Britain Suspends Aid to Malawi

Joyce Banda is the President of the Southern African nation of Malawi. She took office after the death of Bingu wa Muthirika on Friday, April 6, 2012., a photo by Pan-African News Wire File Photos on Flickr.

Britain suspends aid to Malawi

November 21, 2013

LONDON – Britain has suspended direct aid to Malawi over a multi-million pound corruption scandal which has seen ministers close to President Joyce Banda implicated in fraud and the attempted murder of a whistleblower. Sarah Sanyahumbi, the Department for International Development’s head in Malawi, said the “Cashgate” scandal, which saw central government pay out for goods and services that were never supplied and senior officials arrested with wads of banknotes in their car boots and houses, had demonstrated “serious weaknesses in the government’s financial systems”.

“This is not business as usual. As far as we are concerned, the line has been crossed, so once the line has been crossed you cannot go back to what you had before,” she told NGOs and journalists in Malawi.

The news that Malawi’s biggest donor is freezing its support along with the European Union and Norway will, according to its finance minister, have a catastrophic effect on its ability to provide basic services.

It also represents a significant about-turn in UK-Malawian relations.

Mrs Banda came to power in 2012 after the death of her autocratic predecessor Bingu wa Mutharika, and was hailed as a “very good president” by Andrew Mitchell, the former international development secretary, after a series of reforms that included selling off the presidential jet, slashing her salary and implementing IMF advice to devalue Malawi’s currency.

The UK resumed suspended general budgetary support soon after and, in November 2012, gave the government £20 million as an emergency cash top-up.

Last year, it spent £117m supporting Malawi, including an estimated £11m on “governance and security”.

Over the next year, it was due to spend £92m but how much Malawi will now receive is unclear. A senior Western official said there were “real concerns” about what had happened and cited rumours swirling in Lilongwe that the president herself could be implicated.

A DfID spokesman said the UK had sent a team of forensic auditors to help Mrs Banda’s government get to the bottom of the scandal.

“While there is no evidence that UK funds have been misused, it is clearly not possible to provide direct support to Malawi’s government at this time,” he said.

“A team of independent auditors, with UK support, are conducting a full forensic audit.

“No UK funds will be paid until we are fully satisfied that taxpayers’ money is safe.”

The scandal first broke in September when an environment ministry official was found with £190 000 in the boot of his car and an accountant in the president’s office was found with £2 000 at his home.

Weeks later, a treasury official who is thought to have been about to reveal the widespread fraud was shot three times in the face outside his home. He survived and is recovering in hospital.

Since then, 48 civil servants have been arrested and the accounts of 60 companies dealing with the government have been frozen. Some estimates have put the amount stolen to as much as £155m.

President Banda reacted by sacking her justice, trade and industry and finance ministers. Ralph Kasambara, the justice minister and a previously close ally of the president, has since been charged with the attempted murder of the treasury official.

This week, an IMF team sent on a fact-finding mission to Malawi will announce whether it will withdraw its US$20 million credit facility.

In an attempt to boost donor confidence yesterday, Malawi’s government issued a statement through the London PR firm Bell Pottinger highlighting that the plunder of state resources began under the previous administration and that Mrs Banda had consistently spoken out about, and acted on, corruption.

“The message to the people of Malawi, my Government and the watching world is clear; I will stop at nothing to rid this nation of criminality at its highest levels,” President Banda said in the statement.

“I declare that no one, no matter their status, shall receive my government’s protection when evidence demands their investigation.”
Richard Dowden, Executive Director of the Royal African Society, said President Banda was unlikely to have been involved.

“I would be amazed if she was aware of any of this or allowed it to happen,” he said.

“She comes from an NGO background rather than a political one and has come up against a very powerful network of people who have control of those within the bureaucracy and are looting state funds before they can reach the people who need them most.”

- The Telegraph