Tag Archives: botched East Bridge Fert Deal

Agriculture, Malawi

Chakwera must fire errand boy Sam Kawale for chronic AIP mess

MaraviPost

BLANTYRE-(MaraviPost)-Despite sacking the former Agriculture Minister Robin Lowe two years ago, Agriculture Inputs Program (AIP) still giving Malawians headaches with dubious deals.

When President Lazarus Chakwera appointed his errand boy Sam Kawale, some quarters of the society had much expectations that the program would be in safe hands but the case is different.

Errand boy Kawale has been caught in numerous shady deals more than Lowe.

But Chakwera has failed to act on Kawale’s incompetence.

Now, Malawi government is again in a mess with its fertiliser deal with East Bridge Limited.

The Romanian firm made an initial supply for which the government is failing to meet payment deadlines.

The company already has another consignment of 60,000 metric tonnes ready for shipping as part of meeting its contractual obligations.

But, amid these developments, the government has entered a deal with another supplier for similar amounts of fertiliser, which might suggest it has quietly abandoned East Bridge Limited.

Early last year, the government announced it had signed a fertiliser contract with East Bridge.

Initially, it emerged that the deal would see the Romanian firm supply 600, 000 tonnes of fertiliser to Malawi.

Later, the then Minister of Finance Sosten Gwengwe said Cabinet had recommended the halving of the quantities.

In that case, East Bridge would supply 300,000 tonnes of fertiliser in two batches of 150,000 tonnes each valued at $124.5 million each.

Malawi would pay back in form of produce.

In response to growing questions about how the deal flouted procurement procedures, in August last year, Minister of Agriculture Sam Kawale told Parliament that the government had suspended the deal.

He said his ministry was instead arranging to have the contract transferred to Smallholder Farmers Fertilizer Revolving Fund of Malawi (SFFRFM).

He made this announcement after Gwengwe and Reserve Bank of Malawi Governor Wilson Banda had written the International Monetary Fund (IMF) that the government would cancel the barter deal in order to recommit to following the appropriate public procurement procedures.

We now know that East Bridge supplied an initial 28,000 metric tonnes of fertiliser to SFFRFM.

But it has not received full payment, although it has also been planning to ship into the country another 60,000 metric tonnes.

However, it looks like government has jettisoned East Bridge, because it has entered another fertiliser deal with ‘His Highness Sheikh Ahmed Al-Qassimi’.

A letter dated May 27, 2024, from Richard Chikunkhuzeni, SFFRFM CEO to Secretary for Agriculture, reads:

“We would like to inform you that SFFRFM has received a revised offer from the Office of His Highness Sheikh Ahmed Al-Qassimi to supply 600,000 tonnes of fertiliser (300,000 tonnes Urea: 300,000 tonnes NPK).

“The revised term sheet has reduced the cash cover requirement from 120 percent to 100 percent as per attached email correspondence.”

Chikunkhuzeni said in the letter that the removal of the 20 percent would cost the bag at K65,000, lower than the K80,000 on the market.

“The transaction will also help to ease the country’s forex burden as the payment to the supplier will be in Malawi kwacha,” reads the letter.

Now, East Bridge is demanding K39.5 billion ($22.5 million) for breach of contract, loses and damages.

In a letter dated September, 20 2024 to Attorney General Thabo Chaka Nyirenda, the company demanded immediate payment of the money.

According to the letter, this is an outstanding balance for fertiliser supplied to the Malawi government on March 20, 2024.

“The agreement stipulated that the Smallholder Farmers Fertiliser Revolving Fund of Malawi (SFFRFM) would settle the amount with commodities of equivalent value or cash by June 14, 2024. However, this did not happen,” reads the letter from East Bridge’s lawyer, Chimwemwe Kalua.

The agreement further said that if SFFRFM failed to settle the amount by June 14, 2024, the government would pay the outstanding balance in cash immediately after that date.

Todate, neither SFFRFM nor the government has fulfilled their payment obligations.

As a result, East Bridge Estate SRL demands immediate payment of the outstanding sum plus collection fees of $3.3 million and interest on the outstanding sum at the statutory rate from March 20, 2024.

East Bridge warns that if the payment is not received in full, they will commence arbitration proceedings, seek specific performance of the agreement and claim damages for breach of contract or pursue other legal remedies available under Malawi law.

“Time is of the essence, and our client’s forbearance should not be construed as a waiver of any rights under the agreement or at law,” the letter further says.

The Attorney General’s office is responsible for advising the government and representing it in litigation.

In this case and in the previous letters that we have seen, the Attorney General responded, indicating that he was initiating plans for payment.

However, nothing has happened.

However, lawyer Kalua refused to speak to us.

But East Bridge’s Chief Executive Officer Haim Tzutziashvili said the firm has indeed put forward the demand letter to the Attorney General.

“We have the fertiliser which we already supplied and we have over 60,000 metric tonnes also ready for shipping.

“We even agreed to be paid in Kwacha if the farm produce are not ready. What we want is to continue with the contract,” Tzutziashvili said.

Both Attorney General (AG) Nyirenda and Kawale have also failed to give clear presponse on matter.

Source: Malawi News

Agriculture, Malawi

CDEDI suspects foul play on PAC withdrawn East Bridge fertilizers inquiry

Maravi Post Reporter

…. demands an audio and minutes for the meeting

By Iommie Chiwalo

BLANTYRE-(MaraviPost)-While other stakeholders have gone straight asking for resignation of Chairperson for Parliamentary Committee on Public Accounts (PAC), Center for Democracy and Economic Development Initiatives (CDEDI) has requested for audio and minutes where the committee agreed to withdraw public inquiry on the East Bridge Company.

In a letter that we have seen, signed by CDEDI Executive Director Sylvester Namiwa and addressed to Speaker Catherine Gotani-Hara says announcement made by the PAC Chairperson Mark Botoman, that his committee had called off the much awaited public inquiry into the infamous East Bridge fertilizer deal, has sparked a heated debate that has culminated into serious allegations of money exchanging hands.

Namiwa says in line with Access To Information (ATI) Act as well as the wording of section 12 subsection 1 (b) of the republican constitution, which states that all legal and political authority derives from the people of Malawi and shall be exercised to serve and protect their interests.

Mark Botomani stops East Bridge fertiliser deal

“We would like to believe that whatever was
discussed during the said meeting was in the best interest of the voters and taxpayers, hence we are not asking for too much.

CDEDI has since given the Speaker Catherine Gotani-Hara seven days to do the needful.

Namiwa has also demanded for the release of an audio and minutes as a way of extinguishing the current public suspicion that has been aggraveted by eleventh hour withdraw of the inquiry.

“CDEDI strongly believes that Malawians have a right to know what really transpired during the two hours meeting prior to the abrupt announcement. By making public the requested information, your office will not only demonstrate high levels of transparency and accountability, but such a gesture will put to rest the debate that has dominated the public discourse,” he said.

The CDEDI Executive Director has highlighted that it is irrefutable fact that Legislators are representatives of the people on one hand, and both the committee and plenary meetings of Parliament are public meetings on the other hand hence the demand for the audio and minutes for the meeting.

Meanwhile a grouping of some Civil Society Organizations are calling for the resignation of the PAC Chairperson Mark Botoman for sleeping on duty.

Kawale and Zamba

But Botoman argues that his committee consulted all the legal instruments before arriving at such a decision.

Still on his part, National Anti-Corruption Alliance Chairperson, Moses Mkandawire told the press in Mzuzu Wednesday on behalf of other non-state actors that by abandoning an inquiry of the Eastbridge Fertilizer deal PAC has failed in its oversight role.

The CSO’s have since called for an independent enquiry into PAC’s decision-making processes and also an immediate resignation of Botoman to ensure its effectiveness as well as efficiency.

PAC on Tuesday announced it has dropped an inquiry on the East Bridge Fertilizer company and Ministry of Agriculture deal after finding no proof that public funds were spent on the deal.

Agriculture, Malawi

Amateur leadership: Chakwera’s Tonse to cancel botched East Bridge Fert Deal

Maravi Post Author
LILONGWE-(MaraviPost)-President Lazarus Chakwera’s Tonse Alliance government is running out of ideas to address the ailing economy hunting Malawians since 2020. Chakwera’s inconsistency and amateurism in running state affairs continue to cost the nation heavily. This is testified by the current position of the International Monetary Fund (IMF) on a botched fertilizer procurement deal with Romanian firm East Bridge Estate. Eventually, Malawi tells the IMF that it will cancel the deal. In a Letter of Intent, dated June 30, 2023, to IMF Managing Director Kristalina Georgieva, Finance Minister Sosten Gwengwe and Reserve Bank of Malawi (RBM) Governor Wilson Banda says the barter deal to secure access to fertilizer in exchange for crops raised a number of governance concerns. Gwengwe and Banda note that Attorney General (AG) Thabo Chakaka Nyirenda advised that the deal be halted because the transaction was undertaken without the proper procurement and authorization procedures. “In light of this, we are taking all the necessary steps to nullify this deal and to avoid a recurrence of such incidences in the future. We also confirmed that the government has a manual repository of contracts (which are also recorded in Excel) and has made available to fund [IMF] staff a full repository of contracts that would give rise to actual or contingent external debt liabilities of the government and the RBM. “We recommit to following the appropriate public procurement procedures and adhering to the limits on contracting and guaranteeing non-concessional and concessional external debt set forth in the PMB [the Staff Monitored Program with Executive Board involvement]. We requested governance diagnostic technical assistance from fund staff to identify any weaknesses in regulation, legislation, and compliance,” the top officials say. Human Rights Defenders Coalition Chairperson Gift Trapence told the Daily Times that he was not surprised that the government is taking steps to halt the deal. Trapence said Malawians questioned the whole contract right from the beginning. “This is an embarrassment to the government. Government should show real commitment to issues of accountability and transparency and should make sure it adheres to procurement procedures to avoid loss of taxpayers’ money through lawsuits for careless decision-making,” Trapence said. On July 4, the Malawi Law Society (MLS) wrote the Office of the AG, Anti-Corruption Bureau (ACB), and the Director of Public Prosecutions (DPP) asking them to investigate the deal with East Bridge Estate. As part of the deal, Malawi is expected to pay back, in the form of produce, 250,000 metric tonnes (mt) of soya beans at US$528 per mt— which translates into US$132,000,000 (MK132 billion) — and 250,000mt of groundnuts at $725 per mt costing US$181,250,000 (about MK182 billion). MLS claimed in its letter that the deal flouted some of the country’s laws. MLS President Patrick Mpaka noted, in the letter, that there appears to be a violation of procurement and public finance management laws. “[There are violations of laws] starting with an apparent failure to obtain certification from the Minister of Finance that funds were available for the procurement, going through due diligence to initiation and conduct of procurement proceedings and ending with apparent illegitimacy of the signatures on the agreements,” it reads. In June this year, details emerged that the government had signed a US$124.5 million (MK125 billion) agreement with the Romanian company before its consultations with the ACB were finalized. It transpired that, in April this year, the Ministry of Agriculture wrote the ACB, asking it to conduct due diligence on the company but, before consultations between the ministry and the ACB were finalized, the government proceeded to sign the contract. Recently, government spokesperson Moses Kunkuyu defended the deal, saying Malawians should not be worried because no money will be paid before the product is supplied. Kunkuyu further said this is a commodity exchange deal where, after the company has supplied the fertilizer, the government is going to pay back using farm produce such as soya, maize, and other products. The overrated Agriculture Minister Sam Kawale was all over in media houses justifying the botched deal with Romanian firm East Bridge Estate. Source: Daily Times