Little-known Cement trader ensnares departing Mutharika

Mahmed Shaffe Ahmed Chunara is not your stereotypical Malawian of Asian origin. He speaks fluent Chichewa without an accent. According to his friend, he attended, a government primary school. He is a Malawian through and through. Now he is at the centre of the biggest corruption scandal-yet that broke on the eve of the transition period from the Peter Mutharika’s six years, in power as Malawi President to the succeeding regime of Lazarus Chakwera. But what exactly is cement-gate? The Platform for Investigative Journalism reports

Mahmed Shaffe Ahmed Chunara

It’s a case of a presidential privilege and a question of whether it was abused for commercial entity or not. After it was initially reported that some 40 000 metric tons of cement, whose value was K3.2 billion, was procured and imported into the country fresh revelations indicate 20 000 tons extra cement was procured—raising the total value of cement procured to K5 billion.

According to the invoices, 20 000 metric tons imported from Zambia and Zimbabwe was worth some $2 240 000.00 (K1 680 000 000.00) respectively, meaning the extra 60 000 tons amounted to K5, 040, 000, 00.

President Peter Mutharika’s head of security, ex-soldier Norman Chisale, is the only person who has since been formally charged with fraud and money laundering related to the transaction – a procurement of 60 000 tons of cement which amounts to 1, 740, 000 bags in a period of 6.5 months.

Norman Chisale behind Peter Mutharika when he was in power

But at the centre of the procurement is a family running cement wholesale business in the capital city Lilongwe.

All documents reviewed by the Platform for Investigative Journalists (PIJ)—invoices and Malawi Revenue Authority (MRA) declaration forms—show that Chunara procured the cement and at ports of entry, President Mutharika was identified as financier of the deal.

Check an export licence obtained by Chunara attached

Also check an invoice to Larfage cement

The evidence trail further shows that the Malawi Revenue Authority (MRA) was asked to clear the cement as duty free by letters from the State House. The letters which we reviewed were authored, purportedly, by the then Director of State Residences, Peter Mukhito, a former Police Chief during the regime of Bingu wa Mutharika, the former President’s brother.

One of the letters authored by the then Director of State Residences, Peter Mukhito

Efforts to speak to Mukhito have proven futile on several attempts.

At Malawi Revenue Authority, the revenue collector’s Deputy Commissioner of Technical Customs and Exercise Abigail Kamwamba, wrote memos addressed to customs officers at various ports to clear the cement.

One of the Clearing letters authored by Deputy Commissioner of Technical Customs and Exercise Abigail Kamwamba

The two Chunara connected companies, Melton Hardware owned by his father and cement Prestige Import and Exports, which he owns, are involved in cement business, running wholesale shops in Lilongwe’s Malangalanga Trading Centre and warehouses along the Mchinji-Lilongwe road.

Proof of the two Chunara connected companies, Melton Hardware owned by his father and cement Prestige Import and Exports

According to the Presidential Salaries and Benefits Act, the president can import duty free “items for personal use” but the arrangement with the cement trader raises questions over possible abuse for commercial purposes, according to private practice lawyer John Gift Mwakwawa.

Mwakhawa questioned whether such volumes of cement importation could be construed as personal use and asked for a probe into the procurement before police launched the current investigation that appear to have now nabbed Chisale and lead to the questioning of Roza Mbilizi, the Deputy Director General for MRA and Chunara.

“Duty free status is for personal use but these amounts brings in suspicion that this cannot be personal use but perhaps for business. Even the personal use envisioned by the law does not include supporting business, the law might be prone to abuse and this needs to be reviewed as it could be bordering on abusing the law,” said Mwakwawa

An invoice for the purchases of the cement—whose total value is 3, 210.00 dollars— from Lafarge Cement Company also shows that the cement was procured by Prestige Import and Export whose address is P.O Box 567, Area 2 Next to Winners Chapel, Lilongwe, Malawi.

Another invoice from Lafarge also show that 3, 480.00 worth of cement was purchased by Chunara while an invoice from Badat Agencies, a company based in Chipata Zambia, shows Chunara bought from the company some 247, 800 USD worth of cement.

According to tax declaration (form 12) we have accessed, the cement was imported in the country under Taxpayer Identification Number (TPIN) of the importer (31060073 which belongs to Shafee Chunara, of P.0 Box 1528 while Mutharika is identified as Financier of the purchase on the forms.

Another form also show Chunara purchased 4 800 kg of cement from Portland cement Zambia for a total amount of 528, 000.00 ZAR and paid 4 800 USD for freight and again Mutharika is identified as financier.

In another purchase, Chunara purchased cement amount to 594 000.00 ZAR with similar details and another 462, 000.00 ZAR another worth 330 000.00 ZAR, another 1, 320, 000.00 USD another 18, 720.00 USD,

His company, which uses the same TPIN No is Prestige Import and Exports and Chunara also trades as Melton Hardware. Chunara conceded owning the company but asked for an email questionnaire which he was to respond to within the hour but has not for over a week now.

One of the declaration forms for Zambia cement at Mchinji border purchased at 17, 400.00 US dollars identifies Mutharika as a financier but Chunara as the importer. The cement was purchased, according to the form, from Portland Cement in Zambia.

Sources within MRA, investigating agencies, told PIJ the cement imports could be more and dates back as early as 2015 although PIJ has not seen any evidence to support this.

When contacted, Chunara who has a warehouse on the Lilongwe Mchinji road asked for more time.

“The company which imports the cement is Prestige Imports Cement. There different companies under my TPN so MRA sometimes just write my name. Melton Hardware is for my father,” said Chunara before asking for more time to respond to the questionnaire.

The documents we have accessed indicate, this started taking place in 2017 but sources say it could be as early as 2015.  The company did not pay all taxes (duty and exercise) and even VAT was waived to zero.

Both the ACB and Fiscal Police received complaints on the cement procurement from whistleblower who also shared documents with various media outlets including the PIJ.

According to ACB sources, the bureau started preliminary investigations on the matter but agreed with Fiscal Police to take the lead as it had institutional advantage on the matter—the Fiscal Police is headquartered in Blantyre where MRA is also headquartered while the Bureau is headquartered in Lilongwe.

The initially reported importation of the 40 000 metric tons of cement by the President from Zimbabwe and Zambia raised question marks over integrity of the presidential benefits and privileges act and also Mutharika’s commitment to buy Malawian company.

However, the president’s appetite for foreign cement further raised questions over misuse of the country’s thin foreign currency reserves and makes mockery of the Buy Malawian campaign the president personally launched in 2016 and has toured as remedy to boasting local industries. 

According to correspondence we sourced, in June 2018, Director General of state residences Peter Mukhito wrote a letter dated June addressed to MRA commissioner general to clear 20 000 metric tons of cement purchased from Chipata, Zambia. 

Peter Mukhito

In the letter by Mukhito, Mutharika specifically requests duty clearance for 20 000 tons of cement from a company known as Prestige Export, Chipata Zambia.

But further documentation from MRA shows that Mutharika also procured some more 20 000 metric tons of cement from PTC Zimbabwe Limited duty free.

In a letter in response to a letter from State House dated 21st November signed by deputy commissioner of Technical Customs and Exercise Abigail Kamwamba, addressed to State House, advises that MRA extended ports where the cement should be allowed into the country from previously Lilongwe Port to Dedza and Mchinjil.

“We write to acknowledge receipt of the letter dated 21st November, 2018 requesting duty free clearance of the above mentioned goods. We write to convey the Commissioner General’s approval to clear 20 000 MT cement from Zimbabwe Duty free in terms of Customs Procedures Code 418 of the Customs and Exercise (Tariffs) Order,” reads part of the letter.

Fired MRA Commissioner General Thom Malata previously refused to comment on the matter, referring PIJ to the Commission’s head of corporate affairs Steven Kapoloma.

“The Authority is obliged to respect taxpayer’s right to confidentiality by not disclosing individual tax affairs to third parties or the public. Without commenting on this specific issue, kindly take note that under Customs Procedure Code 418 of the Customs and Excise Tariff, the President is allowed to import goods duty free,” said Kapoloma then.

Former State House Press Secretary Mgeme Kalilani told PIJ partner The Nation newspaper the president was entitled to import the cement duty free.

Mgeme Kalilani

Early reaction to the cement procurement focused on Mutharika’s apparent betrayal to the  2016 launched the Buy Malawian Strategy (BMS)—a Malawi government spearheaded campaign also supported by donors such as the UNDP—aimed at boosting local initiatives.

 “We have dedicated this day to make a sincere promise to our dearest country by launching Buy Malawi Strategy. This is an oath of patriotism, pledged to our country. And we have no other country to be proud of except Malawi,” said the President at the launch of the campaign.

Former President Mutharika

He added: “The Buy Malawi initiative is at my heart and the heart of my government. We pledge to buy Malawian because we are proud that Malawi can produce fine products and services worthy our pride and money. Malawi is set to take her place in the world. And we will succeed.” But as police moved to charge Chisale, Mutharika’s aide of many years, of money laundering and fraud charges, it is apparent the scandal won’t end at this level that of course would include wastage of scarce forex on a product widely produced at home. Considering that in its wake there are several unanswered questions, legal battles and criminal proceedings even for the president look imminent—ensnaring a presidency now without legal or political immunity.