The scandal could spell trouble for President Banda
It is the biggest financial scandal in Malawi's history. Known as "cashgate", it has affected the country's relations with donors and caused outrage among Malawians. And with elections in May this year, the scandal could cost President Joyce Banda and her People's Party votes, writes the BBC's Chakuchanya Harawa.
At the centre of the scandal is a computer-based financial information storage system.
Some government officials have allegedly been exploiting a loophole in the system to divert millions from government coffers.
It is estimated that up to $250m (£150m) may have been lost through alleged fraudulent payments to businessmen for services that were not rendered.
According to a report in the local media, an audit by managers of the financial system has established that records of some transactions carried out between July and September 2013 were deleted.
Allegations of the massive looting of government money became public following the shooting of the finance ministry's then budget director Paul Mphwiyo in September 2013.
Just days before, a junior civil servant was allegedly found with bales of cash totalling more than $300,000 in the boot of his car.
More cash was confiscated from some civil servants' homes and car boots.
'Crisis of confidence'
The country's main donors were infuriated.
They have withheld $150m pending further investigation into the scandal.
Malawi is one of the world's poorest countries and is reliant on donor funding
Up to 40% of Malawi's annual budget is donor-funded.
The EU ambassador to Malawi, Alexander Baum, told the BBC: "It is a crisis of confidence, and unless there is transparency and everybody has the feeling and trust that the crisis has been addressed with full determination, confidence will not return."
But it is not all doom and gloom for the government.
The IMF, which had been withholding funding for the same reason, has just decided to give nearly $20m to the country.
A government preliminary report looking into the alleged fraud, carried in conjunction with British experts, has now been completed although it has not been made public.
Police have since impounded vehicles, houses, apartments and office buildings belonging to those suspected of involvement with "cashgate".
The Director of Public Prosecutions, Bruno Kalemba, told the BBC: "People have to be afraid of government money. In a country like ours, the needs are enormous and to imagine that just a few people were able to get their hands on this much money is quite discomforting and unpatriotic."
With the start of the trial this week of two of the 70 people charged so far, many will be hoping that more revelations will come into the open.
But while the legal battles are being fought in the courts, on the political front cashgate could become a major issue in the forthcoming elections.
'Scandalous'
It is already dominating campaign rhetoric.
The opposition has criticised the government's handling of the scandal, portraying the current administration as corrupt.
Many Malawians have been shocked by the allegations
President Banda argues that she initiated appropriate steps, including investigating, apprehending and prosecuting suspects as soon as she became aware of the allegations.
Some have linked the scandal to the president, saying her party was trying to raise funds for the May election campaign.
Her office described the allegations as "scandalous and baseless".
Some of the top names facing charges were until recently senior officials of the ruling party.
Sacked Justice Minister Ralph Kasambala, who has been charged with the attempted murder of the former budget director, has told a magistrate he wants President Banda, her sister and two other senior officials to be his witnesses when his trial starts.
Another former ruling party executive committee member and businessman has been charged with theft and money-laundering.
It is alleged that his company pocketed $6.5m for services not rendered. Both deny the charges.
The financial management system was adopted in 2005 by the late Bingu wa Mutharika administration.
President Banda has suggested that the looting may have started as far back as 2010 following a directive by the former president that banks should honour all government cheques without asking questions.
Ms Banda became president in 2012 following the sudden death of Mr Mutharika; she had been vice-president although she had been fired from the then ruling party and had formed her own party.
For the moment, the political effects of the trial are not not clear - the scandal could well hurt both Ms Banda's People's Party and Mr Mutharika's Democratic Progressive Party (DPP), possibly allowing another party to gain ground.
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