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Government to blow k295m on PR

 

Government’s naivety by engaging a UK firm to publish articles in a magazine without a contract or seeking authority of the Office of the Director of Public Procurement (ODPP) will cost the taxpayer K295 million (about $435 352) at a time Capital Hill government is struggling to provide essential services to the people, Weekend Nation can reveal.

Business Outlook, a public relations firm, is on the neck of the Ministry of Information to pay a jaw dropping K295 million for articles it published in Time magazine last year.

One of the pictures used with the published stories
One of the pictures used with the published stories

A reliable source at Capital Hill—whose identity we have withheld on request—confirmed with Weekend Nation, the ministry engaged the UK-based firm to create a package that would be used to sell the country’s potential for investment on the global stage.

As part of the deal, the company arranged for the publication of several articles in the magazine between November and December, quoted at 295 000 pound sterling (K295 million).

Director of Information Bright Molande confirmed the ministry received an invoice for K295 million from Business Outlook but denied formally engaging them to render services to the ministry.

“That is true that a bill has to be settled with Business Outlook. But I should say that as a ministry we did not hire the services of this company. They just came on their own with an offer that seemed innocent only to realise that there were costs involved,” he said.

Molande said Business Outlook initially came in June 2015 to interview some senior government officials and later offered to do a Malawi country profile, which was not a planned expenditure, but the ministry allowed it to go ahead on the understanding that terms of payment would be agreed upon later on.

Said Molande: “We did not plan for this, but we saw it as an opportunity to sell the country on a global scale, especially in areas of trade and investment. As such, we have not paid because we do not have the money to pay since this was not budgeted for.

“It is not realistic, therefore, that we can be talking about terms of reference for an activity that was not on our plans.”

But the Weekend Nation source contradicted Molande, saying it was the ministry that hired the firm, as such, the invoice was duly forwarded to the ministry.

Said the source: “But when senior officials realised there was no money in the ministry’s budget, they agreed that Treasury should fund it directly. Nobody knows who influenced this kind of transaction.”

Ministry of Finance spokesperson Nations Msowoya disowned the transaction on behalf of Treasury.

“We have checked around with all relevant sections that work on these things at the ministry but we are not aware of this particular transaction,” he said.

However, Minister of Finance Goodal Gondwe, confirmed the transaction.

“We made an agreement that Time magazine should run the articles as a forerunner to the President’s (Peter Mutharika) trip to the African Global Summit in London. We agreed that we will pay 295 000 pound sterling. This money will be infused into the Ministry of Information, Tourism and Culture vote during the mid-year budget review around February this year. The law allows us to spend sometimes outside the budget but regularise it whenever the august House meets,” he said.

According to Gondwe, the deal was being handled by ministries of Information alongside Trade and Industry.

The spending throws cold water on Mutharika government’s austerity measures that were said to be bolstered by the public service reforms currently being implemented by the government set-up.

The publication of the profile in the magazine was also supposed to coincide with the World Business Economic Forum that took place in London in the last-quarter of 2015 in November last year.

The 2015/2016 recurrent and capital budget estimates show that the Department of Tourism, Wildlife and Culture headquarters was allocated K271 277 735 (about $400 344) while K235 638 888 (about $347 749) was approved for Tourism Development and Promotion (Destination Marketing).

Among the articles that were published in Business Outlook under special advertising section were eight pages themed as Malawi up and open for business, Private sector to be engine for growth, Reforms helping to expand investment, Agriculture the economic bedrock, Malawi a mining country, Infrastructure; economic priority and well connected, safe and beautiful.

Apart from destabilising the budget the Business Outlook deal has also exposed laxity in strict adherence of procurement procedures as the transaction was not sought nor granted by the Office of the Director of Public Procurement ODPP as Molande admitted.

ODPP head Dye Mawindo had not responded to our questionnaire as we went to press on Friday.

When asked on flouting of procurement procedures Molande said: “There was no formal bidding process. Here was a company that initially came with an offer to assist and later told us we were to pay. Our consideration was that the results would outweigh the investment made.”

Economists Association of Malawi (Ecama) president Henry Kachaje was cagey in his response, weighing the positives against the systemic weaknesses the transaction had exposed.

“The expenditure might have to be offset with another budget allocation within the same ministry. In the event where the expenditure bloats the already approved national budget, the Minister of Finance will have to put up a case, to justify the over-expenditure. As a general rule for fiscal discipline, I would urge the government to desist from spending outside the approved budget,” he said.

He, however, said government needs to invest in trade and investment, calling on the Ministry of Finance to revise the budget to infuse important elements that were not captured earlier.

Chairperson of Parliament’s Budget and Finance Committee, Rhyno Chiphiko, said they are not aware of the issue.

Said Chiphiko: “But for sure every government hides money for such operations. These types of expenditures are, however, not highlighted in the budget since they are clandestine in nature. Suffice it to say, it is good that this information has come to light and as a committee we will take it up with Treasury when we meet for mid-term review of the budget.’’

According to Chiphiko, government hides operations of this nature as they are made at ministerial level, but warned government against taking advantage of some votes which he said were not properly audited.

In 2013 former president Joyce Banda faced criticism locally for hiring a UK public relations firm—Bell Pottinger—which had earlier worked to clean up reputations of governments with poor governance records. Banda hired BP to prop up her image in the wake of Cashgate which resulted in donors withholding direct budget support to Malawi. PB was, however, not paid by the Malawian taxpayer. n

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