MALAWI CASHGATE REPORT PDF

I decided to produce this report following the conviction that nothing The Malawi “Capital Hill Cash-Gate Scandal” (named after the seat of. Story by Shaun Raviv in Lilongwe, Malawi. Additional reporting, translating and fixing by Golden Matonga. Illustrations by Andrew Berry. visited July 9, ) [hereinafter BBC Cashgate Report] (on file with the Dependence, Donor Withdrawal: Implications of Malawi’s Cashgate.

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Capital Hill Cashgate Scandal or “Cashgate” is a financial scandal involving looting, theft and corruption that happened at Capital Hillthe seat of Government of Malawi. The scandal was uncovered during the administration of President Joyce Bandathough it is believed to have begun prior to her taking office.

The scandal first came to light in Septemberwhen an accounts assistant in the Ministry of Environment was found with several thousand dollars USD in his car. Following Cashgate’s revelation, the British government sponsored an independent audit into the scandal, focusing on transactions made through Malawi’s electronic financial management system. In October,more than 70 people were arrested in connection to Cashgate — many of whom were subsequently tried and convicted.

President Joyce Banda also fired her entire cabinet. In OctoberBaker Tilly provided the Government of Malawi with a confidential report summarizing individual case files from its original audit. It found the primary beneficiary of the scandal to be Osward Lutepo, who has since been sentenced to 11 years in prison. In November,after signs that Cashgate-related corruption extended beyond the term of the British government’s audit, the German government initiated another audit to review potential theft dating back tounder then-President Bingu wa Mutharika.

Several donor countries have since suspended foreign aid funding to Malawi as the scandal is deliberated. Cashgate remains a high-profile political dispute in Malawi. Most governments of countries have Public Financial Management PFM systems that they use to manage the flow of funds across various levels of government. These accounting systems enable a centralised and efficient management of government funds generally income and expenditure across departments and enable the money a government receives or spends to be reconciled with the actual funds in the government’s bank accounts, countrywide.

Due to the vast sums that pass through government bank accounts, it is important that PFM systems be robust and effective at managing government funds be they raised from taxes, donors, dividends, etc.

This system was intended to replace the manual systems that were previously in place. If properly implemented and managed, the IFMIS system automatically links planned budget and actual cash budget demands, allowing managers to efficiently schedule expenditures to minimize cashflow problems and improve public service delivery. Thus, the main reasons for the IFMIS were efficient expenditure control, to provide timely budgeting and accurate financial information across government, to provide a state-of-the-art computerised accounting system and to provide a standardised integrated financial management reporting system across government.

A pilot project was launched in five ministries, but was met by many problems, resulting in the termination of the contract with the first supplier. Maalawi the problems encountered during the pilot trial were severe mismanagement,technical problems, funding shortages, disagreements among members of the project there were three distinct suppliersinsufficient training and staffing cultural challenges, resulting in long delays.

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Staff not paid and not motivated. Incomplete and doctored records: That same year, a peer-reviewed article in November identified 21 issues that needed to be resolved for the IFMIS to work properly.

For some reason, those issues could not be resolved. In Novemberthe new IFMIS was formally introduced and customised to Malawi’s own specific requirements across 50 ministries and government entities. In turn, cheques are raised for payment to suppliers and others which are then printed on Reserve Bank of Malawi RBM cheques.

The GoM suspected that “a number of perpetrators had exploited these weaknesses through collusion, resulting in financial loss to the government exchequer. The government of Malawi soon recognized that rdport IFMIS was vulnerable to misuse and corruption and commissioned Soft-Tech Consulting Limited — the software solutions technology company that initially implemented the IFMIS reporrt to investigate any illegal exploitation of the system.

It is believed that the cash gate scandal caused financial loss to the government. A week later, on 13 September, Paul Mphwiyo, Budget Director in Malawi’s Ministry of Finance, was shot by armed men who were waiting for him just outside the gate of his house in Lilongwe Area Mphwiyo’s wife rushed him to a cahsgate health clinic, where doctors managed to stabilise his condition.

He was transferred to Kamuzu Central Hospital and the next day flown to South Africa for specialist treatment. In the ensuing malwai, stories began to emerge that millions of dollars had been embezzled by government officials colluding to defraud the state.

Some claimed Paul Mphwiyo was clean, and acting to close the loopholes, [20] others claimed that he was implicated in the corruption.

Upon the emergence of a large-scale corruption scandal, Malawi became enmeshed in chaos and speculation. President Joyce Banda’s administration maintained that the malawii was made possible because of loopholes in the IFMIS, and also suggested that Mphwiyo may have been shot by the scandal’s perpetrators because he was on the verge of busting a corruption syndicate.

She enlisted a Cabinet Commission chaired by the Minister of Good Governance, Christopher Daza, to cashgatee this plan and communicate its repprt to Malawi’s donors. However, many foreign donors began suspending aid reporf response to the scandal. On 11 OctoberNorway froze all budget mallawi to Malawi.

By December civil society groups were protesting against the government’s handling of the scandal, saying the government was not doing enough to get to the bottom of the matter, and to finalise the investigation. The same week in which Malawi’s donors suspended their foreign aid, President Joyce Banda sacked her cabinet.

People began to speculate whether the two were implicated in the saga because no formal explanation was given as to why they were dropped. Malawi’s Anti-Corruption Bureau ACB also began an investigation into illicit financial activity among civil servants, and started making arrests in connection with Cashgate.

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Later in October, the ACB continued to make arrests. It issued two reports of the audit: The February Baker Tilly report found that a total of MK 13,, Malawian Kwacha was misappropriated during the six-month period of We have seen funds transferred between unrelated companies, individuals withdrawing funds from unconnected organizations and inflated prices paid to companies with limited malqwi no trading history and very large cash withdrawals.

We caahgate not believe the receivers of these funds are therefore the ultimate beneficiary in all cases. However, in our opinion further specific detailed work is needed to support the Malawi Law Enforcement Agencies in investigating these matters across international jurisdictions.

In this regard we cashgatd the international donors to continue to support oversight and thus to support ongoing investigations in order to ensure convictions and, if possible, reparations.

Later inthe British government provided the Auditor General of the Government of Malawi and the Malawi Law Enforcement Agencies with a second report that summarized 53 Cashgate case files. This report also detailed civil servants, companies, banks, Ministries and other individuals and organizations involved in illicit Cashgate transactions. The second report demonstrated that Osward Lutepo — who was linked to several businesses implicated in Cashgate — was the primary beneficiary of the scandal, along with a number of other businessmen.

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MALAWI CASHGATE SCANDAL

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Reckford Kampanje, Accountant General.

MALAWI CASHGATE SCANDAL REPORT-PDF

Retrieved 28 December Archived from the original PDF cshgate 31 December Steve Sharra, Global Voices. Unpacking the paul mphwiyo saga”. Archived from the original on 20 November Archived from the original on 12 November Archived from the original on 30 December Retrieved 12 December Retrieved 5 December President Banda Appoints New Cabinet”.

Archived from the original on 9 January Retrieved 21 September Suspect in Mphwiyo shooting saga”. Archived from the original on 2 October Retrieved 30 September Retrieved 10 October Archived from the original on 10 January Retrieved 30 October Retrieved 10 November Retrieved 30 January Retrieved from ” https: Crime in Malawi Lilongwe in Malawi.

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