Malawi's President Joyce Banda named a former World Bank economist as the new finance minister on Tuesday, five days after dissolving her cabinet amid a massive government corruption scandal.

Maxwell Mkwezalamba, who has been a commissioner for economic affairs at the African Union in Addis Ababa for the past nine years, was named as replacement to axed Ken Lipenga.

All the other ministers except four were reinstated in a new 26-member cabinet, according to an announcement on state television.

Amid reports that some of her cabinet ministers were lining their pockets from state coffers in the deeply impoverished country, Banda last Thursday fired her entire cabinet.

Ten government employees have been arrested over the past three weeks on suspicion of swindling more than $3 million (2.2 million euros) from state coffers in what has been dubbed the Capital Hill cash-gate scandal, named after the seat of government.

Last month the budget director in the finance ministry survived an assassination attempt on the eve of revealing the government corruption ring.

Since the scandal emerged the European Union has threatened to suspend aid and Norway has halted funds, calling on the president to rapidly deal with rampant corruption.

Malawi relies on foreign aid to bankroll around 40 percent of its national budget.

Political analyst Ernest Thindwa said that Lipenga's removal was "expected because he was at the centre of fraud and cooked revenue figures" at the treasury.

A presidential official who did not want to be named said it would have been "political suicide" for Banda to keep the finance minister.

"Lipenga was the head of a ministry embroiled in a fraud and corruption scandal. The head of that ministry would have to be sacrificed," said the official.

It was not immediately clear why Banda dropped former justice minister, Ralph Kasambara, a well-known lawyer and one-time attorney general.

Banda however retained most of the faces from the old cabinet, reshuffling some in the new line-up expanded from 25.

Consumer activist John Kapito said he would have "loved to see more ministers whose ministries were involved in the fraud go."

"We are aware more ministries are involved in corruption and fraud. The whole system has been abused by politicians," said Kapito, who heads the Consumers Association of Malawi.


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