PRESIDENT FREE TO PLUNDER

Experts want review of Assets Declaration provision

Malawi’s State presidents can plunder public resources at will unless the country implements mechanisms for monitoring the growth of their wealth, experts warn.

The warnings follow revelations that within eight years of his presidency from 2004, the late Bingu wa Mutharika was 45 000 times richer after his wealth grew from the K136 million worth of largely dormant assets he declared after taking office to K61 billion in 2012.

With the size of Malawi’s economy as measured by gross domestic product (GDP) estimated at around $6 billion, Mutharika’s K61 billion ($180 million) represents about three percent of the country’s economy.

It is also equivalent to the value of NBS Bank, Malawi’s third largest bank which has nearly K60 billion assets.

If the Mutharika estate were to be converted into cash today and invested in National Bank of Malawi (NBM)—the country’s largest bank worth roughly K130 billion— it would own nearly half of the financial house that has been in business for 42 years in arguably the country’s most profitable sector.

And at an average of K7.6 billion in earnings annually, Mutharika’s net income was competing with the country’s top two banks—NBM and Standard Bank—which raked in more than K7 billion apiece in the 2012 financial year.

With Malawi’s laws toothless when it comes to auditing a sitting president and the accountability architecture so porous and passive, experts in the legal, accounting and governance discipline say the president has unfettered leeway to loot.

Granted, Section 88 of the Constitution demands that the President and Cabinet ministers declare their assets, liabilities, business interests and those of their spouses—held by them or on their behalf—within three months from the date of election or appointment.

But legal and economic luminaries have noted that the law is—in its current form— toothless as it offers no instruments for checking how leaders build up their wealth after the declaration and does not compel them to account for or justify their assets.

The section also leaves little mechanism for citizens to demand transparency and accountability from the public office-holders regarding their earnings while in office.

Chancellor College associate professor of law Edge Kanyongolo noted in an interview on Thursday that although the law is clear on the declaration of assets, public officers easily manipulate it, especially given that they do not have to declare anything when leaving office.

“Apart from mere declaration of assets on entrance, public officers should also declare their assets when leaving office after serving their terms of office, retiring or resigning,” argued Kanyongolo.

He said the country needs to develop legislation with inbuilt sanctions to complement the constitutional provision.

The constitutional scholar also wants the law to empower the Financial Intelligence Unit (FIU), Malawi Revenue Authority (MRA) and Parliament to audit the wealth of presidents, vice-presidents and other elected leaders from time to time and update taxpayers who can gauge if leaders are using their positions to enrich themselves.

Such mechanisms could help Malawians to comprehend how Mutharika’s K136 million wealth in 2004—comprising two farms, three houses, five undeveloped plots and six vehicles—plus an annual presidential pay package of around K35 million in personal emoluments (K280 million over eight years), could earn him K7.6 billion a year as the country’s economy plummeted, the average Malawian earned just $350 (K122 000) a year and when one in every two Malawians lived on less than $1 a day (around K160 using the exchange rate when Mutharika was in office).

Mutharika is not the only Malawian president with unexplained wealth.

His predecessors, Bakili Muluzi and Hastings Kamuzu Banda in that order, also built up vast fortunes which were questioned only after they had relinquished power.

Muluzi is currently answering charges that include personalising billions of kwacha that government said should have gone into the State Treasury. Prosecutors also hounded Kamuzu Banda to his death for dubious riches.

Meanwhile, Malawians have no way of tracking incumbent President Joyce Banda’s wealth.

After assuming the presidency in April 2012 following Mutharika’s death, she has refused to declare her assets, arguing she already did so in 2009 as vice-president.

The contents of her declared assets, as well as Mutharika’s second declaration, were never made public as Speaker Henry Chimunthu Banda refused to release them.

President Banda’s refusal to declare her assets makes it impossible for taxpayers to monitor her wealth.

Society of Accountants in Malawi (Socam) president Evelyn Mwapasa said in an interview on Thursday that tax returns from leaders’ businesses and emoluments are critical wealth assessment tools.

Said Mwapasa: “Salaries and emoluments received from government in respect of their [presidents] offices are exempt from tax. However, all other incomes they earn are not exempt from tax and they should be paying tax on those other incomes.

“If public officers were filing their tax returns, [it] would still be a good measure of assessing their wealth, just like in the other countries [where]  one can’t run for public office unless they file tax returns and their files with the revenue authority are in order…MRA should enforce filing of tax returns by all public officers.

“Where MRA sees signs of wealth beyond the public officer’s known sources of income, investigations should be made and tax collected accordingly.”

Catholic Commission for Justice and Peace (CCJP) national coordinator Chris Chisoni, emphasised the need for a revision of the declaration of assets laws to incorporate strong monitoring and compliance reinforcement mechanisms.

“It’s not a good tradition to allow our presidents not to pay tax and not to have their wealth measured through the taxes they pay. This, coupled with compliance levels to the declaration of assets laws, has led largely to the accruing of huge wealth by our presidents, as their appetite for more resources finds a fertile crescent in the laws that prescribe their privileges and benefits,” he observed.

Chisoni said the current laws “over-respect and over-privilege” the presidency; hence, the needto prescribe a threshold of accountability and transparency in leaders’ resource accumulation without trampling upon their rights to economic development,” he said.

The experts’ proposals are in line with 2006 recommendations by a government appointed Special Law Commission to develop legislation on the declaration of assets, liabilities and business interests by public and elected officers.

The commission recommended legislation with inbuilt sanctions to complement the declaration of assets, liabilities and business interests provisions that may be found in other relevant pieces of legislation and proposed the introduction of administrative and criminal sanctions for abuse of office.

“The public officer who fails to declare assets, liabilities and business interests should be disqualified from holding future public offices for a prescribed period, in addition to any sanction that may be imposed,” the commission recommended.

Justice Minister Ralph Kasambara could not be reached when Weekend Nation wanted to find out the progress the ministry has made in effecting the SLC recommendations.

The ministry’s public relations officer, Apoche Itimu, said she needed to consult Attorney General Anthony Kamanga who was in Morocco at the time we went to press.

But Kanyongolo suspected the recommendations may have not been implemented due to lack of appreciation of implications that come with the absence of enabling laws.

“I am quite confident that the revelations [on Bingu’s wealth] will spark action…It’s now up to the Executive to move the process of pushing the recommendations to Parliament for legislation,” he said.n