Anti Corruption Bureau Halts Purchase of National Revenue Assurance System in Malawi

Journalists have been shown a recent letter from the Deputy Director of Malawi’s Anti Corruption Bureau (ACB) that ordered the Director General of the Malawi Communications Regulatory Authority (MACRA) to stop the procurement of a new national revenue assurance system whilst ACB investigates suspected offences under the country’s Corrupt Practices Act. A spokesperson for MACRA said they would comply with the order.

No details have been given about the suspected crimes but it is known six potential suppliers responded to the international competitive bidding process advertised by MACRA. Malawi’s Times Group reports that the evidence ACB is seeking to obtain includes copies of the paperwork submitted by each of the businesses that responded to MACRA’s announcement as well as documents created by the regulator in the process of evaluating each proposal.

MACRA already has a revenue assurance system to monitor communications within Malawi. That system is officially known as the Consolidated ICT Regulatory Management System (CIRMS) although critics dubbed it the ‘spy machine’ because of the widespread belief that it would be used for surveillance of phone users. CIRMS equipment was originally purchased from US firm Agilis in 2010 at a cost of USD6mn but lengthy legal battles about the possible infringement of privacy rights meant the implementation of CIRMS was only finally cleared by the Supreme Court of Appeal in June 2017. Times Group reports a further USD20mn was spent on CIRMS software updates after its initial purchase.

MACRA’s spokesperson indicated that one motivation for replacing CIRMS with a new revenue assurance system is the desire to track mobile money transactions. Mobile money services were first introduced in Malawi in 2012. There are now approximately 8 million users of mobile money in Malawi, out of a total population of 19 million.

Malawi ranks 110 out of 180 countries measured using Transparency International’s Corruption Perceptions Index. Efforts were made to tackle corruption during the noughties with the result that Malawi is now considered less corrupt than many of its East African neighbors. Malawi’s current perceived corruption score of 35 is mediocre in global terms but it represents a 5-point improvement on the previous annual score, which had fallen during 10 years of relative stagnation. Malawian President Lazarus Chakwera recently launched a nationwide anti-corruption campaign with the slogan: “corruption is our biggest enemy and is not welcome here”.

MACRA’s reputation was dented earlier this year when ACB issued an arrest warrant for Godfrey Itaye, a former Director General of MACRA. Itaye was said to have owed his appointment to nepotism and he was accused of violating the Corrupt Practices Act whilst running the country’s comms regulator. One of those charges was that he recruited an unqualified individual to manage the revenue assurance work done by the regulator. Itaye was released on bail and the date of his trial has not yet been set.

It is too soon to tell if ACB has genuine grounds for believing one or more vendors attempted to bribe employees of MACRA or whether this is a superficial exercise designed to restore public confidence in lagging efforts to tackle corruption. However, it does signal appreciation of the genuine risk of corruption when countries purchase and implement national systems that are designed to monitor networks and report on how millions of people use their phones. Methodical steps should always be taken to mitigate these risks.

The technical requirements for a national revenue assurance system should be clearly stated and openly published, and there should be legal, procedural and technological controls to limit the data that is captured, processed and reported by these systems. An open and transparent process should be used to obtain competitive tenders from a wide range of potential suppliers and the evaluation and selection of the winner should be conducted by a group of people using criteria that were defined in advance. Finally, the full cost of buying and running the system should be made public and the financial benefits delivered by the system should be both circulated publicly and checked annually by independent auditors. Only then will the public be able to hold governments and regulators to account for spending on systems that are always bought on the promise of generating a huge return on investment, rarely show any demonstrable returns, and which pose a threat to privacy if used without constraints.

Eric Priezkalns
Eric Priezkalns
Eric is the Editor of Commsrisk. Look here for more about the history of Commsrisk and the role played by Eric.

Eric is also the Chief Executive of the Risk & Assurance Group (RAG), a global association of professionals working in risk management and business assurance for communications providers.

Previously Eric was Director of Risk Management for Qatar Telecom and he has worked with Cable & Wireless, T‑Mobile, Sky, Worldcom and other telcos. He was lead author of Revenue Assurance: Expert Opinions for Communications Providers, published by CRC Press. He is a qualified chartered accountant, with degrees in information systems, and in mathematics and philosophy.