Why is K14.5 Billion Being Paid to Victoria Pharmaceuticals? Questions Arise Over Government Transaction
A payment of K14.5 billion authorized by Malawi’s Attorney General, Thabo Chakaka Nyirenda, to Victoria Pharmaceuticals Industry Limited has raised serious questions among governance and accountability watchdogs. The hefty sum, which has been approved for settlement by the government, comes with a series of unanswered questions: Why is the payment being made now? What is the justification for such a large amount? And is there transparency in how this payment was authorized?
The payment is reportedly linked to an outstanding debt of about $5.3 million (K9.3 billion) owed by the Central Medical Stores Trust (CMST) to Victoria Pharmaceuticals for the supply of pharmaceutical products in 2016. However, the payment amount has nearly doubled to K14.5 billion after adding interest and other charges, a detail that has sparked concern among civil society groups and watchdog organizations.
According to a communication dated August 23, 2024, from Nyirenda’s office, the total debt owed to Victoria Pharmaceuticals grew because of interest accrued over time. The agreed-upon interest rate was 12 percent on the U.S. dollar claim, while the Malawi kwacha portion would be subject to the Reserve Bank of Malawi’s policy rate. The communication further explains that the payment would be made in Malawi kwacha, converting the U.S. dollar debt to K14.5 billion at the current exchange rate of K1,750 to $1.
But for many, the rapid payment raises more questions than answers.
Lack of Transparency: A Key Concern
Gift Trapence, Chairperson of the Human Rights Defenders Coalition (HRDC), has expressed strong reservations about the payment. Trapence is calling for the government to explain why such a large sum is being paid to a pharmaceutical company—particularly without a clear and public explanation of the terms of the deal. “The payment is happening so quickly and without sufficient clarity. We are calling on the government to explain this transaction in detail to the public,” Trapence said. “If this is a legitimate transaction, there should be no reason to hide details from the public.”
The absence of key documentation, such as a court file, only fuels suspicions. Willy Kambwandila, Executive Director of the Centre for Social Accountability and Transparency (CSAT), has pointed out that the absence of a court file or any public record of a formal agreement between the parties raises a red flag. “Without a court file, how can we be sure that the payment is legitimate?” Kambwandila asked. “Government payments like these don’t usually happen so quickly, and it is deeply concerning that such a huge amount of public funds is being disbursed without proper oversight.”
Questions Over the Timing of the Payment
One of the most pressing questions is the timing of the payment. Why is the government settling this long-standing debt now, after years of delay? The payment of such a significant sum raises suspicions that there may be more to this deal than meets the eye.
The government’s usual bureaucracy and slow-moving processes are well-known, making the speed at which this payment is being processed all the more puzzling. “It’s unusual for the government to pay out such a large amount of money so quickly,” said Kambwandila. “Typically, payments like these take a long time to process, especially for something of this magnitude. The speed with which this has been settled raises concerns about possible behind-the-scenes influence or irregularities.”
Further complicating matters, the agreement appears to have been finalized only recently, with the Agreed Order dated August 12, 2024. This short window between the agreement and payment raises questions about whether the due diligence normally required for such large transactions has been bypassed in favor of expedience.
Is This an Attempt to Siphon Public Funds?
The sheer size of the payment has led some to suspect that this could be part of a scheme to siphon public funds under the guise of paying a legitimate debt. “Given the large amount of money involved, and the lack of a detailed explanation, this raises the question of whether taxpayers’ money is being misused,” said Kambwandila. “We know that the government is struggling with a variety of economic challenges, and yet this payment is being made without sufficient checks and balances.”
Both HRDC and CSAT have called on the Anti-Corruption Bureau (ACB) to investigate the matter and ensure that there is no corruption or fraud involved. “We are calling for the ACB to immediately launch an investigation into the circumstances surrounding this payment. If there is any wrongdoing, those responsible should be held accountable,” Trapence added.
The Need for Accountability
As Malawians demand answers, the public’s trust in the government is at stake. When significant sums of taxpayer money are at play, transparency, accountability, and due process are essential. Unfortunately, the lack of clarity surrounding this K14.5 billion payment risks eroding public confidence in government institutions and their handling of public funds.
While the government and the Attorney General’s office have remained largely silent on the matter, there is mounting pressure for them to clarify the situation. Parliament has also indicated that it will be following up on the payment, with some MPs demanding that the matter be discussed in a full session to get to the bottom of what they describe as a suspicious transaction.
The unanswered questions about this payment are not just a matter of financial oversight—they are a test of the government’s commitment to transparency and accountability. As calls for investigation grow louder, the hope is that the truth will come to light, and any irregularities will be exposed and addressed. Until then, many are left wondering: Why is the government paying K14.5 billion to Victoria Pharmaceuticals, and what’s really behind this deal?
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