EU demands return of aid funds

Malawi, battling to cope with food shortages, has been asked to return at least US $8 million in development aid because it allegedly mismanaged the money. The head of the European Union (EU) delegation in Malawi, Wiepke van der Goot, told IRIN on Thursday that the EU was demanding its money back because it was used for what he termed as "ineligible expenditure". "After an independent audit of expenses of various projects, it was concluded that there were amounts incorrectly spent. The Malawian government has promised these amounts will be returned so as to ensure that the EU continues to support the country," Van der Goot said. The money was initially meant for a road construction project in Blantyre but, according to a joint EU/Malawi government audit, the money was either used for other unapproved projects or was misappropriated. Van der Goot added that the EU was aware of the critical role development aid played in the southern African nation, but that further financial mismanagement could force the EU to suspend budgetary support. Malawi's Finance Minister Friday Jumbe denied that the government had misused EU funds, saying that development funds had been disbursed "appropriately". "The refund is not as a result of any fraudulent activity. After an external audit, the EU concluded that it was not satisfied with the tender process of one of the road reconstruction projects. We believed we had done everything in a transparent way, however, we have no choice but to repay the money if we are to receive further aid," Jumbe said. Six million of the US $8 million will be deposited into a joint EU/ Malawi account, which will be used for developmental projects in the country. The Malawian government will have to pay the remaining US $2 million directly to the EU. In June, Britain, the EU and the United States suspended US $22 million in development aid to Malawi because of alleged widespread corruption and economic mismanagement. Earlier this year the Danish government also suspended aid to the country alleging political intolerance and corruption. Malawi relies on foreign donors to fund much of its national budget.