US embassy cable - 05LILONGWE906

C O N F I D E N T I A L LILONGWE 000906 
 
SIPDIS 
 
STATE FOR AF/S MELINDA TABLER-STONE 
TREASURY FOR INTERNATIONAL AFFAIRS/AFRICA/BEN CUSHMAN 
STATE FOR EB/IFD/ODF LINDA SPECHT 
 
E.O. 12958: DECL: 10/13/2015 
TAGS: EFIN, PTER, EAID, MI, Economic Issues 
SUBJECT: AL QAIDA MADE ME DO IT: GONDWE'S TALL STORY ON 
FERTILIZER 
 
Classified By: Econoff W. Taliaferro for reasons 1.4 b/d 
 
1. (U) In the midst of a raucous parliamentary debate on 
October 12 over the food and fertilizer situation in Malawi, 
Finance Minister Goodall Gondwe was asked to explain delays 
in getting fertilizer imported and distributed to depots 
around the country.  He said the GOM had sealed a fertilizer 
deal with a broker in Saudi Arabia some time ago, but that 
the government's bank, Citibank, had refused to put the 
transaction through, citing an alleged connection between the 
broker and Al Qaida.  When asked to name the broker, Gondwe 
said he had forgotten the name.  The local press has since 
picked up the story and passed it, via a famously excitable 
Malawian stringer, to Reuters and BBC. 
 
2. (C) When Embassy followed up with the Ministry, we got no 
substantive response.  The reason for this became clear when 
we contacted Citigroup's South Africa-based country manager 
for Malawi, who is handling the GOM's letters of credit for 
fertilizer purchases.  Gondwe, under extreme pressure to 
justify poor execution on the purchases, appears to have 
simply made up the story on the spot. 
 
3. (C) As Citigroup explains it, the GOM is dealing with two 
Saudi middlemen on the fertilizer deals: Avignon Holdings and 
Pioneer Chemical Factory.  These brokers have sourced the 
fertilizer in Ukraine and Thailand, and are still involved 
with issuing letters of credit.  Citigroup claims to have 
checked out the middlemen thoroughly before proceeding with 
the deal.  In any case, there have been no delays in 
processing purchases on account of suspected terrorist 
connections.  Citigroup has assured us that, had such a 
connection been found, it would have been reported to the USG 
and not discussed with the GOM.  This incident has been the 
subject of a certain amount warm communication between the 
Johannesburg and New York offices of Citigroup since the 
story hit Reuters wires last night. 
 
4. (C) COMMENT: This incident reflects both the intense 
pressure the administration is under to perform on food and 
fertilizer distribution and the lengths to which the most 
credible figures in the government have been driven to 
justify their poor performance.  (This poor performance, 
mainly on the part of the agriculture ministry and the Admarc 
parastatal, contrasts sharply with Gondwe's brilliant 
execution of fiscal reform, which has taken the country back 
in the good graces of the IMF in one year.)  The past three 
days of parliamentary debate have been heated nearly to the 
point of fisticuffs, and the GOM is groping for explanations. 
 The opposition is showing little willingness to listen to 
these explanations and even less to work on a solution. 
Since no one cares about real causes and effects, Gondwe may 
reason, he may as well make the story a good one. 
EASTHAM