Lilongwe – In 2005, the year President Bingu wa Mutharika ditched the United Democratic Front (UDF), the party that sponsored him into power, to form his own Democratic Progress Party (DPP), Malawi’s treasury was caught in a financial rip-off. The then Secretary to Treasury Dr. Milton Kutengule was arrested on charges of misappropriation of public money amounting to K20 million (US$ 140, 000) he had allegedly deposited at the now defunct Finance Bank Malawi. During the 4th Meeting of the 38th Session of the National Assembly, Members of Parliament raised concerns over allegations that the Secretary to the Treasury had diverted the sum of K20 million issued by Malawi Telecommunications Limited (MTL) as dividend paid to Government instead of depositing the cheque into the Consolidated Account or the No. 1 Government Account. An investigation by the Public Accounts Committee of the National Assembly revealed that Kutengule and some DPP top officials had created a spurious Credit Scheme Account in the Ministry of Finance with the aim to finance the activities of the new political party.

Kutengule told the Committee that he was under heavy political pressure from President Mutharika, the Cabinet and the Minister of Finance, Goodall Gondwe, to identify funds to kick-start the Malawi Rural Development Fund (Mardef), an institution that had not yet been legally established or approved by Parliament. The Secretary reported that he transferred K8m (about US$60, 000) to the Livelihoods And Diversifications Directions by Research (LADDER) project account, another dubious account held by the Stanbic Bank, where it was to be transferred to the Ministry of Education Special Client Account in response to the request for funds by the then Minister of Education, Yusuf Mwawa, who would use it to promote “government business in parliament by enticing opposition Members of Parliament.” During the investigations, the Committee learnt that soon after Mutharika left the UDF it was apparent to government leadership in Parliament that considering their minority status, the DPP would have a very difficult time to transact national business. DPP official including Mutharika therefore agreed to “find a way to entice opposition Members of Parliament, mainly those from the UDF, to support Government business in Parliament” reads the Committees report signed by Committee chairperson late Respicious Dzanjalimodzi in October 2005. “It was decided that the funding of the operations had to be done clandestinely, hence the proposed use of the Special Client Account in the Ministry of Education,” says the report.

The Committee concluded that accounts were operated with the aim of diverting government funds into activities that were meant for promoting government business in Parliament and political activities by enticing Members of Parliament. “The Special Client Account in the Ministry of Education was operated in the interest of and the knowledge of the President and Cabinet,” says the report noting that “the manner of operation was not proper, neither was it transparent nor consistent with the principle of accountability.” The DPP led government has recently been in the forefront fanning speculation that opposition parties and non governmental organizations in Malawi are receiving funding from unknown sources to destabilize the country and force regime change. Such speculation brings into play the importance of public disclosures of political party financing in order to ensure that there is transparency and accountability and that the democratic principle of voter’s self determination and party ownership is not undermined. Malawi is one of the nations in the world that does not have clear guidelines on the financing of political parties. Political party funding in Malawi is a lax activity that allows parties to generate finances from undisclosed sources without legislative restraints. However, as seen above, such laxity has led to the ruling party to obtain unauthorized use of state resources for political use. Another unregulated financing of political parties is the acquisition of funds from the private sector where interest groups and wealthy individuals and foreign countries buy influence in political parties. The mill has it that the DPP itself has been awarding government contracts to local and international conglomerates with the aim that these companies pay the ruling party. Such lack of transparency and accountability by political parties on their sources of funding provides a fertile ground for derailing economic development and democracy since the financer’s more-often-than-not throw their money with strings attached to yield returns.

South African researcher Andile Sokomani notes that campaign and party promotion expenses create growing incentives for corruption in party financing with anonymous donors increasingly investing in party coffers normally with tacit expectation of returns. “Though political parties raise private funds from legitimate sources, it is not uncommon to see individuals or companies suspected of funding incumbent political parties openly acquiring lucrative state contracts and other government benefits” he says. In September 2009, the Centre for Multiparty Democracy – Malawi (CMD-M), a membership organization comprising political parties that have representation in the Malawi National Assembly, held a public discussion at Lilongwe Hotel in Lilongwe to discuss the country’s political party funding systems. The aim of the discussion was to open dialogue on the practice of funding political parties in Malawi as a way of institutionalizing political parties as primary players in a multiparty democracy. Professor Ruud Koole, Vice President of the Board of the Netherlands Institute for Multiparty Democracy pointed out that political parties are the commonest vehicles that people use and entrust with power to transform their lives and meet their aspirations. “In order to achieve these, parties require substantial finances to run their democratic functions on behalf of their respective constituents,” he said but was quick to warn that while some parties obtain their finances legally others get them through dishonest means. He observed that parties across the world source funding through different ways that include party membership, where party constituencies contribute to the party by subscribing a periodical fee to register their support or affiliation to it.

Koole explained that another source of funding is corporate financing, where corporations, trade unions, NGOs, private business interests make donations to their parties of interest. However he warned that “This type of financing is dangerous in that the entities that decide to finance political parties usually do it at a price which mostly involves expectation of business privileges”. Concurring in his essay “The party funding challenge in Southern Africa” Sokomani observes that the interests of wealthy donors with their huge and secret donations co-opt politicians to bend towards their (donors’) self interest agendas. “By making elected officials accountable to those who financed their election campaigns than those who gave them the majority vote, wealthy individuals are allowed to gain the upperhand over the political and economic functions of governments,” he says. The Diocesan Secretary for the Lilongwe Diocese Catholic Commission for Justice and Peace (CCJP), Peter Ngulube Chinoko observes that the impact of the existing legal instruments that govern the financing of political parties in Malawi leaves a lot to be desired.

Chinoko notes that Section 40 of the Republican Constitution provides that only political parties that amass one tenth of the total electoral vote qualified for state sponsorship. “However, with the current political trends in Malawi it is difficult to get such a figure,” he observes pointing out that in the 2009 Presidential and Parliamentary Elections only six million Malawians registered. “As such, it is not easy for parties to get 600, 000 votes in a country of 37 registered political parties”. Following the elections, only six parties (the Democratic Progressive Party (DPP), the Malawi Congress Party (MCP), United Democratic Front (UDF), Alliance for Democracy (Aford), Maravi People’s Party (MPP) and (Mafunde)) managed to make it to the Malawi parliament. Of these only DPP, MCP and UDF are state funded. “Unfortunately, there are no proper mechanisms in place to audit state financed political party books of accounts,” he said explaining that there is no inspection on how the money is used and no penalties have been stipulated for a party that misuses state resources. “Political parties are also reluctant to disclose to their members how much funds they have received from government, a situation which leaves the constituents with a sense of loss of belonging,” he said.

The diocesan secretary suggested that it was important that country’s Registration Act should clearly stipulate who can and who can not fund political parties. Chinoko says the country’s Law Commission is currently amending the Political Parties Act to address issues of control of public funds by political parties and to encourage parties to disclose other sources of funding. Last week the office of the Auditor General announced that government will soon start auditing NGOs to ensure that the funds they receive benefit the ordinary people and are used for their intended purposes. While organizations have reacted differently to the news its worth bringing to the fore the need also for political parties to be transparent as to their source of funding, how much they receive and how the money is used.