Twist to Bingu money saga: Estate wealth down to K51bn

A flurry of cash transfers into Bineth Trust and foreign bank accounts hit former president the late Bingu wa Mutharika’s estate between May and June 2013, Weekend Nation has learnt.

We could not immediately ascertain why the transfers were made and under whose orders, but normally, such operations on a deceased estate are done by its administrators who at the time were the late Mutharika’s daughters—Duwa and Tapiwa.

A trust and the estate under it are exempted from an estate tax, according to the Estate Duty Act.

The bank transfers—done in the country for both local and offshore accounts—started around the time the two sisters obtained letters of administration on May 31 this year to manage their late father’s vast fortune almost all of which was accumulated during his eight years as Malawi’s Head of State.

Duwa and Tapiwa, however, ceased to be administrators of the estate after consent was entered at the High Court in Zomba recently between them and their stepmother, former first lady Callista, who also obtained letters of administration separately.

Both parties later set the letters aside, opting for an out-of-court settlement.

In the process of the money transfers, according to the documents Weekend Nation has seen, some accounts were closed and money transferred into the Bineth Trust Fund account held at Standard Bank, Capital City Branch in Lilongwe.

In a report by Yeremiah Chihana, an evaluator hired by government to assess the Mutharika estate for purposes of estate duty payment, a disclosure is made that the transfer of funds to Standard Bank were followed by heavy withdrawals in the amounts of U$91 000 (about K40 million at the current exchange rate) and over K200 million within a week.

Bank statements that Weekend Nation has seen show that executors at the time closed and transferred K40 079 445.97 on June 5 this year from an account Mutharika held at Standard Bank Capital City Branch into Bineth Trust Fund.

On the same June 5, University of Southern Malawi Current Account number 0260908007 was also closed and all the money—K78 227 500 (US$242,942)—was transferred into the same Bineth Trust Fund, account number 0140003548200.

On the same date, the former executioners closed and transferred K12 017 931.31(US$37, 267) from an active Ndata Farm account into the same Bineth Trust Fund account.

Chihana, in his evaluation report, claimed that subsequent transfers to the US banks of UN and New Jersey to the value of U$18 000; over K300 000 and U$570 000—all totalling $900 000 (about K306 million at the current exchange rate), were also made.

These transfers—according to lawyers representing government and Mutharika’s family in the case where government is claiming K5 billion (US$15.5 million) duty from the estate—are likely to be used by both parties to strengthen their cases.

Lawyers defending the estate are likely to argue that government charged more than K5 billion estate duty based on assets that included property under a trust, which is tax exempt.

However, government seems ready to counter that by stating that cash transfers were made into the trust well after the death of Mutharika.

In another twist to the Mutharika wealth saga, Weekend Nation has learnt that on May 23 this year, before letters of administration were granted, Duwa signed an estate duty affidavit, committing herself to paying K5 billion in estate duty, being 11 percent of the whole deceased estate estimated at K61 billion then.

That figure has now be brought down to K51 billion by the evaluator, according to lawyers from both parties, still way higher than the roughly K150 million that Mutharika declared when he first assumed office eight years earlier.

Reads part of Duwa’s signed affidavit that makes part of a court record: “This account annexed hereto is a full and true account of the particulars and value at the date of deceased’s death, so far as executor [Duwa] have been able to ascertain the same, for all the estate of the deceased in the possession or reversion and the gross value thereof at the date of deceased’s death was at K5 027 000 000.00 and debts and funeral expenses as shown in the accounts annexed…”

But Kalekeni Kaphale, one of the lawyers representing Duwa and Tapiwa, said in an interview on Thursday that the estate duty affidavit Duwa signed fell off upon the consent that was entered to set both letters of administration aside and new administrators appointed.

The new administrators appointed on July 12 this year are Kaphale and Modecai Msiska, on the side of the Mutharika daughters in the matter and James Tomoka, lawyer for Callista.

The appointment of the new administrators happened in a separate matter between Callista and her stepdaughters in which Callista wanted the two sisters removed as administrators.

But Kaphale said in the Thursday interview that the fact that the figure of the estate is now estimated at K51 billion, according to Chihana’s evaluation, means that the estate duty claim cannot be the same; hence, his team would want to have the whole estate re-evaluated to ascertain the actual worth.

Kaphale said: “We even have our doubts on the K51 billion figure, we want it negotiated. These issues are well articulated in [an] affidavit we have filed before the court.”

The affidavit Kaphale was referring to was the one his team filed on July 11 this year, outside a deadline the High Court in Zomba had given, well after lawyer representing the Estate Commissioner, Lusungu Gondwe, had filed for non-compliance.

The affidavit is, however, on the case file and it is not known how the judge will handle it.

Gondwe in an interview on Thursday said he was not taking into consideration the affidavit which was filed outside the court deadline.

He did, admit though that the estimate of the Mutharika’s estate has been brought down to K51 billion by the evaluator.

But he said despite the lower estimate, the estate still attracts the same K5 billion taxes.

A fresh affidavit has been sworn on the K51 billion (US$158 million) estate to reflect the K10 billion (US$31 million) that has been knocked off the initial estimate.

The developments come as the opposition Democratic Progressive Party (DPP) politburo tore into Chihana’s evaluation report at a news conference in Lilongwe last week, arguing it was made out of anger and malice against the former leader to settle a political score.

DPP spokesperson Nicholas Dausi said Chihana’s action was a ploy to prosecute and convict the deceased Mutharika in the media, challenging him to bring evidence.

He also threatened to sue the media if it failed to bring evidence of their published stories within five days.

The five-day ultimatum expired this week. Dausi also claimed that stories of Mutharika’s wealth were political games meant to weaken and disable Professor Peter Mutharika, the party’s 2014 presidential candidate and the former president’s younger brother.

Chihana, a professional evaluator, has since, through his lawyer Wapona Kita, demanded a combined compensation of K200 million from both DPP and its spokesperson Dausi for defamation.

Mutharika died on April 5 2012 while in his last term in office following a cardiac arrest.

Through a constitutional order, his political foe, who was his vice-president, Joyce Banda, made her way into State House to become Malawi’s first female President.