Treasury allowed MRA to borrow

The revenue embellishment saga continues, with fresh information indicating that Ministry of Finance budget director Dalitso Kabambe authorised MRA to borrow money to fill the gap between targets and actual collections.

In a letter to Malawi Revenue Authority (MRA) commissioner general Lloyd Muhara, dated December 30 2011 and signed on behalf of the Secretary to the Treasury (ST), Kabambe indicates that MRA discussed with officials from the then Ministry of Finance and Development Planning the issue of authority to borrow funds from commercial banks.

“I wish to advise that after thorough consideration and consultation on the matter, an approval has been granted by the government allowing the Malawi Revenue Authority to borrow funds from commercial banks amounting to K7.0 billion for the purposes of the agreements reached at the said meeting. This letter should serve as consent from government for Malawi Revenue Authority to proceed on this matter,” says the letter, whose reference number is C/RD/6/3/3/1.

Kabambe’s phone went unanswered on Wednesday when called to explain where he drew the mandate to authorise MRA to borrow the money.

The scam was first brought to light in February this year by Malawi Forum for Unity and Development (Mafunde) president George Nnensa who claimed in Parliament that he had evidence MRA borrowed the money from National Bank of Malawi, NBS Bank, Standard Bank, Indebank and Malawi Savings Bank Limited at the end of December 2011.

Nnensa, who is Balaka South parliamentarian, reported the money was repaid in January this year with interest at the end of December 2011.

Efforts to talk to the concerned banks on Wednesday on the role they played proved futile as the institutions’ heads, save for NBS Bank chief executive officer John Biziwick, were reportedly unavailable.

Biziwick said NBS Bank will provide the required information, if asked, to the Cabinet committee on the matter, being chaired by Vice-President Khumbo Kachali.

Biziwick said the public will access the information through the committee.

Since Finance Minister Ken Lipenga confirmed last week that MRA borrowed the money— initially estimated at K15 billion, but the figure has risen to K30 billion—the only casualty from the fallout so far is MRA board chairperson associate professor Charles Mataya, who voluntarily resigned on Tuesday on principle.

Lipenga has refused to resign so far, saying he will only do so if his wrongdoing is established.

Lipenga is on record as having said his hands are clean on the loan scam. He argues he did not sanction the authority to borrow from commercial banks to beef up MRA’s performance.

He says the report he presented in Parliament in February was based on information given to him by his officials and claims he did not have any reason to suspect there were discrepancies.

But some commentators have counter-argued that Lipenga should not pretend to be ignorant of the transactions as MRA would only get such a mandate from his ministry.

MRA borrowed the money to paint a rosy picture of revenue collection for the hastily implemented zero-deficit budget to show that it was on track in terms of local resources to finance recurrent expenditure.

 

FAST FACTS

• President Joyce Banda has appointed a Special Cabinet Committee to investigate circumstances surrounding MRA’s borrowing from commercial banks.
• In February 2012, Balaka South MP George Nnensa told Parliament that MRA borrowed money from commercial banks to paint a rosy picture of revenue collection.
• The MRA board of directors says it was bypassed in the whole transaction.
• MRA under-collected domestic revenue by over K27 billion during the first six months of the 2011/12 fiscal year.