Cashgate Audit Report: Names out, ex-MDF bosses implicated

Government yesterday publicly released the much-awaited Baker Tilly forensic audit report containing names of companies and individuals who allegedly siphoned about K24 billion ($57m) from public coffers between April and September 2013.

However, the appendices contained in the report made available to media houses yesterday are missing a list of individuals linked directly or indirectly to Cashgate and charts showing links between individuals and businesses involved in the looting.

But the report contains a list of 49 individuals who, between them, are suspected to have had a hand in siphoning K24 billion.

Most of the names are not new in the public domain and they include businesspersons Osward Lutepo and Staffold Mpoola who are answering charges of theft and money laundering.

Topping the list are two names of Anil Lalwani and Raju Lalwani—owners of Top Prima and Rummage Pace—who the forensic auditors believe were given dubious contracts to supply goods to the Malawi Defence Force (MDF) amounting to $50 million (equivalent of K14 billion).

Reads the report in part: “The Auditor General has made two written requests, on our behalf, to the Financial Intelligence Unit [FIU] to identify the beneficiaries’ accounts in Dubai and Hong Kong for these two companies. At the time of this report we have received no formal response.”

Several people have been connected to these dubious MDF contracts, including former MDF commander general Henry Odillo (retired) and his deputy Clement Kafuwa as they were signatories to several cheques such as K3 billion to International Procurement Services (IPS) owned by Lutepo and K1.5 billion to South Africa-based Thuso Group owned by Alexander Banda and Nelson Kauwa.

Odillo was one of the three signatories, apart from Richard Chidzungu and Harry Chawinga, who signed for three cheques amounting to K1.5 billion going to Thuso Group while Kafuwa also signed with Chidzungu and Chawinga four cheques worth K238 million, K339 million, K466 million, K180 million and K220 million going to IPS.

However, contrary to popular belief, especially on social media, the list of suspects who allegedly stole from Malawians does not include senior politicians such former president Joyce Banda and her vice-president Khumbo Kachali.

But Minister of Justice and Constitutional Affairs Samuel Tembenu told the media that investigations into Cashgate were ongoing.

The auditors have, however, identified nine people linked to companies involved in Cashgate, among them Roy Kachale, son to former president Banda, who was alleged to be in a relationship with Laura Savala who allegedly stole K249 million.

Reads the National Audit Office (NAO) report: “One individual who ran for election is noted to have received K4 428 316 582 with the lowest amount being K16 750 000. Four individuals are linked to a business that received in excess of K100 million. These links would suggest the proceeds of Cashgate may have been used to support electoral campaigns though it is not possible to confirm the source of the funding.”

The report also lists three law firms which benefitted from ‘Cashgate funds’ namely Ralph and Arnolds, Knights and Knights as well as Joe and Max Chambers.

The list of names has been classified as follows: Schedule of Cashgate payments where accounting entries were deleted, schedule of other payments where funds have been misappropriated, schedule of companies that received Cashgate cheques in alphabetical order, schedule of companies that received Cashgate cheques (in value order), schedule showing the different loss types split between the different businesses.

The report states that in total, 104 government of Malawi cheques, totalling K 6.9 billion were paid to 39 different companies when they had not supplied any services to government, the majority of which were deleted from the system.

“We identified 32 cheques, totalling K 1 302 517 064 that had been paid to 18 different companies with characteristics of ‘Cashgate’, but for which no supporting evidence could be located.

The accounting entries for these transactions were not deleted as per the Soft Tech report.

The report further reads that government will have to investigate further payments amounting to K 8.7 billion, which include forex transaction documents that cannot be traced and payments on behalf of the Malawi Police Service that were outside the scope of the forensic audit.

Banks which have been identified as having been complicit in Cashgate have also been named, with National Bank of Malawi being the bank where the highest number of Cashgate cheques were deposited (28 out of 104) and where the highest number of businesses that were recipients of Cashgate cheques held bank accounts (12 out of 39).

Speaking during the press conference to release the report, Tembenu, who was flanked by Minister of Information Kondwani Nankhumwa and deputy Auditor General Langton Gomani, stressed that the report was not an indictment of anybody, but investigations into how government lost billions.

“The report is not a court judgment and should be treated as an investigative report. Most of the names here are already in the public domain and these people are answering cases in court,” Tembenu said.

He also ruled out chances of the report having been doctored, saying it was a PDF format and could not be tampered with in any way.