IN THE SPOT LIGHT – The Malagasy Sovereign Wealth Fund : Major irregularities in the management of public funds
The Independent Anti-Corruption Bureau (BIANCO) has uncovered serious irregularities in the management of the Malagasy Sovereign Wealth Fund (FSM), following an investigation initiated on the basis of transmission order from the Antananarivo Anti-Corruption Unit. Upon taking office in January 2026, the new head of the FSM reportedly carried out several large-scale financial operations in a context marked by the absence of a formal governance framework. Investigations revealed practices that violate public fund management rules, with a total estimated amount of 19.44 billion ariary.
The findings point to a management style characterized by informal organization and systematic circumvention of established procedures.
Overvalued vehicles and irregular acquisitions
Four vehicles, some of which were in advanced state of wear or even out of service, were purchased at clearly inflated prices for a total of 495 million ariary. These transactions were allegedly conducted through intermediaries close to the Director General, suggesting possible conflicts of interest. At the same time, purchases from dealerships were made without competitive bidding, in violation of transparency principles, particularly those applicable to sovereign wealth funds. These transactions, concluded based on simple quotations, amounted to 12.83 billion ariary. In light of the irregularities identified, the sales were canceled, funds reimbursed, and the vehicles returned.
A 5 billion ariary loan tainted by conflict of interest
The investigation also revealed the granting of a 5 billion ariary loan to a company linked to an FSM staff member, despite the company’s fragile financial situation. The arrangement highlights a clear conflict of interest, as the individual who facilitated the transaction was both a shareholder of the beneficiary company and a project officer within the FSM. Financial transfers amounting to several hundred million ariary were subsequently detected in favor of a senior official, without apparent justification.
Off-procedure spending on office furniture
Office furniture acquisitions, totaling nearly 150.6 million ariary, were carried out outside any regulatory framework, with some deliveries even suspended on the instructions of unauthorized individuals.
Cash withdrawals and unexplained transactions
Significant cash withdrawals made by cheque, without proper justification or traceability, were also identified, reinforcing suspicions of embezzlement of public funds. In the absence of an operational Board of Directors, the Acting Director General was required to limit actions to routine management. However, the operations undertaken clearly exceeded this scope.
Based on the evidence gathered, the acts may constitute offenses including embezzlement of public funds, abuse of office, conflict of interest, forgery and use of forged public documents, as well as money laundering. As part of efforts to recover illicit assets, BIANCO seized six (06) vehicles and froze bank accounts totaling more than 15.58 billion ariary.
Eight (08) individuals were brought before the Antananarivo Anti-Corruption Unit on April 3, 2026. Following their appearance, the investigating judge, in a decision issued on the morning of April 4, 2026, ordered the pre-trial detention of six (06) individuals at Tsiafahy prison and Antanimora central prison, while two (02) others were placed under judicial supervision pending trial.
This case highlights major governance failures in the management of a strategic state instrument and underscores the importance of adhering to principles of transparency, accountability, and good governance. It also illustrates the increased vigilance of the authorities of the Refoundation of the Republic in protecting public resources against the risks of malversation of publics fonds.