“Corruption is subjective, but fraud is not”

So it’s about time for an update on Mr Ltombi Kawana, the chairman of the microfinance organisation I am consulting, who was asked to take forced leave in light of corruption charges one month ago.

The charges against him, made by several of his employees, accused him of making loans to relatives and employees and, in certain cases, making multiple loans to the same person under slightly different names. Auditors funded by the Swedish government (who also fund the microfinance institute of which he is CEO) were brought in to check these claims and in due course he has been cleared of all accusations. According to the auditors, who are pretty ruthless, he's clean.

As I said in my post about him a little while ago, I was desperately hoping this would happen. Or in other words, I was hoping he was innocent – because I definitely like and trust the guy, and it would have been a bit of a blow to my idealism if he’d turned out to be stealing from the very cause we are trying to help.

It turns out that the claims made against him were largely made up, but there were a couple of interesting exceptions. Loans HAD been made his sister, but he had markedly redirected the authorisations of these loans so that he did not bias their issuance. In addition, a loan that he had supposedly issued to his secretary (illegal) turned out to be issued to someone completely different, who happened to have an identical name (not illegal). It turns out that the newspaper which initially published news of his suspension definitely sensationalised the case.

Another point of interest, although legally irrelevant, is that Mr Kawana had been recruited from Citibank, after having worked there as an Anti-Fraud officer for several years. After becoming CEO of Pride Microfinance, he identified several employees who he suspected were taking bribes from real customers and fraudulently issuing loans to fake customers. It was these same employees, now under the spotlight themselves, who had tried to frame him with corruption charges - but not before they tried to poison him (I’m serious).

Last year, after he kicked up a fuss about missing money in the company, an assassination attempt was made on him through the use of a local poison in his coffee – this was carefully orchestrated...his secretary was bribed to call in sick so that the aforementioned employees could get access to the coffee that she is usually asked to make. This may seem very far fetched, but ask the doctor who dealt with Mr Kawana’s case at the hospital that day, and you will soon realise that creative methods such as this are not uncommon in this country. In fact, just yesterday i tried some local Zambian cuisine in the canteen opposite my office and was momentarily convinced that it contained a deadly and unnatural substance; but after some consideration realised that it merely tasted like shit. Another phenomenon that is not uncommon in this country.

Mr Kawana, due to be reinstated tomorrow, is now reconsidering whether he wants to spend any more time as CEO of Pride. I suspect it won’t be long before he resigns, and adopts a job that doesn’t carry quite the same threats to his life and career. Sadly, that means he will no longer be Chairman of the Association of Microfinance Institutes, and I may have to finish my project with somebody else. But before he moves on, he has some work to finish: “I don’t care what happens to me, but I want to make sure the people who are stealing money from Pride aren’t allowed to get away with it. Anyone can make claims of corruption on anyone else, they can make something up and people will believe it, but I have real paper evidence concerning these employees. And Nishant, let me tell you something: corruption is subjective, but fraud is not.”

P.s. As I’m sure you know, there’s another leader of an altogether different development financial institution, also hired for the job on an anti-corruption mandate, who has recently been accused of backhand dealings. Unlike Ltombi Kawana, however, Paul Wolfowitz hasn’t been cleared of charges – in fact he’s admitted his sins publicly. Evidently size doesn’t matter…whether it’s micro lending or world banking, one thing is clear: handling aid money is a dirty business.