[2] A week later, the Budget Director in the Ministry of Finance was shot outside his home, and several other civil servants were found hiding large sums of money, thus unravelling what came to be known as the "Cashgate" scandal.
[3] Following Cashgate's revelation, the British government sponsored an independent audit into the scandal, focusing on transactions made through Malawi's electronic financial management system.
[4] The first audit – released to the public in February 2014 – demonstrated that 16 Malawian companies received illicit payments from the government between April and September 2013 for goods and services that were not performed.
[5] In October 2014, Baker Tilly provided the Government of Malawi with a confidential report summarizing individual case files from its original audit.
The report – intended to be private and "provided to assist Malawian law enforcement agencies only" – outlines individuals and companies involved in illicit Cashgate-related transactions.
Current President Lazarus Chakwera and his Tonse Alliance (Malawi) continue to allege Banda's guilt in the scandal, though there is no evidence supporting this claim.
[8] Likewise, Banda and her People's Party (PP) have long speculated both Mutharikas’ involvement in Cashgate, citing the mysterious murder of the head of Malawi's Anti-Corruption Bureau, a failure to enact financial reforms and suspicious wealth accumulation of high-ranking DPP members.
In 1995 the government of Malawi began implementing a PFM known as an Integrated Financial Management Information System (IFMIS) backed by the World Bank.
The report also found that, in addition to rampant fraud and corruption in procurements and disbursements, there were "no adequate records of staff and pensions and advances, leading to problems of ghost workers, especially in the education sector.
In May 2005, the Government decided to adopt and implement an EPICOR-based IFMIS following the study tour to Tanzania in March 2005, and a contract with Soft-Tech Consultants was signed in July 2005.
A week later, on 13 September, Paul Mphwiyo, Budget Director in Malawi's Ministry of Finance, was shot by armed men who were waiting for him just outside the gate of his house in Lilongwe Area 43.
[21] Before long, a web of plots of how civil servants were siphoning funds from government coffers were rife on social media, blogs and online news sources.
President Joyce Banda's administration maintained that the looting was made possible because of loopholes in the IFMIS, and also suggested that Mphwiyo may have been shot by the scandal's perpetrators because he was on the verge of busting a corruption syndicate.
She enlisted a Cabinet Commission chaired by the Minister of Good Governance, Christopher Daza, to oversee this plan and communicate its findings to Malawi's donors.
Malawi's Anti-Corruption Bureau (ACB) also began an investigation into illicit financial activity among civil servants, and started making arrests in connection with Cashgate.
Chazika Munthali, the principal accountant in the Office of President and Cabinet, was charged with approving three vouchers totaling MK 1 billion (~US$2.3 million) to International Procurement Services, a company belonging to one Osward Lutepo, a senior official in the ruling People's Party and Deputy Director of Recruitment and Sensitisation, who eventually became the prime Cashgate suspect.
[41] British accounting firm Baker Tilly was enlisted by the UK's Department of International Development (DFID) to conduct a forensic audit of possible corruption during the period of September to April 2013.
However, in our opinion further specific detailed work is needed to support the Malawi Law Enforcement Agencies in investigating these matters across international jurisdictions.
The second report demonstrated that Osward Lutepo – who was linked to several businesses implicated in Cashgate – was the primary beneficiary of the scandal, along with a number of other businessmen.