Patrick Achitabwino articles

FRAUD: A THORN IN THE MALAWI ECONOMY
By
Patrick Achitabwino

The unprecedented rate at which fraud is creeping its way into the Malawi economy is suicidal as the nation risks being nailed on the cross of poverty. A Kenyan conman was recently arrested in Lilongwe for operating a fake NGO that has swindled poor Malawians of their hard earned money.

It has now ceased surprising to hear that employees of company A or B have been arrested for fraudulent activities in excess of millions of kwachas. Newspapers are easily flooded with adverts about people who are on the run and that whosoever would give information leading to their arrest would be rewarded thousands of kwachas.

Fraud has become a rabbied dog that is viciously crippling the already weak economy of the country. The worst danger lies in the sense that most fraudsters are usually people in positions held in high esteem such that it is unthinkable that they might be involved in such malpractices.

Winnie Madikizela-Mandela - a potent symbol of resistance during the South Africa’s apartheid system – who was known as the ‘mother of the nation’ by her many supporters, but disparaged as the ‘mugger of the nation’ by her detractors, was convicted of fraud.

Madikizela-Mandela, a lawmaker, was found guilty of 43 charges of fraud and 25 of theft. Addy Moolman, her financial advisor, was found guilty of 58 counts of fraud and 25 of theft. The two were accused of fraudulently obtaining bank loans worthy 120 000 United States dollars in the name of bogus employees of the African National Congress (ANC) Women’s League, of which Madikizela-Mandela was president.

Fraud alongside corruption is threatening the survival of many corporate bodies in the country. Defrauded industries would in the end have no option but to close their businesses, as they would not be posting profits. That would in the end erode the investors’ confidence in the country, deprive the government of tax revenues hence inadvertently affecting developments.

The most unfortunate part of fraud is that it is capable of hiding beneath the veil of seemingly just operations. There have been allegations that some orphans care centres are just calculated means for self-enrichment in the name of supporting orphans.

Fraud has the power to curve highways to massive poverty. As the fraudsters get rich, millions of people end up wallowing in the whims of abject poverty. When industries are defrauded, massive job losses bare their teeth ending up spiralling millions more jobless people on the streets.

The Commission for Africa – a 17-member commission chaired by UK’s Prime Minister Tony Blair – noted that fraud is one of the evils that are hindering economic growth in Africa. Even with massive financial aid, Africa’s economic growth will be questionable, as fraud will be derailing it.

According to a report authored by a campaign group called Global Witness, fraud leads to chronic instability and poverty. For instance, in Angola, where quarter of the oil revenue is unaccounted for each year, one in four children dies in infancy. Yet, as Gavin Hayman of the Global Witness says, the international community spends 200 million US dollars each year trying to feed one million people in Angola who are critically dependent on international food aid.

Scars of fraud and their devastating impact in the health sector in the country are far much visible. Malawi registers one of the highest maternal deaths in the world as clinics run without drugs. Unbelievably, truckloads of medical equipments and drugs get siphoned into fraudsters’ houses. Such a fraud further puts the impoverished Malawian who survives on less than 1 US dollar a day on a great disadvantage. Just because he or she cannot afford health services from private clinics, he or she dies of diseases that could have easily been cured.

The insurance industry is suffering the consequences of massive fraud. There have always been reports of staged fake accidents all in the interests of claiming money from insurance companies.

And as technology advances, so too have fraudsters grabbed it as an opportunity to make more money. The Director of United States Secret Service Ralph Basham says that Internet fraudsters, motivated by money and armed with sophisticated technology, pose an increased economic threat as they steal data from companies and industries.

With just a few keystrokes, online fraudsters can disrupt the economy of a nation and our poor nation must stand on guard. The fact that Malawi is too poor such that its industries cannot invest millions on security software to protect their computer systems makes them an easy target for fraudsters.

Howard Schmidt, a special adviser for cyberspace security during the first term of president George Bush, cautioned that Internet fraudsters are increasingly targeting less protected businesses. Such a change in tactics poses a great risk to struggling economies of poor countries like Malawi.

Fraud devastates economies. For instance, law enforcement agencies in the USA disrupted an online organized crime ring that spanned 8 US states and six countries. The ring had stolen 7 million credit card numbers, costing consumers and credit card companies 4.3 million US dollars.

Malawians who surf the Internet are prone to online fraud. In accordance with the Internet Fraud Advisory, a not for profit group based in Britain, the internet has become a paradise of money laundering fraud, lottery winner fraud, primer on internet fraud and fake job fraud. Fraudsters have also embarked on creating and publishing dating or match making websites.

Fraud, if unchecked, will devastate our economy through the grounding of industries, crippling of health services, sky-rocketing the unemployment rate. It is the hope of the nation that the Money Laundering Bill will be passed in the national assembly soon.