the pre-contractual process could make it harder for corrupt officials to hijack the procurement of public contracts, but does it shut the door to corruption in procurement altogether?

Consider this scenario:-

Suppose a procurement committee had a preferred provider of certain services prior to publishing of a tender, by virtue of an inside secret agreement between officials, their boss, and this particular provider. A deal that would be of financial benefit to the members of that committee. What is to stop some members of that committee from secretly assisting the preferred provider to submit the strongest bid, one that fulfills all the conditions of the tender, and is likely to be the most attractive? What is to stop officials doctoring the process behind closed doors to ensure the preferred provider’s success? Especially if the help given, is given in secret?  What will guard against such a scenario?

I think it is more logical for certain checks and balances to be established as part of this initiative, to make it more ‘foolproof’. The Vice President Saulos Chilima must ensure that some additional measures are implemented in all public procurement dealings. For example, this initiative could go much further by demanding that no prior conscious contact whatsoever must have taken place between the members of the awarding committee, or an employee of the awarding body or ministry, and prospective bidders, when they knew a contract has been published. Further, to ensure that committees awarding contracts are formed from competent yet unconnected individuals, who do not work together, and have no social relationships, awarding committees should be made up of people from different sectors, who do not know each other, who do not work together, who are not part of the same social circles, who come from across the country, and who critically have declared their political support( i.e. they support different political parties). All this is important to make it harder for a conflict of interests to arise.

So as an example, if the Ministry of Natural Resources, Energy and Mining is considering publishing an invitation to tender for some goods or services it requires, an awarding committee could be made up of nine individuals:- two from the ministry itself, three from Civil Society Organisations, one ordinary member of the public, one from a religious organisation and two diplomats from different foreign consulars.

In my view, awarding bodies composed of such a makeup, although operating at a cost to the government, are highly unlikely to award contracts on political or regional lines, or in situations where a conflict of interest exists.

Further, while best practices can be imported from other CoST implementations across the world, the threshold in selecting successful bidders should be improved, so that only those with the highest rating, and strongest bids, as agreed by a large majority (at least 7 out of the 9) of the committee are awarded the contracts.

Finally, smaller players need to have their own categories, so that they are not disadvantaged merely by their size, when pitted against larger companies.

CoST Malawi is directed by a Multi-Stakeholder Group (MSG) that comprises representatives from:

  • Ministry of Irrigation and Water Development,
  • the National Audit Office,
  • Accountant General,
  • Director of Buildings,
  • Anti-Corruption Bureau,
  • Office of Director of Public Procurement,
  • Malawi Building, Civil and Allied Trades Association
  • Malawi Economic Justice Network,
  • Human Rights Consultative Committee,
  • Business Action Against Corruption,
  • African Institute of Corporate Citizens

All sounds good and well on the surface. Anyone can cobble together rhetoric and words that sound heroic and purposeful. But the implementation of this initiatives is what counts. The devil is always in the detail. In my view, the essential features  are not good enough. More needs to be done to prevent abuse of process like the scenario provided above.

Inequality in graphs and images

Lately, talk of inequality has dominated the media. Everybody is talking about it. Probably because of this year’s Davos Summit, but everyone seems to be keen on reminding us just how economically unbalanced the world is. Just how a few people own huge amounts of wealth, while the rest live on breadcrumbs.

Global Wealth 14Yesterday, it seems Mark Carney, governor of the Bank of England entered the fray, when he said:

“Without this risk sharing, the euro area finds itself in an odd position,”

While the context of Mr Carney’s statement may have been different to the subject of this post, and directed more to institutions on a country level, on a personal level, I don’t believe in the RobinHoodesque notion of ‘stealing’ from the rich to give to the poor. I don’t believe that such an approach works because it’s a dangerous idea that is not only open to abuse, but that can backfire. And before you jump on me and criticise my socialist credentials, let me qualify it.

I know inequality is real, and I know its crippling effects on people and communities across the world, especially in poor countries.

My contention is that if people work hard to earn their money, if they pay their taxes and do not accrue wealth using dodgy (or outright illegal means); if they do not use tax havens or other immoral ways of depriving governments of the much-needed lifeblood of corporation tax; if these business magnets are no more than scions bequeathed of inherited blood money (money tarnished with the proceeds of slavery and colonisation), if they have earned their way to the top, why should anybody sensible think it is a good idea to take it away from them?

Why!?

wealth-gap-2I believe in fairness, I believe that corporations must pay their fair share in taxes. That the government must act in the interests of the people, not just working for the interests of corporations. I believe that those who are rich, or who have the means, must do more to help the disadvantaged – whose spending ironically often drives the profits. Doing all these things will likely lead to less inequality, less strife, and better social harmony.

And here’s why:

If you look at recent events, not only comments made at Davos, what you find is that it’s not so much that the money isn’t there. Instead the problem is that the money which is made on the back of extremely liberal national and international tax regimes – is stashed away in enclaves where cash-strapped governments be they in Africa or elsewhere cannot get to it.

As a result the government cannot sufficiently invest in services, cannot create jobs or help those at the bottom of the pyramid improve their lives. This increases inequality, including spurning side effects such as crime and social unrest.

So then, where’s a good place to start, when addressing this problem of inequality?:-

1. Change the laws to ensure that companies pay a fair share in taxes from the revenues they generate.

This slideshow requires JavaScript.

Essentially, it also means being firm with tax havens to reveal the sources of blood money or any untaxed funds.

offshore_tax_jurisdictions

2. Crack down on corruption, and stop illicit financial outflows.

This slideshow requires JavaScript.

3. Streamline services (a streamlined small government that is cheaper and efficient to run is preferrable to an inefficient large and bloated government that is expensive to run).

4. Stop unnecessary privatisation. But encourage responsible Investment

US_Africa_Summit_Day_1If you privatize everything, from where will the state earn its income??

Everybody knows that employment tax revenues are not a sufficient revenue source. That’s why there are so many governments across the world that have budget deficits, simply because all the tax companies pay plus the tax their employees pay – IS NOT ENOUGH to sustain all the functions of government. From Britain, the US, France, Ireland, Italy and Greece to South Africa, Malawi,  Ethiopia and Mozambique, and many others, budget deficits and debt are commonplace. As a consequence most of these countries fail to adequately invest in healthcare, in poverty alleviation, in education, in job creation for young people, in women’s health and advancement…because there isn’t enough money coming into the government coffers for them to spend on these things.

Simply put, the state has no full-time job and is only employed part-time. So how the hell can it spend, or raise its family properly?

5. Instead of privatisation, countries should enter into joint venture partnerships with businesses, for win-win deals because these will not only provide tax revenues from employment tax, and corporation tax,  but will additionally earn the government dividends (which can be significantly higher than corporation tax and employment tax combined).

CossartDevelopment_webfg2

It also means deals that involve raw materials should principally benefit the people of the country in which the raw material is first (NOTE I’m not using ‘politicians’ or a country’s leaders here. Contracts must benefit the people not a handful of politicians). As I like to put it, when was the last time an African mining company was given a 70% mining/ oil drilling stake in Europe or the Americas?

africas-natural-resource-wealth6. Empower young people by training them to acquire advanced entrepreneurial skills so that they become assets capable of adding real value to communities.

Providing Aid is not good enough, emphasis on ‘Trade not Aid’ (other than Fairtrade or better) is becoming cliché. Further, I think the advantages of possessing a first degree are overstated. In my experience they rarely equip students with entrepreneurial skills.

business-paper-clipWhat is required to begin denting inequality is to train young people to be ‘go-getters’. And that is a different ball game altogether over and above merely providing a quality education.

7. Finally invest in services (hospitals, transport, policing and security, infrastructure, the youth and women, etc) including investing in things like ecofriendly energy. Because if everybody paid their dues, such investment would create jobs. And they’d be enough funds for people to receive living wages.

Tanzanian PM under pressure to resign over alleged fraudulent payments

Tanzanian PM under pressure to resign over alleged fraudulent payments via Guardian

Mizengo Pinda accused of authorising unlawful offshore payments under guise of energy contracts a month after donors withhold funding amid corruption fears

Former Malawian President Joyce Banda implicated in the Cashgate Scandal by Oswald Lutepo

Joyce Banda is a good mother. This I’m inclined to believe because a reliable source who it so happens knows her step-children, told me so. According to this completely reliable source, Mrs Banda raised her step-children up as if they were her own children, with all the love, all the concern and all the care that any good Parent gives to her children. Growing up under her was good, they love her.

But being a good and caring mother is not the same as being a good president, nor for that matter, the same as being an honest person.

Thus, while Madam former President and international darling was busy prancing around the globe, giving speeches about her role as president and what she achieved (most recently here ) and while she was conducting interviews, perfidious thoughts of treachery were swirling violently in the mind of one Brutus: the man Oswald Lutepo. For those not too familiar with the Cashgate Story (see another summary of how the scandal started here), Lutepo is the man who was People’s Party’s Deputy Director of Recruitment and who according to some people in Lilongwe, Joyce Banda appeared to have shielded from prosecution.

At the time when the bubble at Capitol Hill had burst, and Mphwiyo was recovering in a South African hospital, when the likes of Ralph Kasambara, the former Attorney General were being dragged through the courts, arrested and re-arrested as the plots in the scandal unfolded, Lutepo was safe and dry. He could aswell have claimed the title of the ‘Malawian Teflon Don’, because despite handing himself to police, it seemed as if pinning him down with anything was proving extremely difficult, according to some, because he was protected by powers mighty and high. When the name of Manondo  appeared on Interpol wanted list, Lutepo’s name was nowhere to be seen, even though it was claimed that Malawi Police had alerted Interpol to issue warrants of arrest. Throughout this time the man protested his innocence, and claimed that he had no role in the scandal. That the accusations were smears by people who were jealous of his business success. The questions remained, including how exactly did he achieve that business success?

A few weeks ago, when the full Baker Tilly’s report on the Scandal was revealed (there had been an initial publication with names of companies involved in Cashgate and their owners omitted), most people who were hoping for the truth to be revealed were not surprised to see Oswald Lutepo’s name in the document. What caused astonishment was that Joyce Banda’s name was not in it or in any way connected. While  Madame former president’s son Roy was implicated, there was no link to Joyce Banda. Most Malawians familiar with the scandal couldn’t believe that she didn’t know what was going on, after all the allegations which implicated those close to her, and after all the rumours about her own active if not primal role. Surely Madame president must have known something.

According to Zodiac Online, who today interviewed Lutepo, one of the highest beneficiaries of government funds during the scandal, Joyce Banda did know what was going on.

Image-Laundering-JB And, if that’s true, then it means that Mrs Banda lied to Malawians when she protested her innocence, most recently today via her media officer.

If these allegations are true, then today is a sad day for Malawi, and for Africa, because it simply reinforces this toxic notion that corruption in Africa is endemic. That African leaders are corrupt and even those who on the surface appear innocent and honest, and polished, complete with fancy hair, fancy clothes and a tolerable english accent, are inherently corrupt; as rotten to the core as their often rent-seeking officials.

There have been many casualties (including at least one fatality) associated with the recent politics in Malawi, but if the allegations brought by Lutepo are true, Joyce Banda may have indefinitely lost the opportunity to clear her name, and give Africa a new kind of leader.

While it is my wish, as I wrote here, for every penny that has been embezzled from Malawi government coffers over the years to be recovered, and as many of the culprits as can be apprehended to face the long arm of the law, I acknowledge that due to the complexity, buck-passing and treachery surrounding these type of scandals, due to the extraordinary efforts people go to in order to escape the consequences of their improper actions, we may never know the whole truth. Ordinary Malawians may never get to the bottom of this scandal in the same manner that we do not know what or how much Dr Kamuzu Banda took from the public purse.

But, if these allegations are true, then it could as well have been confirmed today that our former president, the second woman president in Africa, was a thief.

Siimilar Links