Malawi: Karim Batatawala Facing Tax Crime Charges, 'Cashgate' At Immigration Department

10 January 2019

Controversial Blantyre-based business mogul Abdul Karim Batatawala is being pursued by law enforcing agencies on tax crimes charges and fraud in relation to government procurement deals.

Malawi Revenue Authority (MRA) had previously obtained warrant of arrests from Blantyre Chief Resident Magistrate, which indicate that between 2009 and 2014 three Batatawala brothers (Abdul, Aslam and Mahomed), "knowingly concealed and suppressed" information on sales amounting to over K30 billion with a view to "fraudulently evade value-added tax (VAT)" contrary to Section 49(1) of the VAT Act Chapter 42:02 of the Laws of Malawi.

Section 97 of the Taxation Act empowers any taxpayer aggrieved by MRA's decision, determination or assessment of taxes to appeal to the authority's commissioner general who may then amend or disallow it.

Sources at Fiscal Police say Batatawala is being suspected to have also corruptly interfered with the MRA attempts to administer tax laws.

Karim Batatawala is also being investigated to have corruptly enabled extension of contract with Malawi Immigration Department No. IM/01/85 dated March 22 2010 through his Africa Commercial Agency to supply and delivery of Immigration uniform and other accessories for K4 796 129 880 (K4 billion).

The contract stipulated that the delivery and payments will be "gradual and spread over a period of several years in accordance with the uniform needs of the Department of Immigration."

The contract was signed by Elvis Thodi in the capacity of Chief Immigration Officer. Thodi is now director general of the State spy agency.

And in a memorandum to minister of homeland security, the incumbent Chief Immigration Officer Masauko Medi which is dated July 17 2018 said Batatawalala through his African Commodity Agency had a contract of K4 billion dated 22 March 2010 and another contract dated March 26 2012 worth K5 billion and that [in a Cashgate style] "time went on without the supplier delivering the uniform as requested by the department."

Medi informed the Minister that Immigration Department received communication from African Commodities dated July 31 2017 requesting clearance of uniform and accessories imported and another letter from Reliance Trading Company to request MRA for duty free clearance of goods imported under contract.

Immigration Department wrote Attorney General for legal opinion on the matter " for deliveries did not comply with the provision of the contract", Medi informed the minister.

He said the Attorney General guided to reject the goods based on "lapse of time and the supplier went to the High Court to proceed with court case" against Attorney General.

Medi said the Attorney General started negotiations with the supplier in order for government not to lose out much but during one of the consultations meeting the supplier produced a worksheet outlining total value of goods already arrived in Malawi at K46 billion while value of goods not arrived were at K7 billion.

He said the figures "alarmed the office of the Attorney General" and expanded the consultation group incorporating Auditor General, Secretary to Treasury and of Secretary of Homeland Security.

The letter informed that the stakeholders meeting agreed to inform President Peter Mutharika in writing on the matter through Minister of Justice for his "knowledge and guidance as the amount claimed by the supplier is beyond the 2018/19 Budget provision for Immigration Department."

Corruption has worsened in Malawi since 2014, according to the Corruption Perceptions Index published by Transparency International, the anti-graft advocacy group.

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