Malawi stalls probe on oil contracts

By Collins Mtika

MUZUZU – Malawi’s graft busting body, the Anti-Corruption Bureau (ACB) has stalled investigations on suspicious donations that were allegedly made to former president Joyce Banda’s Mudzi Transformation from Rakgas in exchange for the controversial awarding of exploration licences for oil blocks.   

ACB is putting its foot down saying it has no money despite having a raise in the 2017/18 fiscal budget.

“The investigations have stalled due to insufficient resources and legal processes that are required to follow some links both within the country and in other jurisdictions outside the country,” ACB’s senior Publicist Egrita Ndala said in a written response.

But the Natural Resources Justice Network, a coalition of Civil Society Organisations (CSOs) working in the extractive sector, is having none of it.

“We want to call on the government to make transparent the process around the renegotiations of the addendum to the oil and gas agreements and to allow corruptions investigations to be concluded,” Kossam Munthali, the Network’s Chairperson said.

In May this year, ACB publicly proclaimed that it had launched an investigation into whether money irregularly changed hands during the rushed signing of production-sharing agreements on three of Malawi’s petroleum blocks just eight days before the 2014 elections in the country.

The probe was requested by a number of civil society organisations in Malawian and international NGO Oxfam.

“The Anti-Corruption Bureau has been allocated a budget estimate amounting to USD 4 million in the 2017/18 budget. Of this, USD1.5 million is for personal emoluments while USD2 million is for corruption prevention, public education, investigations and prosecutions,” Ndala said.

She also said that ACB does not only require financial resources to operate effectively but also need well trained personnel, enough vehicles and other relevant equipment which is necessary for it to carry out its operations.

The awarding of six petroleum exploration licences between 2012 and 2014, under the former presidencies of Bingu wa Mutharika and Joyce Banda, was fraught with controversy.

Less than two weeks before the hotly contested poll in May 2014, Banda’s government entered production-sharing agreements with RAK Gas MB 45 – a subsidiary of the United Arab Emirates’ state-owned RAK Gas registered in the secrecy jurisdiction of the Cayman Islands. The deal was reached before any proven oil discoveries.

According to the records of the Reserve Bank of Malawi, RAK Gas made an unexplained payment of $235,700 (89-million Malawi kwacha) to the Reserve Bank’s account for the government’s mines department before the exploration licences were handed out.

The unusual wire transfer was picked up and queried by independent consultants LBN Strategies of Cologne, Germany, and Lilongwe-based Resources M&E while examining the Reserve Bank’s accounts as part of a scoping exercise for government.

In 2015 the  Extractive Industries Transparency Initiative (EITI) Board, which met in Bern, Switzerland, unanimously approved Malawi’s application to join the EITI, a development that means Malawi’s natural resources will be stewarded with global standards of transparency and accountability.

Paradoxically, the country’s first Extractive Industry Transparency Initiative (EITI) report launched in the Capital City, Lilongwe this week showed that 34 percent of the total revenue paid to the government could not be accounted                             for.

According to the report, USD 700,000 from the Department of Mines revenue and almost USD2 million from Malawi Revenue Authority (MRA) has not been reconciled from a total of USD 8 million government declared.

August 2017
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