Government hides the truth

If you go to one demonstration and then go home, that's something, but the people in power can live with that. What they can't live with is sustained pressure that keeps building, organisations that keep doing things, people that keep learning lessons from the last time and doing it better the next time.
Noam Chomsky

Power is a drug on which the politicians are hooked. They buy it from the voters, using the voters' own money.
Peter Newman


The Mhlako Triumvirate

Saturday, May 14, 2011


My apologies for a long absence, I have been fighting pain for a few months and sitting down to write anything requiring thought and time has been too much for me.


In politics perceptions are all-important. The voting public decides on the basis of probability and incomplete information that any unusual increase in the apparent wealth of powerful officials, their family, close associates or apparent business partners is the result of the illegal or dubious abuse of office or criminal activity. The constitutional provisions for the President and other officials and their spouses to declare their assets, liabilities and business interests and to place their affairs in a beneficial trust have had no practical effect. These declarations, if made, have not been made public. They have not been subject to audit or other competent professional verification process. There have been no penalties for non-submission, late submission or non-compliance. With such a scenario our Presidents may be tempted to believe that they will be able to acquire wealth while in office without any subsequent scrutiny.

Naturally, high officials, especially presidents, find it easy to recruit established businesses with unscrupulous owners to assist them in the unfair acquisition of wealth. We perceive that there are many indications that this actually happened during Muluzi’s presidency.

During the latter days of his presidency, I publicly questioned the source of his apparent new-found wealth. I had been close to him in the struggle for the change to multi-party democracy. I was well aware that his business affairs could not be classified as flourishing. His trucks and buses were non-runners. Granted, he had a sugar distributorship and a well-established tobacco farm but, I guess, they were not prospering to the extent that he could live the sort of expensive life-style that he was able to display after his accession to the presidency. We have seen how, soon after he stepped down, his ‘investment’ in Keza House went sour.

When President Muluzi was in office it was an open secret that the Kalarias in Lilongwe were his close business associates and that their business interests were quite diverse. I was interested to learn from a recent report in the press that there is now a dispute between the Kalarias, the former president, and his family members concerning the sale of the ‘Muluzi’ shares to their former co-shareholder. No doubt the courts and the lawyers will be able to resolve the issues. But we will be left with unanswered questions. Were these business interests ever disclosed as required by law? With whose money were the businesses funded? If the Muluzis made any actual investment into the businesses was there sufficient wealth as declared to pay for the shares? If not, what was the consideration for the Kalarias to be persuaded to take on the Muluzis as shareholders? After all, no one gives away their wealth without some easily understood motive. Without a proper answer suspicion must remain that it was the power of presidential patronage and preferment.
We do not have satisfactory answers. The fault lies with us. We appear to accept that each new president will immediately become wealthy and that we have no right to question the process while he is in office. Our media has too small a reach and has poor resources for deep investigative journalism.

We should be aware of what is happening now.

The Mhlako Syndrome – (Mhlako wa Alhomwe – the Lhomwe tribe’s cultural movement now chaired by the President)

The perception is that President Mutharika favours his ‘home boys’. The Governor of the Reserve Bank, the Secretary to the Treasury, the Inspector General of Police, the Chief Justice, the head of the Anti Corruption Bureau (ACB), the Postmaster General and the Chief Executive of the City of Blantyre  (to mention just  a few) are all fellow tribes-people. I do not imply that any of them are unfit for their posts or that they would compromise themselves in any scheme to defraud the nation. But what is happening?

Another home boy, a certain Mr. Mulli via his business, Mulli Brothers, seems to be in a prime and favoured position in the acquisition of assets or in other businesses where government has a hand. Many, many months ago we heard that Mulli Brothers had purchased the former Bestobell premises on Bakili Muluzi Highway, Blantyre to be the headquarters of the next phone operator yet to be licensed by the Malawi Communications Regulatory Authority (MACRA). It came as no surprise to read in the press this week that the licence had been granted after proper assessment of competing bids by MACRA to Celcom, a new telecoms company 100% owned by the Mulli Brothers. Who else did we expect it to be?.

Proud Malawians may be happy to see more investment by local companies rather than foreign. Unfortunately, the undisclosed Cabinet policy of ‘empowerment’ seems to empower only one company! There is no suggestion that shares will be made available at any time on the stock market – a way to truly empower a broader spectrum of the populace.

I have not been keeping notes but I seem to recollect that the following businesses have been acquired by Mulli Brothers:
  • Chitakale Tea Estate
  • Malawi Tea Company
  • Chombe Tea Estate
  • National Bus Company
Mulli Brothers have been in business for some years in transport, produce buying and export. But for a company to make so many acquisitions in such a short time generally requires a large amount of credit. We expect that cash inflows from existing businesses could not have generated sufficient surplus for such large acquisitions or for the establishment of new businesses.

In a statement credited to Mr. Mulli in the news report the new phone business will require an investment of K42 billion (US$280 million). This appears to be something of an exaggeration but it is what he is reported to have said. Where is the money to come from? The rumours months before the award of the licence were that there was a Chinese investor and technical partner - no word of that now or yet.

Many companies that had diverse holdings and interests have found it better to specialise in related businesses. Agro-industry/transport/telecommunications are hardly complementary. One must then ask whether credit is being extended based on proper assessment of risk. And here we must look at the Malawi Savings Bank (MSB) which is wholly owned by government (it belongs to us!). By a strange coincidence, the Secretary to the Treasury is also the Chairman of the bank.

Question: what is the exposure of OUR bank to Mulli Brothers? Can we trust that any credit arrangements have been truly arms-length? We have only to see what happened at Malawi Housing Corporation where well-connected individuals including the Minister of Housing, Minister of Education (brother to the President) and the Attorney General appear to have been able to purchase houses at very favourable below-market prices in ‘sweetheart’ deals. The MHC is, of course, owned by us. We do not appear to be getting the best value for our interests.

While all this is going on, our formerly not very wealthy President appears to be suddenly very rich having acquired Ndata Estate for a rumoured K70million and where he is, by repute, building a sixty room mansion. While all this is going on the Government has been unable to pay the salaries of many of the civil servants including teachers, nurses and police.

 Will Mulli be Bingu’s Kalaria? What will happen to the businesses at the end of the Bingu era without the power of patronage?

Are our affairs in safe hands?

You may wish to guess what my perception is!

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