\tThe company was launched in February \u202f2011 to add export value to pine cut in the 53,500ha Viphya plantation in the Mzimba district of northern Malawi.<\/p>\n
\tIt secured the loan from MSB despite having no experience in the timber business. The loan was guaranteed by another state institution, the Export Development Fund.<\/p>\n
\tHowever, the factory was never built, and neither Sterling nor MSB has explained what happened to the money.<\/p>\n
\tLast year the government controversially sold 75% of MSB\u2019s shares to privately owned FDH Financial Holdings. This followed a recommendation of the World Bank and the International Monetary Fund, which found that politically connected individuals received huge loans from the bank that were not being serviced.<\/p>\n
\tAs part of the sale, the treasury paid out MK6-billion (R128-million) to clear toxic loans made by MSB to private companies.<\/p>\n
\tSterling\u2019s name and amount\u00a0do not appear among the 13 relieved debtors listed by the government. But a reliable finance ministry source, who was involved in the Sterling deal from the start, said that it was among the principal beneficiaries.<\/p>\n
\tThe source said the treasury paid off the full original loan amount.<\/p>\n
\tAlso benefiting from the write-off was Mulli Brothers, another politically connected firm.<\/p>\n
\tMulli Brothers<\/em><\/strong><\/p>\n \tProminent on the list of companies that benefited from the Malawi treasury\u2019s generosity is Mulli Brothers, which is listed as owing the Malawi Savings Bank a whopping MK4.8-billion (R104-million).<\/p>\n \tThe company\u2019s proprietor, flamboyant Leston Mulli, was a close lieutenant of former Malawian president, Bingu wa Mutharika.<\/p>\n \tHe remains a known supporter and financier of the ruling Democratic Progressive Party.<\/p>\n \tThe list of 13 debt relief beneficiaries also includes K\u2019s Investments, which owed the bank (MK66-million (R1.4-million).<\/p>\n \tThe company is owned by Bintony Kutsaira, a senior DPP politburo member.<\/p>\n \tTreasury spokesperson Nations Msowoya told The Nation newspaper that the toxic loans \u201chad been on the bank\u2019s books for a long time without generating interest \u2026 and this reduced its share value.<\/p>\n \t\u201cThis [debt relief] was not protecting individuals.\u201d<\/p>\n \tIn an\u00a0interview with amaBhungane\u00a0in 2014<\/a>, Gondwe confirmed to the centre that he lobbied for the loan but said he no longer had any connection with Sterling.<\/p>\n \tHe referred all questions to the Sterling chief executive and board chairperson, whose names he claimed not to know.<\/p>\n \tIn a telephone interview last week, Gondwe reacted furiously to questions about the debt relief.<\/p>\n \t\u201cDon\u2019t ask me that as if you are my boss. What is your problem?\u201d he snapped, before hanging up. Several attempts to contact him for further clarification were unsuccessful.<\/p>\n \tTreasury spokesperson Nations Msowoya failed to answer questions over a four-week period, despite reminders and his assurances that he would respond.<\/p>\n \t\u201cIt just shows that there is no accountability on the way Treasury uses funds,\u201d Felix Jumbe, an opposition MP who chairs Parliament\u2019s agriculture committee, told The Nation newspaper.<\/p>\n \tAttempts to contact Mwanza for comment were unsuccessful. The directors previously failed to respond to questions.<\/p>\n “Non-traditional experts”<\/em><\/strong><\/p>\n \tSterling was the brainchild of the Timber Millers\u2019 Cooperative Union, comprising 400 small millers, which held a 63% stake in the company.<\/p>\n \tThe plan was for the union to supply raw timber to the factory, which would export finished products to the United Arab Emirates, South Africa and East Africa.<\/p>\n \tIt was the beneficiary of a state loan guarantee scheme that targets \u201cnon-traditional exports\u201d \u2013 but which does not cover timber products.<\/p>\n \tThe millers\u2019 union withdrew its support for the venture in 2014, complaining that the factory had not been erected and it had no idea what happened to the loan.<\/p>\n \tSaid Shadrack Gondwe of the Chibwaka Co-operative Miller Timbers, one the Sterling shareholders: \u201cThey rented a ramshackle timber building in the Viphya plantatation from a German, bought five pick-up trucks, office supplies and a transformer.<\/p>\n \t\u201cNo plant or machinery was bought for use in timber value-addition. In fact, nothing took off the ground.\u201d<\/p>\n “Not within its mandate”<\/em><\/strong><\/p>\n \tMalawi\u2019s Anti-Corruption Bureau said this week that it could not investigate the Sterling scandal until it receives a formal complaint. \u201cThe bureau is not investigating the issue of toxic loans at the Malawi Savings Bank because that is not within its mandate,\u201d said ACB spokesperson Egrita Ndala.<\/p>\n \tUnder the Anti-Corruption Bureau Act, the bureau cannot launch an investigation purely in response to public concerns, even though the necessary information may be in the public domain.<\/p>\n \tMeanwhile, the Viphya plantation, once said to be among Africa\u2019s largest, has been reduced to an uninterrupted vista of charred tree stumps.<\/p>\n \tThe destruction followed the ruling DPP government\u2019s issue of numerous licences to politically connected companies and individuals, giving them unfettered harvesting access.<\/p>\n \tThe licences far outstripped the forestry department\u2019s capacity to replant or maintain the forest.<\/p>\n \tHarvesting has been put on hold for the remaining trees and members of the Malawi Defence Force have been posted there to keep loggers away. Local environmentalists contend that less than 20% of the original area has been replanted.<\/p>\n \tThe latest auditor-general\u2019s report revealed that the government has lost at least 3.4-billion kwacha (about R70-million) in uncollected revenue from tree and fuel-wood sales, rentals and permits issued to plantation operators at Viphya.\u00a0<\/p>\n \t Insider source claims Malawi’s government has settled politically connected Sterling Timber International’s 1.4-billion kwacha loan from a state bank.<\/p>\n","protected":false},"author":2,"featured_media":4397,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[2],"tags":[],"class_list":["post-4396","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-stories"],"acf":[],"_links":{"self":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts\/4396","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/comments?post=4396"}],"version-history":[{"count":0,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts\/4396\/revisions"}],"wp:attachment":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/media?parent=4396"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/categories?post=4396"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/tags?post=4396"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![](\"https:\/\/amabhungane.org\/wp-content\/uploads\/2018\/03\/250x106.jpg\")
<\/a>
The amaBhungane Centre for Investigative Journalism provided this story. Like it? Be an amaB supporter<\/a> and help us do more. Know more? Send us <\/em>a tip-off.<\/a><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"