Field York case: Mpasu ordered bank governor
BY Gedion Munthali, The Daily Times
09:56:47 - 20 July 2007
Former Education Minister Sam Mpasu directed the Reserve Bank of Malawi to release foreign exchange to buy notebooks and pencils from Field York when the country only had reserves for buying essentials like drugs and fuel, a State witness told the Lilongwe Magistrate Court Thursday.
Former Reserve Bank Governor Francis Pelekamoyo said this before Chief Resident Magistrate Chifundo Kachale as he testified in a case where Mpasu is accused of abusing his office as Minister of Education by buying learning materials from Field York at an exorbitant price.
Pelekamoyo, appointed governor in 1989 but whose contract was terminated prematurely by the UDF administration in 1995 with two years to run, said Mpasu issued the directive after he [Pelekamoyo]
had written Mpasu that the bank was not able to go into contract with Field York because of the shortage of forex.
“The directive from Mpasu was verbal. It came through the then Principal Secretary in the education ministry Dr. Sam Safuli. He said that the minister had told him to tell me that payment had to made to
Field York at all costs,” said Pelekamoyo when he was asked by State lawyer Steven Kayuni about the directive.
Pelekamoyo said that in 1994, the Ministry of Education notified the Reserve Bank of Malawi that government wanted to go into contract with Field York in United Kingdom to supply note books and pencils.
The terms were that government should deposit 300,000 British pounds, and then make weekly deposits of 100,000 pounds for a period of about six to seven months.
But at the time, Pelekamoyo said, the country was facing acute shortage of foreign exchange emanating from the fact that there had been an aid embargo on Malawi for the previous 3 years.
This meant that management of foreign exchange had to be made for very essential products only, like fuel and medicines.
“So when I received the request, I wrote the Ministry of Education, telling them that the payment schedule they had agreed with Field York could not be honoured because of shortage of forex,” Pelekamoyo said.
The Reserve Bank, as an alternative, contacted the Finance Company of Malawi which used to procure goods and services for government, to use the company as a guarantor so that Field York could go ahead to supply the required note books and pencils.
But Field York rejected Malawi Finance Company to act as guarantor.
In further discussions with the Reserve Bank, the court was told, Malawi Finance Company offered an alternative that they could procure the notebooks and pencils themselves at one-fourth of the price quoted by Field York and would deliver them earlier than the UK-based company.
According to Pelekamoyo government would have spent 500,000 pounds using the Malawi Finance Company instead of 2 million pounds paid to Field York.
On September 20, 1994, Pelekamoyo wrote Mpasu telling him the banks inability to contract with Field York, and of the alternative offered by the Malawi Finance Company.
Besides that Malawi Finance Company had offered to extend the payment period.
“I did not receive any reply, but a directive three days later to make the payment to Field York. You see, as Central Bank Governor you are a public servant; what you give are proposals and recommendations,” said Pelekamoyo.
After the Mpasu directive was given to him, Pelekamoyo wrote the Managing Director of Field York, with copies to Mpasu, telling him that the Central Bank would deposit 300,000 pounds in the company’s account 10365505 at the Barclays Bank in London. He however asked for negotiations on the payment terms of the weekly payments of 100,000 pounds.
Hearing of the case will continue of August 21 when former Finance Minister Aleke Banda and a police officer who investigated the case are expected to testify.