The Lilongwe Chief Resident Magistrate Court Monday committed to the High Court the case in which former Finance minister Joseph Mwanamvekha, Reserve Bank of Malawi (RBM) former governor Dalitso Kabambe and RBM former deputy governor Henry Mathanga are accused of instructing officials at the central bank to present cooked up figures to the International Monetary Fund (IMF).
The three are alleged to have committed the offence to paint a rosy picture of Malawi’s Net International Reserves (NIR).
NIR are defined as the difference between reserve assets and reserve liabilities.
Reserve assets are readily available claims on nonresidents denominated in foreign convertible currencies.
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Reserve liabilities, on the other hand, are all foreign exchange liabilities to residents and nonresidents, including commitments to sell foreign exchange arising from derivatives— such as futures, forwards, swaps and options— and all credit outstanding from the fund.
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Particulars of the case are that Mwanamvekha, Kabambe and Mathanga did, between June 2018 and September 2019, an arbitrary act when they flouted terms and conditions of the Technical Memorandum of Understanding (TMU) between IMF and the Government of Malawi by directing senior officials at Financial Market Operations at the RBM not to disclose critical information to the IMF as was required by the said TMU.
It further says the act by the three prejudiced the rights of the Malawi Government to access $108 million Extended Credit Facility as it was eventually cancelled by the IMF.
When the case came before court on Monday, one of the defence lawyers Lusungu Gondwe asked for an adjournment of the case, saying one of the lawyers, Kalekeni Kaphale, was handling another matter at the Supreme Court of Appeal in Blantyre, hence he was not available.
But State lawyer Dzikondianthu Malunda objected to the prayer, saying the accused persons were already in court, such that it would only be proper to proceed with the committal process.
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Chief Resident Magistrate Madalitso Chimwaza agreed with the State and committed the case to the Financial Crimes Division of the High Court.
In its November 17 2022 statement on the matter, the IMF said Malawi misreported on its observance of the performance criteria on the floor on the NIR of RBM, leading to the noncomplying disbursements.
“At the time of the first and combined second and third reviews under the ECF arrangement, the NIR for end-June and end-December 2018, and end-June 2019 were incorrectly reported.
“RBM’s gross reserve assets were overstated due to inclusion of both: (i) pledged term deposits, and (ii) assets through contracting short-term swaps, whereas the Technical Memorandum of Understanding definition of the gross reserves assets explicitly excluded both,” reads a statement from the IMF.
