LILONGWE-(MaraviPost) –Top government civil servants and politicians including former Speaker of National Assembly, Richard Msowoya, former vice President Khumbo Kachali, former Chief of Staff and operation at State house Peter Mukhito and former Foreign Minister Francis Kasaila are among beneficiaries in the infamous tractor gate.
This comes as ministry of Finance and Economic Affairs says the US$50 million (about MK50 billion) loan Malawi Government obtained from Exim Bank of India in 2011 to procure 177 tractors and other farming machinery has matured.
The ministry’s spokesperson Taurai Banda told the Nation Newspaper on Monday that the development means debt servicing has started and that the country is expected to pay about US$58 million (about MK58 billion) over 25 years to clear the loan.
“The loan has an average interest rate of 1.5 percent per annum. The loan has a repayment period of 25 years, including a grace period of 4 years.
“The loan is being serviced from the consolidated account of the Malawi Government, just like any other loan,” he said.
The farm equipment deal turned sour after it emerged that politically connected and other individuals benefitted from the equipment meant to promote agriculture mechanisation. Investigations by the Office of the Ombudsman found that most of the people who bought the equipment meant for hiring out to smallholder farmers got the same for a song.
But Banda said government recovered part of the money from the equipment dubbed as Tractorgate, saying the Ministry of Agriculture deposited the funds in government accounts.
He further said subsequent deductions are being made directly through the government payroll of each officer who bought the equipment.
“Of course, some tractors and shellers are still available and being accessed by farmers. The idea behind the facility was to assist in mechanisation of agriculture activities”.
“So, some tractors and shellers are available at various agriculture development divisions [ADDs] for hire by interested farmers at a fee which is contributing to agriculture productivity,” Banda said.
In an interview at the weekend, Ombudsman Grace Malera said her office is still following up on the Tractorgate case and that there is some progress in resolving issues that were raised in the Ombudsman’s report on the matter.
She said her office is following up on implementation of the directives in the matter. However, she said responsible authorities have achieve 80 percent compliance.
“When you look at our chart in terms of rate of compliance, the Tractorgate is actually one of the cases where the compliance went up all the way to 80 percent in terms of directives that were given,” said Malera.
In its 2020 report, the Office of the Ombudsman detailed how some of the tractors and other farm machinery bought using the $50 million facility were illegally sold to public officers and other farmers in total disregard of the country’s laws.
The sale was allegedly disguised as a routine public auction of government equipment and K143 million could not be traced after the auction. Out of 177 tractors, only 77 were distributed to ADDs across the country.
In the report, the Ombudsman asked the country’s prosecuting authorities to crack down on State procurement chiefs implicated in the scandal. Some of the Tractorgate beneficiaries were politically-linked individuals.
Malera said her office is encouraged with the progress that is being made to have the issues resolved on the matter.
“You will recall that there was a directive that the relevant ministries should issue an apology that was complied with. There were other administrative actions that government ministries, departments and agencies were supposed to do, that have since been complied with as well,” she said.
The Ombudsman’s report also called for an apology to the people of Malawi, which government belatedly issued following a court action.
Two senior public officials, notably the Secretary to the Treasury and Principal Secretary in the Ministry of Agriculture were later found in contempt of court for failing to adhere to some of the recommendations.
But exactly benefited from tractorgate?
In a 46 paged Office of the Ombudsman’s (OoO) report titled “The Present toiling, the future overburdened”, which is in our possession after it was released a week ago gives account on how the whole deal flopped and became a pray to politicians and civil servants.
The report gives a clear picture into allegations of maladministration and related irregularities on the purchase and disposal of farm machinery in 2010 under Export-Import (EXIM) Bank of India line of credit worth US$ 50 million.
About 177 tractors and 144 maize shellers bought for the use of small farmers were snapped up at nominal prices by government officials, in a scam allegedly disguised as a routine auction of government equipment.
The tractors, purchased for R740 000 each, were sold in 2014 for R100 000. The sale raised a paltry MK600-million (R12-million), meaning that the balance of the bank loan for the purchase of the tractors will be repaid by the Malawians’ taxpayers money.
Background
The US$ 50 million loan was secured as a result of one of the India/African Summit where the late and former President Bingu wa Mutharika negotiated which was meant for three purposes to finance cotton processing facilities (US$ 20 million), Green Belt Initiative (GBI)-US$15 million and One Village One Product (OVOP)-US$15 million
The funds were particularly intended to procure materials for construction of earth dams and canals such as excavators, motor graders, bulldozers, trippers and farm mechanization equipment including tractors, trailers, ridges, planters and rice threshers among other.
The loan was therefore taken from EXIM Bank under Loan (Authorization) Bill, 23 of 2010 which was passed in Malawi Parliament on December 8, 2010.
The funds were in the form of a line of credit advanced to the Malawi government to be repaid over a period of twenty years after a grace of period of five years.
From Parliamentary proceedings which approved this loan, it was clearly indicated that the funds intended to move Malawi from being rain fed reliant nation with ultimate aim of ensuring self-sufficient on food production.
Eventually, Malawian farmers would start appreciating the value of their work while turning the country into an exporting one other than importing nation.
Complaints
With the power the country’s supreme law of the land-constitution vested into the Office of Ombudsman (OoO) under section 123 (1) orders the agency to investigate any and all cases where it is alleged that a person has suffered an injustice or alleged instance of unfair treatment abuse of power by any organ or employee of the government.
Based on complaints the OoO received from farmers and a Member of Parliament (MP) between March and April 2016, prompted the office to institute an investigation on how government procured and disposed the tractors and allied implements.
Malawian farmers were promised accessibility of the tractors which eventually landed into few individuals contrary to its initial and legal purpose.
On the legal aspect, Parliamentary proceedings for passing this bill was done in hasty manner thereby not giving enough time for scrutiny
The loan was obtained for the benefit of the agriculture sector which is the country’s backbone hence majority of Malawians would be affected.
How did the deal flop?
According the report Ministry of Agriculture contracted Apollo International to procure the machinery including the tractors. But tendering procedures on identification of Apollo for this exercise was floated as the ministry failed to produce minutes and tender document to OoO.
The ministry connived with Apollo to procure the machinery contravening the condition of the loan agreement that the equipment had to be bought from a company registered from India.
The ministry imposed itself a procurement entity which raised so many questions what kind of expertise had in procuring such machinery and to whose authority it acted upon.
Soon after the farm machinery arrived in the country including 177 tractors and allied implements, 90 trailers, 144 maize Sheller’s and 48 seed-cum-fertilizer applicators worthy US$9 million, the ministry changed tone on the initial distribution plan to Agriculture Development Division (ADDs) and stallholder farmers selling the equipment to commercial farmers.
The Ministry’s Internal Procurement Committee (IPC) comprising civil servants developed a concept paper titled, “Tractors and other farm machinery ownership scheme”, outlined a different plan of how the 100 out 177 tractors would be sold.
The concept defended its shift from the loan condition stating that in order to maximize the use of the equipment the Ministry decided to loan out some machinery to capable individuals, associations, cooperatives or small to medium scale farmers and civil servants.
The paper went further stated that the machinery would be loaned out civil servants and associations or cooperatives in the recovery period of six and four years respectively.
And it added that the loan will be issued out at the cost of the equipment and small to medium scale farms owners and, will access the equipment through the leasing and asset facility offered by commercial banks.
In selection of beneficiaries, the concept stated that National Farmers’ Association of Malawi (NASFAM) and Farmers Union of Malawi (FUM) will identify and recommend farmers or groups to the ministry for the tractor loan scheme and that the two organizations had committed themselves for the loan recovery.
On the other hand, the ministry was responsible for identification of civil servants, individual farm owners and specific commodity associations or cooperatives.
Surprisingly, from 2012 to April 2013 Ministry of Agriculture (MoA) failed to work within the concept paper until it was reminded to sell the tractors through Cabinet Paper Ref No. CAB7/11 dated April 22, 2013.
The cabinet paper directed that the tractors should be disposed of forthwith by selling them on loan or cash basis to bonafide Malawian commercial farmers in all districts in the country.
“Cabinet observed that the 100 tractors and allied implements were stating idle at the Plant and Vehicle Hire Organization (PVHO) and that any further delay in utilizing them could result in appreciable deterioration, engine cease and economic loss to government.
“The Honorable MoA and Minister of Local Government and Rural Development should as a matter of urgency instruct District Commissioners and Managers of ADDs to jointly prepare a list of eligible and bonafide Malawian commercial farmers who may be interested in acquiring the tractors for use and submit the list to cabinet for consideration and approval”, commanded the cabinet paper.
By departing from the intent of the Loan Authorization Bill and selling the machinery to commercial farmers, the Executive Arm of government acted contrary to the dictates of the law.
Disposal and sale of the tractors
According to the report on Management of Tractors and Purchased by government for Smallholder Farmers drafted by MoA, 76 tractors were allocated to ADDs against 77 and other 31 were given to government institutions and departments within the sector. And 10 out of 31 tractors were handed to Green Belt Initiative (GBI) which presently six out of ten are operational.
With respect to the selling of the tractors to Malawians, adverts were put in the local newspapers on various dates such as October 1, 2013, September 26, 2014 and March 27, 2015 inviting interested individuals and groups of farmers to buy the tractors.
According to purchasing list of individuals and commercial farmers benefited from the deal which IPC compiled included its own committee members (IPC) including the chairperson bought the tractors.
The IPC maladministration in the whole deal contravened Section 19 of the Procurement Act that demands any person who is sitting in that committee and acquire an interest in a matter that is to be determined, needs to declare their interest as rescue themselves and are not to take part in the deliberations.
The Act further states that failure to a bide by this provision will result in a fine of MK50,000 and two years’ imprisonment with hard labor.
Despite also code of conduct and ethics for public servant’s experts to avoid conflict of interests, none in the committee declared their interest to buy the tractors.
Tractors’ sale proceeds and accessibility
So far, MoA has failed to furnish with the total amount of loan collected from the tractors sales only giving the OoO General Receipts (GR) as deposit slip for Reserve Bank account in respect of some payments for the sale of the tractor both by cash and cheques from different banks.
With respect to the pricing of the tractors, the price value was different and below, and paid in local currency Malawi Kwacha though the machinery was bought in US Dollars.
For those civil servants who bought the machinery using a loan, are being deducted from their salaries and deposited into government Account Number 1.
However, smallholder farmers’ access to tractors through ADDs remains a challenge due to frequent breakdown, high seasonal demand and lack trained tractor operators.
Sadly, there is general poor performance of the machinery, pieces and services particularly supplied by Apollo International Which MoA gave the tender.
The materials which Apollo tendered are said to be manufactured using archaic technology, problematic and earn extra costs when in use.
Tractors beneficiaries
According to OoO Annex, there are 68 beneficiaries including top civil servants, politicians, business tycoons and commercial farmers which ignited eye blows on the whole deal that only few individuals benefited from it leaving the whole population in dark when all in all Malawians will be responsible for the repaying the loans as its bounded by the law.
Some notable politicians benefited in this infamous tractor gate including Minister of Foreign Affairs Kasayira, Msowoya, Former Malawi Congress Party (MCP) lawmaker, Rhino Chiphiko,Khumbo Kachali.
On other hand top civil servants includes State House Chief of Staff and Operation officer Peter Mukhitho (former Inspector General of Police), Rashid Khama Mtelela (Office of the President and Cabinet), Dr. W. Lipita, (MoA), Ben Botolo (Ministry of Mines), Bright Kumwembe (MoA), Dr. Godfrey Ching’oma (MoA), Ivy Luhanga (MoA), Dr. Benesi (Chitedze Research Station), Peter Simbani (Ministry of Finance), Ronnie Phiri (Ministry of Education) Samuel Madula (Ministry of Sport) among others.
While business tycoons including Mulli Enterprises, T. Nathukwa of Beata Investment, Misheck Esau of CDH Investment Bank, and Wuli Trading Company also benefited from the deal.
Office of Ombudsman’s wipe and remedial action on the deal
Therefore, by going through the whole process from the loan acquisition to the disposal of the tractors, the OoO fault government for maladministration and injustice to the people of Malawi.
In accordance to Section 126 of the Malawi Constitution the OoO took a remedial action with recommendation that those diverted the whole authorization loan bill be accountable to Malawians within 30 days from the date the report was issued.
Key recommendation be effected including; “Principal Secretary of Ministry of Finance should apologies to Malawians for buying archaic technology equipment which some remain idle and deteriorating at PVHES thus unnecessarily indebting Malawians. The apology should unequivocal and through Press Release to run in two daily newspapers and two radios and TV stations (one public and private) for three consecutive weeks.
“The officials who were members of IPC presided over the sale of the farm machinery and benefited from the sale should be prosecuted in accordance with the Procurement Act.
“MoA should confiscate the tractor which has been personalized by Tanato Anderson from Liwalika Village and allocated to its nearest ADD.
“MoA should give account of to country of how much has been collected from the sale of the farm machinery against how much is supposed to be collected.
“National Audit Office should audit the three India lines of credit by June 31, 2017”, ordered the Ombudsman, Martha Chizuma-Mwangonde dated October 13, 2016.
Conclusion
It’s a wish of every taxpayer that those botched the deal are brought to book with totality complying the Office of Ombudsman orders and recommendation to prevent the future recurrence of the same.
In the end the tractors will not outlive the loan repayment period resulting next generation subjected to loans that they neither nor their ancestors benefited from. The present generation is tailing on the farms while the future overburdened for nothing.
