Running to stand still: reflections on the cashgate scandal heist in Malawi
| Published date | 03 May 2016 |
| Pages | 169-188 |
| DOI | https://doi.org/10.1108/JMLC-04-2015-0014 |
| Date | 03 May 2016 |
| Author | Steven William Kayuni |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
Running to stand still: reections
on the cashgate scandal heist
in Malawi
Steven William Kayuni
School of Law, Politics and Sociology, University of Sussex, Brighton, UK
Abstract
Purpose – In September, 2013 following a police tip, a government accounts clerk was found with
huge sums of cash amounting to US$300,000 in his car, and a week later, Malawi’s Budget Director
(Treasury Ofcial) was fatally shot outside his home. These two incidents unravelled what would later
be famously known as the “Cashgate Scandal” that leading to revelations of fraud amounting to US$32
million, an amount representing almost 1 per cent of Malawi’s annual GDP in merely six months. As a
result, donors withdrew their annual 40 per cent budgetary support. A lot of people (almost 70) in both
public and private sector found with both cash in local or foreign currency were arrested. An
independent audit report by Baker Tilly, a British accountancy rm, revealed that the fraud and theft
was with such sophistication that cheques were issued to private companies for services that had not
been rendered to government. Those cheques were cashed, and money was distributed among several
people. Those arrested were charged with offences ranging from corruption, abuse of ofce, theft, theft
by public servant, tax evasion and money laundering. This paper aims to analyse the cashgate scandal.
It explores the rst conviction of these cashgate case series which also happens to be the rst ever
conviction on money laundering offence in Malawi. It further explores the law likely to apply to the
cashgate scandal case series, the opportunities that have been lost and likely stiing implications on the
future of the ght against corruption and money laundering offences in Malawi. All law enforcement
actors such as the prosecution, defence and the courts have that duty to clarify and implement the
common interests of Malawians, namely, the prescriptive purposes of the law in accordance with the
expectations of an approximate process that guarantees attainment of human good, i.e. justice.
Design/methodology/approach – This paper presents the desk research of various journal articles
and reports on money laundering in general and Malawi. Further, an analysis of the rst money
laundering conviction is presented.
Findings – Malawi is still struggling with enforcement of money laundering offences.
Research limitations/implications – There was no quantitative research involved. Further, being
the rst case for litigation and conviction, not much has come up on Malawi’s money laundering
practice. Actually, this is likely to be the rst article on money laundering and analysis of the cashgate
heist.
Social implications – The paper serves as a learning process for future prosecutions.
Originality/value – The paper offers a new and novel approach to the ght against money laundering
offences and organized criminality in Malawi. Before the Treza Senzani Judgment, Money Laundering
Law in Malawi had never been tested before the Courts. Through an exegesis of the Malawi law as
regards these offences, the paper adds value to the research and ght against money laundering. It
The author takes full responsibility for all the mistakes and shortfalls. The interpretations and
conclusions in this article are entirely those of the author. They do not necessarily represent the
views of the Ministry of Justice, Directorate of Public Prosecutions, Attorney General or the
institutions the ofce represents.
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1368-5201.htm
Cashgate
scandal heist
169
Journalof Money Laundering
Control
Vol.19 No. 2, 2016
pp.169-188
©Emerald Group Publishing Limited
1368-5201
DOI 10.1108/JMLC-04-2015-0014
further offers insights into legal interpretation and policy formulation that would enable law
enforcement agencies in Malawi to succeed in the ght against such criminality.
Keywords Money laundering, Corruption, Theft
Paper type Conceptual paper
1. Introduction
The Cashgate Scandal of 2013 was probably the climax of corruption, looting, theft and
money laundering of public funds since Malawi embraced democratic principles and
accountability in 1994. Its rst ever trial, conviction and sentence was Republic v. Tressa
Namathanga Senzani (2014), handed down on 2 October, exactly one year after the
scandal became public. The defendant, Tressa Namathanga Senzani, a former Principal
Secretary in the Ministry of Tourism pleaded guilty to two offences of Theft contrary to
section 278 of the Penal Code (Cap. 7:01) of the Laws of Malawi and Money Laundering
contrary to section 35(1)(c) of the Laws of Malawi. This was in relation to US$150,000 (63
million Malawi Kwacha) that she had unlawfully authorized from the Ministry of
Tourism to be paid to her two companies for services that were never rendered. She
agreed to full restitution by surrendering 2 million Malawi Kwacha in her bank account
and a house in a posh suburb area 47 on plot number 42/5/258 valued at 61 million
Malawi Kwacha. She was sentenced to 9 months imprisonment on the theft offence and
three years imprisonment with hard labour on the money laundering offence. The
sentences were to run concurrently. The prosecution is satised with the sentence[1].
The defendant has indicated that she will appeal against the sentence[1].
As the rst trial of the cashgate scandal case series to be concluded and the rst ever
conviction since the Money Laundering, Proceeds of Serious Crime and Terrorist
Financing Act[2] came into effect in 2006, this case sets the tone of how the scandal will
be dealt with in court and also postulates the ght against corruption and money
laundering in Malawi. The people of Malawi, international community, international
and local media are fully focused on the cashgate scandal proceedings[3]. It is therefore
suggested that the prosecuting authorities namely Directorate of Public Prosecutions
and the Anti-Corruption Bureau (ACB) on the one hand and the judiciary or courts on the
other are themselves on trial. The intense scrutiny of every decision and the
decision-making process could not be underestimated. These institutions recognize that
they must not just ght corruption but be seen to actually do it. The ACB acknowledges
that its momentous job is to have a corrupt-free Malawi[4], while the judiciary
recognizes that it is duty bound to provide independent and impartial justice and
judicial services that are not only efcient but also earn the respect, trust and condence
of society[5]. Notwithstanding these lofty intentions, the Senzani Case has sent serious
indications of the struggles Malawi still has to surmount when it comes to ghting
corruption, money laundering and white collar criminality. It has further put to question
whether those entrusted with the decision-making take serious consideration of the
values[6](McDougal and Lasswell, 1966/1967) or notions that Malawi as a nation
aspires or cherishes[7]. What decision-making process is involved by those entrusted
with decision-making authority and what bases of power (McDougal, 1956) are those
decisions depended upon? What are the probable responses of Malawians to what the
prosecuting and judicial authorities conceive to be the best decision in such heavily
scrutinized cases as the cashgate scandal series? Whether any purported or
JMLC
19,2
170
To continue reading
Request your trial