Pres Joyce Banda’s appointee to probe the K14.3 billion Malawi Revenue Authority (MRA) scandal has cleared Finance Minister Dr. Ken Lipenga of any wrongdoing and accused senior treasury officials of illegally taking out loans in their desperate attempt to prove to the country that the now defunct zero deficit budget (ZDB*) was working.

“It is clear that the decision to borrow was illegal as it did not follow procedures and was taken by few senior technical officials in the Ministry of Finance and the Malawi Revenue Authority without the prior knowledge, involvement of the Minister of Finance and provided for in the Public Finance Management Act,” Vice President Khumbo Kachali told parliament Thursday.

“The Secretary to the Treasury, at that time, as principal finance adviser didn’t handle the issue in a professional and objective manner as one responsible to the Minister of Finance as provided in Public Finance Management Act, section 7 subsections 1 and 2,” said Kachali who chaired a three-man committee of fellow cabinet ministers.

The VP said MRA borrowed from National Bank of Malawi on 30th December 2011 a total of K3 billion, Standard Bank, Inde Bank K500 million, Malawi Savings Bank K1 billion, while on 29th December, 2011 they took a K500 million loan from FDH Bank.

As if that wasn’t enough, MTA went back to the banks on 5th January 2012, borrowing K1 billion from National Bank, K1 billion from Standard Bank, K300 million from FDH Bank, K1 billion from NBS Bank. On 3rd January, 2012 MSB gave MRA another K3 billion loan.

All the loans, said Kachali, were due to mature on 9 January, 2012 and was fully paid by then. The NBS Bank pegged interest at 12 percent per annum, while Standard charged 19.75 and the rest had their interest on the loans at 17 percent per annum.

“The total interest charged amounted K48, 749, 554.85 and addition, two banks namely, INDE Bank and Standard Bank had charged arrangement fees which amounted K12, 077, 625.57. This brought total cost of borrowing to around K61 million,” said Kachali.

Earlier this year, Finance Minister Ken Lipenga told parliament MRA had met its revenue targets, dismissing charges that the tax collector wasn’t truthful in its statements. When it was later revealed that indeed MRA had borrowed the money, Lipenga denied knowingly presenting misleading statements in parliament.

The Kachali probe was a result of calls by many, including civil society leaders, for Lipenga to step down or be fired by Pres Banda.

Kachali said his committee made recommendations to the president aimed at deterring Treasury officials from making bone-headed decisions.

“Unfortunately this matter has cost the nation in two ways, the Public image of Government both locally and internationally and the amount of monies spent totaling K61 million in servicing the loans,” Kachali told parliament Thursday.

Leader of the former ruling Democratic Progressive Party George Chaponda wanted to know if Joseph Mwanamveka, then Secretary to Treasury, was given a chance to respond.

Retorted Kachali: “We even had dinner together.”

But Lifred Nawena (Thyolo Thava) took issue with Kachali wondering if he was at peace with his decision.

The outspoken former university lecturer said there was proof that then Deputy Finance Minister Dr. Cornerlius Mwalwanda attended meetings which discussed MRA missing revenue targets.

Granted, it was hard to believe Lipenga claiming innocence about MRA cooking the books, Nawena pointed out.

“It’s very important not to take people for granted,” the lawmaker said. “Is the Vice President’s conscience clear that he has told the truth and absolute truth?”

But Kachali said he'd made the right call.

*The Mutharika administration last year introduced the ZBD, which was supposed to be financed by local resources, in anticipation of donors cutting off budget support over concerns about economic mismanagement and human rights. Experts had warned that Malawi couldn’t pull off the ZBD because the southern African country had a narrow tax base. The new government of Joyce Banda – she assumed power after Pres Bingu wa Mutharika died suddenly in April – abandoned the ZDB as she patched up differences with donors who have pledged budget support to the country. Donors used to provide 40 percent of Malawi’s budget. ©2012 The Maravi Post. Reproduction authorised, with usual acknowledgment.