US embassy cable - 04LILONGWE586

UNCLAS LILONGWE 000586 
 
SIPDIS 
 
SENSITIVE/NOFORN 
 
E.O. 12958: N/A 
TAGS: KCOR, ECON, PGOV, PINR, MI, Political, Corruption 
SUBJECT: CORRUPTION FEATHERS EX-PRESIDENT'S NEST 
 
 
SUMMARY 
------- 
1. (SBU/NF) Taking office in 1994 with a couple of 
nearly bankrupt businesses, former President Bakili 
Muluzi finished his ten years in the presidency as one 
of the richest men in Malawi. That he acquired his 
fortune while officially earning an annual salary of USD 
56,000 (MK 6 million) demonstrates how corruption and 
influence peddling are becoming commonplace in Malawi. 
END SUMMARY. 
 
MULUZI BEFORE PRESIDENCY 
------------------------ 
2. (U) Former President Bakili Muluzi was elected to 
office in June 1994 and was re-elected for his second 
and final five-year term in 1999.  His handpicked 
successor, Bingu wa Mutharika, was elected in May 2004. 
 
3. (SBU/NF) When he assumed office in 1994, Muluzi owned 
some businesses trading in sugar and farming. His 
passenger transport business had just closed down, and 
the sugar distribution business was almost bankrupt. His 
businesses failed to honor debts, and several clients 
issued court claims against him. His assets were 
estimated to be worth less than USD one million. 
 
Muluzi After Serving Ten Years as President 
------------------------------------------- 
4. (SBU/NF) Muluzi left office a far richer man - some 
say the richest citizen of Malawi. His sugar 
distribution business is the largest in the country, and 
he has built several houses, including two very large 
residences (one in his home village and another in 
Blantyre). Real estate agents estimate his two mansions 
are worth more than USD one million. Muluzi has also 
established a Holding Company called Atupele Holdings, 
which owns several properties including the Keza Office 
Building built at a cost of USD 3.67 million. Not 
coincidentally, before construction on Keza was even 
complete, the Malawi Revenue Authority rented it, paying 
in advance for five years of occupancy. 
 
5. (SBU/NF) Muluzi is connected to seven other companies 
either through sole ownership or by partnerships.  The 
three most well-known are Alkay Plastics Ltd, Transcom 
Ltd, and Chikale Hills. Alkay Plastics Ltd is the 
largest manufacturer of plastic products in Malawi and 
has established export markets in neighboring countries. 
Transcom Ltd, established during the last three years of 
Muluzi's presidency, owns more than 130 trucks of 
various sizes (10-60 ton trucks) for domestic and 
international cargo haulage.  Muluzi also owns Chikale 
Hills, a transport company of unknown size but with a 
large presence in Malawi. 
 
6. (SBU/NF) Muluzi also partnered with other individuals 
to establish Fertilizer Financing Company, Kalaria 
Wholesalers, and African Logistics Company. It is widely 
speculated that Muluzi used these business partners to 
hide his wealth. 
 
THE TOP SETS THE TREND 
---------------------- 
7. (SBU/NF) During Muluzi's ten-year tenure, corruption 
became more widespread in almost all sectors of Malawi. 
The civil service, police, and immigration often require 
"tips" for routine services, and people publicly talk of 
bribing the police to avoid arrest for both minor and 
serious offences.  These trends led to Malawi's position 
on the Transparency International Corruption Perceptions 
Index dropping from 45 in 1999 to position 83 in 2003. 
(NOTE: Corruption is one of the primary factors that 
kept Malawi from qualifying as an MCA country.  END 
NOTE.) 
 
COMMENT 
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8. (SBU/NF) Corruption is not the accepted norm (yet), 
and it is certainly not at the level of many countries 
in Africa.  President Mutharika has come out strongly 
against corruption by his "zero tolerance" policy and by 
his plans to investigate all reported cases -- even at 
"the highest levels." His words, however, will have to 
be met with action in order to stem corruption's 
corrosive effects on Malawian gove