Govt ignored redflags on Salima Sugar

It has emerged that Ministry of Trade and Industry and other State agencies ignored red flags on Salima Sugar Company Limited (SSCL) when the Human Rights Defenders Coalition (HRDC) alerted it on allegations of irregularities.

Communication The Nation has seen shows that the ministry dismissed HRDC’s appeal to institute an investigation into the abuse, arguing it already conducted the same and that an audit into the allegations did not provide any evidence of wrongdoing or corrupt practices, money laundering and tax evasion.

However, two years down the line, the human rights body has been vindicated after a forensic audit conducted by Audit Consult confirmed abuse at the Salima-based sugar company that saw over $30 million (about K51 billion) not being accounted for.

The forensic audit, which the government commissioned, followed a recommendation by Attorney General (AG) Thabo Chakaka-Nyirenda, focused on loans, equity contribution, resource management and utilisation, among other things.

HRDC also copied its letter, titled ‘Allegations of corrupt practices, money laundering and tax evasion against Salima Sugar Company,’ to the then minister of Homeland Security Richard Chimwendo Banda, Anti-Corruption Bureau (ACB) director-general, the director- general of Financial Intelligence Authority (FIA) and the Malawi Revenue Authority commissioner general.

HRDC, in its January 19 2021 letter signed by chairperson Gift Trapence and then national coordinator Luke Tembo, wanted the ministry and the relevant State institutions to investigate the issue of shareholding and allegations bordering on the company’s failure to remit dividends to the government and release its financial statements.

The organisation also wanted the company to be investigated for illegally importing white sugar from Tanzania which it was then repackaging and selling locally when it only had licence to produce brown sugar.

But in response to the HRDC letter, Secretary for Trade Christina Zakeyo said their investigations on white sugar importation did not show any evidence of imported sugar.

In her response dated February 12 2021 and addressed to HRDC, she said the ministry conducted an audit of its import licence archives and found that none was issued for Salima Sugar Company.

Reads the letter: “In collaboration with Malawi Revenue Authority, an investigation was also done in their customs system which did not provide evidence of importation of white sugar by the company.

“Officials from the two institutions also visited Salima Sugar Company at their production plant in Salima where they got information from the senior authorities that the company does not import any sugar. They indicated that all raw materials are sourced locally and sales are done locally.”

When contacted on the issue last week, Zakeyo referred the matter to Minister of Trade and Industry Sosten Gwengwe who said he was not sure of the investigation mentioned in her letter.

“I am not sure about those investigations and I am not sure what was the scope and what they were looking for,” he said, adding that Zakeyo herself was better-placed to comment on the issue.

However, Gwengwe said the issue was being dealt with by Ministry of Finance and Economic Affairs and the Attorney General but his ministry was also “following closely”.

He said what he recalled was that he introduced the issue in 2022 while at Treasury when he told Parliament that the issue of shareholding did not “make sense” before the Treasury and the AG took it up the matter.

But commenting on the issue, Ministry of Justice spokesperson Frank Namangale said the AG was not aware of the developments between HRDC and the Ministry of Trade.

“But it appears from the correspondences that the Ministry of Trade, upon being tipped by HRDC, acted on the matter in collaboration with MRA by undertaking an investigation at that level, and did not find traces of what was being alleged,” he said.

In an interview yesterday, Trapence said they were happy the forensic audit vindicated them after the ministry played down their request to launch investigations into the malpractices three years ago.

He said: “The response given to HRDC then was an insult to Malawians. It also showed how unprofessional some public officers are in their work. That letter raised several issues which have now been laid bare. We commend the AG for taking up the issues.”