Chikaonda, who also served as governor of the Reserve Bank of Malawi, said the plunder, popularly known as Capital Hill cashgate, started when main expenditure ceilings were removed from expenditure control measures.
“What went wrong is that main expenditure ceilings were removed and there was an authorisation that all government cheques be honoured…and that was the turning point,” said Chikaonda who is currently group chief executive officer for conglomerate Press Corporation Limited (PCL).
He was speaking at Kamuzu Palace in Lilongwe on behalf of other private sector players after a two-hour consultative meeting with President Joyce Banda on the issue of cashgate.
Chikaonda said before 2005, there was a spending limit for ministries and government departments which was put in their respective commercial banks beyond which the accounts were frozen.
He also faulted the way the Integrated Financial Management Information Systems (Ifmis) was operated since November 2005 when it was introduced.
“The operator was performing so many tasks and these are system operation, security, administration of the system and there was no audit trail. In a bank, a department that issues ATM [automated teller machine] cards is different from the department that issues pin codes,” he added.
He, however, informed journalists that government has re-introduced some control measures that were removed in 2005 including the setting of K500 000 (about $1 250) as a limit for government cheque encashment and that the issuing of cheques has to be confirmed by other key parties.
Chikaonda said the private sector is now convinced that adequate measures have been put in place by government to address cashgate and assured that the private sector will be monitoring the measures in place.
Upon returning from Brussels on Sunday, Minister of Finance Maxwell Mkwezalamba told journalists at the Kamuzu International Airport that some of Malawi’s development partners such as Germany and the European Union (EU) are pleased with the measures that government has put in place in view of cashgate.
He cited the formation of a ministerial committee on cashgate, the introduction of expenditure control measures such as the cutting of both internal and external travel by civil servants as some positive strides that donors are happy with.
Malawi’s major donors under the Common Approach to Budget Support
(Cabs) continue to withhold budget support amounting to $150 million (over K60 billion) citing the recent revelation of public funds looting at Capital Hill as the reason.
The International Monetary Fund (IMF), whose board is scheduled to meet on Malawi in January next month, is also withholding $20 million under its Extended Credit Facility (ECF) programme for Malawi.
