NOISE ABOUT CORRUPTION IN MALAWI

C O N F I D E N T I A L SECTION 01 OF 02 LILONGWE 000839

SIPDIS

STATE FOR EB/IFD/ODF MARLENE BREEN
STATE FOR EB/IFD/OMA FRANCES CHISHOLM
STATE FOR AF/S TED CRAIG
TREASURY FOR INTERNATIONAL AFFAIRS/AFRICA LUKAS KOHLER

E.O. 12958: DECL: 08/23/2014
TAGS: ECON EFIN KCOR PGOV PREL MI
SUBJECT: NOISE ABOUT CORRUPTION IN MALAWI

REF: A. LILONGWE 586

B. LILONGWE 728

Classified By: Econ Officer William R. Taliaferro, reasons 1.5 b and d

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SUMMARY
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1. (C) Malawi's new administration has been very public about
its intention to bring corruption under control. President
Bingu wa Mutharika has replaced the chief government
prosecutor, who in turn has publicly targeted several former
ministers and ruling party members. The noise of a crackdown
has garnered political support for Mutharika, and may buy
just enough credibility to tip donors to release budgetary
support sooner. End Summary.


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A NEW SHERIFF IN TOWN
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2. (U) Beginning with the controversial replacement of
sitting Director of Public Prosecutions (DPP) Fahad Assani
with novice lawyer Ishmael Wadi, the Mutharika administration
has been loudly declaring war on corruption. The DPP's
office, which has sole authority to prosecute cases forwarded
by the Anti-Corruption Bureau (ACB),had been seen as a
barrier to rooting out corruption at the cabinet level.
Under Assani, several cases involving ministers and senior
ruling party officials had been refused, creating the
perception that he would only go after "small fish," and then
only with permission from the Government.


3. (U) Mutharika's July appointment of Wadi, who is only
three years out of law school and has no experience with
criminal law, was an early signal that he intends radical
change. Sacking Assani was a controversial move, which
elicited a brief storm of protest (including calls for
impeachment) and a civil lawsuit. By early August, though,
the controversy had died down, and Parliament unanimously
confirmed Wadi.

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NAMING NAMES IN THE PRESS
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4. (U) Since his appointment, the new prosecutor has used the
press to announce his targets, which include several former
ministers and senior members of the ruling United Democratic
Front (UDF) party. The UDF is the party of both Mutharika
and former president Bakili Muluzi. Significantly, his
accusations have been seconded in the press by Mutharika's
chief of staff, Ken Ng'oma. Mutharika confines his own
anti-corruption statements to broad generalities, but UDF
members have roundly criticized his staff's penchant for
trial by press.


5. (U) Accounts vary about who Wadi is targeting, but the
most prominent potential cases are these:

-- Humphrey Mvula, CEO of the parastatal Shire Bus Lines,
deputy director of the UDF, and leader of the UDF's militant
youth wing Young Democrats, who was arrested for malfeasance
at Shire. He was later released, but the press regularly
quotes Wadi declaring his intent to prosecute Mvula. Mvula
has since been fired from Shire.

-- Cassim Chalumpa, current vice president and former
minister of finance and education, who is thought to have
been involved in fraud involving school-building funds.

-- Clement Stambuli, former information minister, suspected
of unspecified malfeasance in office.

-- Peter Fachi, former minister of justice; Patrick Mbewe,
former local government minister; and Monjeza Maluza, former
home affairs minister, for arranging the fraudulent sale of
used Land Rovers to the GOM as new. Mbewe is also thought to
have been involved in corruption around contracts for
national ID cards.

-- Friday Jumbe, former minister of finance, thought to have
profited from illegal sales from the strategic grain reserves
during the 2002 hunger crisis.

-- Dumbo Lemani, former minister for water development, for
manipulating the Petroleum Control Commission's fuel import
allocations for personal profit.


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LESS NOISE FROM THE PROFESSIONALS
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6. (C) The Anti-Corruption Board, which is responsible for
investigating corruption but still cannot prosecute on its
own, has kept comparatively quiet about specific cases. They
have talked publicly about a few investigations, including
that of Chakufwa Chihana, the sitting minister of
agriculture, who is alleged to have bribed local election
officials leading up to the May 2004 elections. They have
also mentioned a new investigation into the suspicious death
of Kalonga Stambuli, a long-time Muluzi associate who broke
with him in the late 1990s, fled into exile, then returned in
2003 as a Muluzi ally and investment banker. Up to now,
neither Wadi nor the ACB has named Muluzi as a target of any
investigation, although he is the most obvious target--and
the most dangerous (reftel A).


7. (C) In a recent meeting with the DCM and pol/econoffs, the
senior management of ACB indicated that it is now
investigating or preparing to prosecute a number of cases
involving officials "at the very highest levels of
government." The Mutharika administration has decided in the
last week to double ACB's operating budget, despite a general
tightening of the state budget. Even so, the ACB still has
considerable capacity building to do, especially regarding
international law enforcement cooperation and investigation
of financial crimes.


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COMMENT: BUYING POLITICAL SUPPORT, AND TIME
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8. (C) Though the administration's public pronouncements have
angered Muluzi loyalists, they seem to be popular with the
opposition, to the extent that some observers now describe
the President's UDF party as a de facto opposition. This
much is certain: the noise about corruption investigations is
buying Mutharika some political independence from the old
guard of the UDF, including Muluzi himself.


9. (C) Whether this tactic will give him enough support to
pursue a responsible fiscal agenda, and to defend his
corruption-busting against more concerted political
maneuvering from UDF, remains to be seen. Among donors, who
certainly constitute another intended audience, there is
still some skepticism about the noise level. They would be
more impressed with court cases and convictions. However,
with a potential currency crisis perhaps two or three months
away, the donors need to make a decision soon about whether
to release funds. In the absence of enough time to see the
whole judicial process completed, noise alone might make a
difference.


RASPOLIC