The Peter Mutharika administration over the past year paid back a loan which a non-existent firm called Sterling Timber International received from the now sold Malawi Savings Bank (MSB) with the help of Finance Minister Goodall Gondwe.
The company secured the loan from MSB in 2011 to build a timber processing factory in the north but the industrial unit was never set up. To receive the loan, Sterling Timber got the backing of Minister of Finance Goodall Gondwe who was also roped in as a director of the firm.
Gondwe confirmed in 2014 that he lobbied for the loan but said he no longer had any connection with Sterling.
But reports show that Sterling’s K1.4 billion loan was one of the toxic loans government settled after selling 75 percent of its in MSB shares to FDH Financial Holdings Limited.
The company’s name however does not appear on the list of 13 bailed out debtors which government released. This has happened while Gondwe who was instrumental in securing the loan is heading the Ministry of Finance.
When asked to clarify the exclusion of Sterling on the companies listed as beneficiaries of the debt relief, Gondwe reacted angrily.
“Don’t ask me that as if you are my boss. What is your problem?” he said.
Sterling which was the brainchild of the Timber Millers’ Cooperative Union was launched in February 2011 to add export value to pine cut in the 53,500ha Viphya plantation in Mzimba. The union which comprises 400 small millers held a 63% stake in the company.
The plan was for the union to supply raw timber to the factory, which would export finished products to the United Arab Emirates, South Africa and east Africa.
The millers’ union however withdrew its support for the venture in 2014 after realising that the money for the factory had been misappropriated.