LILONGWE-(MaraviPost)-The opposition Malawi Congress Party (MCP) guru Dawn Gowa Nyasulu, Managing Director of Nyasa Hills Ltd faces is under fire receiving an advance payment of MK200 million from Salima Sugar Company to supply fertilizer, which he has failed to deliver.
Source told this publication that Nyasulu shared part of the money with his associate, Wester Kosamu, Salima Sugar’s Executive Secretary.
This comes as Malawians were later told Salima Sugar required a government bailout, effectively draining taxpayers’ money.
Meanwhile, authorities say every tambala will be recovered to ensure Malawians enjoy the benefits of their resources, as calls grow for accountability and punishment of those implicated.
Efforts to get feedback on the matter from both Kosamu and Nyasulu proved futile for several attempts.
Salima Sugar Company has officially commenced its 2025 sugar production season, a development that is expected to ease the current scarcity of sugar in local retail outlets across Malawi.
The company’s Executive Chairman, Wester Kosamu, made the announcement on Monday during a tour of the company’s premises by Minister of Agriculture, Sam Kawale.
Kosamu disclosed that Salima Sugar Company is projected to produce 22,000 metric tons of sugar this year.
He emphasized that Malawians should begin to see an increased supply of sugar in the market starting next week Monday, as production gains momentum.
The Executive Chairman expressed optimism that the company’s timely intervention will significantly contribute to stabilizing the market, addressing concerns from both retailers and consumers.
During the visit, Minister Sam Kawale hailed the start of the sugar production season as a crucial step towards resolving the persistent sugar shortages that have affected many parts of the country.
Kawale expressed confidence that the increased production at Salima Sugar will help regulate sugar prices, making the commodity more accessible to ordinary Malawians.
He reaffirmed the government’s commitment to supporting the sustained production of sugar and encouraged the company to continue expanding its operations.
The Agriculture Minister said the government views Salima Sugar’s growth as vital to national food security and economic stability, especially in the agro-processing sector.
As the company begins this year’s operations, hopes are high that Salima Sugar’s efforts will offer long-term solutions to the country’s sugar supply challenges.
LILONGWE-(MaraviPost)-President Lazarus Chakwera’s Tonse Alliance government, through the Green Belt Authority, has terminated its shareholder agreement with an Indian company, Aum Sugar and Allied, for Salima Sugar Company operations.
In a letter by the Green Belt Authority to the Indian company says the decision was reached at an extraordinary shareholder meeting on December 6 following a breach of contract by the Indian company.
The letter signed by Green Belt Authority Chief Executive Officer Eric Chidzungu observes that the Indian Company was not timely paying its equity contribution and that it has been defrauding the company.
The Greenbelt Authority has terminated the shareholders’ agreement between AUM Sugar and Allied Limited and GBI Holdings Limited dated 27th August 2015.
“The clause mentioned above is to the effect that: The Agreement can be terminated at any time by either JV Partner for good cause, such as causes mentioned below In particular, but without limitation, this Agreement may be terminated for good cause, which means and includes by a JV Partner, if the other JV Partner does not pay any amount payable by it under or in connection with this Agreement and such amount remains unpaid after the expiry of one hundred and eighty (180) days after such JV Partner in default received a notice by the Company or by the other JV Partner requiring such payment to be made.
The Green Belt Authority has therefore given the Indian shareholders a 90-day notice to prepare for the new arrangement and, by default, sell its shares to the government at a reasonable and agreeable price.
The termination of the shareholder agreement follows forensic audit results conducted at the company recently and it is per Section 12(3) of the Shareholders Agreement.
BLANTYRE-(MaraviPost)-The Centre for Democracy and Economic Development Initiatives (CDEDI) has demanded prompt action by giving the Financial Intelligence Authority (FIA) seven days to probe entities and individuals named as sources of loans where former Salima Sugar Company Chairman obtained without collateral as indicated in the Illicit Financial Flows (IFF) uncovered through a recent audit report.
In a letter addressed to FIA Chief Jean Phillipo Priminta, CDEDI Executive Director Sylvester Namiwa says the probe is just a necessary stitch in time considering that according to the leaked audit report, the transactions were done without collateral and the said entities are not registered as financial lending institutions.
“This provides reasonable ground to suspect acts of money laundering and in a worst-case scenario, what can stop someone from thinking that some of the funds are proceeds for a crime given that such huge sums of money were carried as cash,” queries Namiwa.
He said this is a matter of national interest and that prompt action is needed before his organization decides to take the next course of action.
Namiwa says, though established with good intentions from public stakes through the Greenbelt Authority, almost eight years down the line, Malawians are yet to reap the fruits of Salima Sugar Company only to learn of the massive financial plunder.
The CDEDI Chief has therefore argued that Salima Sugar Company as a public entity, Malawians have a right to know the unknown persons who gave out MK191 million to its former Chairman Sherieesh Betigiri.
Namiwa says the action from FIA is more necessary now because what has happened is contrary to the initial aim of establishing Salima Sugar Company which was an attempt to bring in competition with the expectation to serve the common good for the majority poor, currently struggling to access the basic commodity.
The recent forensic report on Equity Contribution, Loan Capital, and Utilization shows that being a summary of the source of Malawi Kwacha (MK) 3.741 Billion AUM SAL equity contribution that was meant to be paid in United States Dollars (US$D) shows that Pacific Limited get loan amounting to MK1.8 billion on September 21, 2021.
It also shows that Mount Meru Millers Ltd obtained MK1 billion on October 18, 2021, and that Mphoto Enterprises got its share of MK600,000 on September 1, 2022.
As if that is not enough, the audit report states that Rajash Salien (R Mart) got MK25 million on September 8, 2022, and that the same R Mart Investments received another money amounting to MK75 million on September 8, 2022.
Meanwhile, CDEDI is still pursuing the sugar prices must fall campaign that culminated in the historic public inquiry into the sugar production and pricing in Malawi by the Parliamentary Committee on Trade and Industry, led by its Chairperson, Hon Paul Nkhoma, between Thursday, July 13, 2023, and Friday, July 14, 2023, where several stakeholders in the sugar value chain presented their submissions.
The sugar Prices Must Fall campaign, apart from forcing the government to reduce sugar prices, is premised on a notion that neither the government nor cane growers in Chikwawa, Salima, and Nkhota-Kota are benefiting from the sugar industry, known for its huge profits year in year out.
Following what transpired during the submissions at the two-day inquiry, CDEDI on August 26, wrote the Malawi Revenue Authority (MRA) requesting the tax collecting body to probe Illovo Sugar Malawi on Transfer-pricing allegations.
The letter was followed by an in-camera handing over ceremony of MK36 billion tax by Illovo Sugar Company to the MRA.
The audit report has exposed politicians, senior government officials, and business magnets involved in Illicit financial flows.
A total of MK114 billion (US$72) million was borrowed from India and local banks with part of it raised from shareholders equity to finance the set-up of Salima Sugar company, but the money trail, just like its scarce sugar, is as murky as its set up.
Salima Sugar Company To save the project, the government which had 40 percent of the shareholding, borrowed MK12 billion and later an additional K6 billion to pay for the land and sugar-growing operations. The loans, with interests, now stand roughly at MK25 billion.
The government says the loans have not been paid, and associates of the company’s ousted Chairman claim all loans could be repaid within 2 years.
It is difficult to find the truth about the company, but Finance Minister Sosten Gwengwe and Salima Sugar Chairperson Wester Kosamu say the reforms that are being introduced will see Malawians gain, unlike the previous arrangement that has been running it between 2016 and January 2023.
Producing 25,000 tonnes each year valued at K27 billion at today’s exchange rate, neither the sugar nor profits have been seen in Malawi, yet the people of Malawi continue to service the loan from India while a few people continue to enjoy the benefits of the plant.
In the beginning- India pumped US$35 million, Malawi borrowed US$25 million (K25 billion). Malawi’s debt profile includes US$35 million debt indicating that was borrowed from India to set up the Salima Sugar factory. However, the story is hazy as to where the money went, who ate it, and what it was used for. This was around 2011, 2012 and 2013.
On 15th August 2016 opening the Salima Sugar factory, then President Peter Mutharika publicly said the initial money was stolen by the previous government and his administration had to find resources to save the company.
The initial loan discussions were started under the Late President Bingu wa Mutharika’s administration and concluded in 2012 and 2013 under the regime of President Joyce Banda.
It was not clear which “previous government” the President referred to in 2016.
“US$35 million was used to pay for the factory. It advertised for partners to run the company in 2013/14 and Aum Sugar was given the contract. The money from India was paid to the Malawi Government and not to Aum Sugar,” an associate of Aum Sugar explained in an exclusive interview granted to The Investigator Magazine.
The total money for the project is, therefore, US$35 million from the Government of India, CDH Bank loans worth US$25 million to GBA, and US$12 million raised as equity by Aum Sugar out of the agreed US$17 million. Roughly around US$72 million was pumped into the company.
It is how and where this US72 million was used or repaid that has seen its former chairperson arrested and allegations of wild parties with taxpayers’ funds made.
We could not trace the exact dates the funds went into the Treasury, but it could be estimated to be around 2012 for Indian loans and around 2016 for Malawian loans.
Aum Sugar was given the contract in 2015 after the factory had already been built. Malawi Government- Green Belt Authority and Aum Sugar form partnership
In 2014, the Government identified Aum Sugar, a partnership from India to set up and run the Salima Sugar Company.
The shareholding was 60% to 40 percent in favor of Aum Sugar, whose main partner with US$4 million worth of shares in Aum Sugar was Shirieesh Betgiri, who assumed the role of Executive Chairman.
Shirieesh Betgiri the then Executive Chairman of the GBA According to sources and the GBA chairman Kosamu, the agreement included raising US$17 million which was to be operations capital, but the company only managed to raise US$12 million until this year when the shareholding had to be restructured to reflect the real contributions.
The GBA has its own 2500 hectares, of which at least 1200 hectares have been developed and kept by Salima Sugar. The GBA was the recipient of a K25 billion loan from the banks and not the Salima Sugar Company, claim the sources.
“There is a forensic audit which we instituted to establish exactly where the company is. All those questions will be answered. As a Board, just like all Malawians, we all have questions, once we get the report, we can push reforms that will make sense that this project benefits the country,” said Kosamu in a telephone interview.
There is a forensic audit that we instituted to establish exactly where the company is – Kosamu “The government was supposed to guarantee loans to Salima Sugar, but they changed and brought in GBA which had 2500 hectares of their own. Salima Sugar developed 1200 hectares of the GBA’s hectarage and the company has its own 500 hectares,” explained our source.
The Salima Sugar Company claims it invested US$12 million into the 500 hectares with the construction of six dams as Lake Malawi is 9 kilometers from the plantations’ six underground pipes.
The GBA states that the US$25 million was used to set up the 1200 hectares of land and start the operations of the company.
There is no certification of the costs, and the anticipated audit report could reveal the real costs.
MK25 billion loans, profit or losses?
The company started actual sugar production and its output is now estimated at 25,000 tonnes per year which is from over 130 million tons of sugar cane, according to insiders.
The company sells all its sugar locally, though it is mainly in 50-kilogram bags, which is why it is rarely found on the Malawi market, said another source.
“The company has never declared any profit. In 2021 it made K24 billion, but they declared that they had issues with the production, and nothing was declared. You are looking at a whole K24 billion,” said a source.
Again, depending on who you ask, there is a dispute if the company is making a profit or loss.
Malawi Government detains Indian nationals working without permits at Salima Sugar Factory – Photo credit: Grace Kapatuka
“It is true that no profit or dividends has ever been declared. But as to why and why, I would be wrong to assume anything. Let us wait for the audit report to make an intelligent comment,” said Kosamu.
Our insider claimed that Betgiri ran the show and that he could explain where the money realized from the sale ended up.
The former chairman’s backer at the company claims the money went straight into banks to repay the loans.
“In 2016 the interest rates were very high to 2018, they ranged from 38 percent to 25 percent. All payments were made at CDH Bank.
The bank kept 60% and gave Salima Sugar 40% for operations based on invoices. With high interests, the loans had soured, but they could be repaid within three years and the company can declare profits,” he said.
However, this is disputed as the loans, paid to GBA, have a life span of around 10 years and at K27 billion a year and even at 60 percent of K24 billion sales being held by the bank, the K18 billion loan should have been settled in a few years.
“If CDH has been taking or holding 60 percent from the sales they should be taking at least K10 billion a year, the K25 billion loan should have been retired within two or three years. It does not make sense that six years later the company is boggled down by these loans,” said our financial expert.
The outstanding loans questions could not be cleared, and the two versions contradict each other, leaving Malawians to ask, where and who got the money and where does the Salima Sugar money really go.
The Investigator Magazine will be tracking the payments and bank statements of the company it has received.
Did Betgiri borrow US$300 million?
Betgiri, former Chairman of the company was arrested by the Malawi Revenue Authority, working with the Financial Intelligence Unit and others claiming that he had borrowed US$300 million in Dubai against the company.
Gift Trapence, Chairperson of the Human Rights Defenders Coalition, had written to the FIA and other prosecution agencies making several serious allegations, that as published in local media.
The company’s worth is less than US$150 million and there is no indication that the former chairman could have been trusted to borrow “US$300 million” against the company.
“We will have to wait for court to get the details, it should be interesting,” said his associate.
On June 21, 2023, Platform for Investigative Journalism reported that Betgiri was arrested by Police after he established a clandestine bank account in Dubai under the name of Salima Sugar Company.
The Investigator Magazine has traced a company registered in Dubai by the same name, but not a bank account, and a former GBA Board member explained to us that nothing came out of the proposed financing from Dubai.
“Just like Bridgin Foundation joke to the President and Government. There was a promise that someone could finance Salima Sugar’s expansion at a low rate. They said the company should open a company and the money will be paid. Betgiri was given go ahead but the company disappeared, so no money was paid, no bank account opened and GBA was aware of all of this,” said the board member who pleaded for strict anonymity.
Police spokesman Peter Kalaya, according to the PIJ and Shirieesh Betgiri lawyer Wapona Kita confirmed the arrest and was remanded at Lumbadzi Police Station in Lilongwe before he was released on bail.
Among the charges include the alleged US$300 million financing and charges of fraud other than false pretences, obtaining execution of a security by false pretence, trustees fraudulently disposing of trust property, and money laundering.
No Malawians, but 150 Indians employed
The start of the company sent shock waves to many agriculture graduates as Indian nationals were shipped into the country and took up most of the top jobs to run the company. The Board agreed.
In July 2020, then-Immigration Minister Richard Chimwendo Banda visited the company and expressed shock that there were a lot of Indians at the factory doing jobs that Malawians could do.
The following day Department of Immigration arrested 67 Indian nationals for working at the factory without a permit and later the numbers were reduced to 50 after discussions. Others allege the matter died down after “a tithe” was collected.
Workers of the company, all Indians The company sources said there is no Sugar training factory in Malawi, despite Illovo operating in the country for ages.
“The agreement was reached, they were reduced to 50, then around 30 could remain with Malawians taking over after training. Otherwise, these came to fill the skills gap,” said an official at the company.
Who is buying and selling Sugar, where is Salima Sugar
The issue of who is selling Salima sugar, two versions again emerge, from the old Board and the new Board adding more mystery to the whole saga.
Our source claimed the company has had 1-kilogram packaging machines for a while, while the other side disputes this, saying it was selling its sugar in 50-kilogram bags.
The other claim is that Malawians of Asian origin are the only ones who had distribution contracts that denied indigenous nationals a share of the Salima Sugar business.
“Only one or two were black Malawians. The rest operated like a cartel,” charged our source.
Kosamu said his Board which took over in January cancelled all contracts and is now processing new bids.
“I can’t say much about the past. The future is that people will be able to find Salima Sugar at Nkhamenya as well as in Chitipa or Nsanje, the new contracts are being processed to rectify whatever was wrong with the past,” he said.
Apart from the Aum Sugar, The Investigator Magazine has established that the Secretary to the President and Cabinet (then called Chief Secretary), Secretary to the Treasury, Principal Secretary for the Ministry of Agriculture, and the Green Belt Authority have been board members since inception.
This raises questions as to what role these Board members played as public representatives during the past six years, as resources were being poured into the company.
Both past and present occupants of the position were not willing to engage in what their role was when billions were being borrowed and spent.
“It’s a difficult question. That institution is very political. Very political. Whatever is happening has politics to it. Asking civil servants what happened is like asking them to hang themselves,” said a former Principal Secretary.
He added that the fact that the Office of the President and Cabinet was part of the Board, whatever happened might have had the blessing of the highest echelons of power.
Trips to Dubai, India
Whilst Begtiri associates claim the Board members have never been to Dubai but only India, our sources gave us a trail of several Salima Sugar officials who have been frequenting the United Arab Emirates.
“There are officials that kept traveling to Dubai at one point. Some of them are deceased. Even senior government officials at the rank of SPC went to Dubai once or twice,” claimed our source saying the other one was somewhere in 2021.
Kosamu said since January none of the Government officials have traveled outside Malawi on the Salima Sugar business.
“Not a Minister, not a PS, or even myself have been to Dubai on the company business. If it was happening it was before us,” he charged.
The former team disputed the Dubai allegations stating that the trips were made to India four times to meet other shareholders.
“Being senior government officials necessary approvals were obtained. The company paid for the travel and nothing else,” said the official.
Can Kosamu deliver the change Malawians need?
“We are pushing reforms, we have managed to increase government shareholding from 40 percent to 49 percent and reduce the old ownership to 51 percent. The shareholders agreed the company needs more of Malawian hence my appointment as Executive Chairman to see transition,” said the Kosamu.
He said the nine percent was converted from the US$5 million that Aum Sugar failed to raise to meet its US$17 million obligation.
Further changes include expansion of production, availability of sugar in local market, and improvement in the quality of services.
“Very soon Malawians will see Salima sugar everywhere. We are committed to improving the sector. We will start by making sure the company benefits Malawians,” he promised.
What next for Salima Sugar?
Will Malawians ever know the truth, this depends on the audit said to be almost ready and who is implicated in the scam.
The Investigator Magazine has been informed of a possible MK1 billion that an individual borrowed from a private company and paid with sugar.
BLANTYRE-(MaraviPost)-As people still facing sugar shortage in shops, one of the county’s sugar manufacturing companies Salima Sugar Company Limited says its product will be on Malawi market in the next two to three weeks.
In a statement, the company says is aware of the sugar scarcity in the market.
The company says the date of the production commencement which is decided by the end of rainy season with a grace period for the soil to dry and the serial ripening of the cane crop.
Salima Sugar ready in next two weeks
“However, to address the severe shortages that have hit hard the country, we will commence sugar production by 15th May, 2022. This will help us plan the distribution to cover the country by end of May, 2022,” reads the statement in part.
Meanwhile, the company has urged the its customers and consumers to exercise patience as it is on its work to make the product be available in the market.
Salima Sugar Company crushes about 250 thousand metric tonnes of cane yearly which produces a range of 25 thousand to 30 thousand metric tonnes of sugar.
The company has 4,000 hectares of land and currently, 1,000 hectares of land is under cultivation.
The farm and factory are located in the shores of Lake Malawi and flood and pivot irrigation is used for sugarcane crop.
SALIMA-(MaraviPost)-The Local staff at the government partly-owned Salima Sugar Company have petitioned management to address a number of concerns which include lack of formal contracts for staff, salary disparities.
The majority 60 percent of shareholding is held by the Government of India.
The petition we have seen lists a number of concerns ranging from failure by the company to provide safety equipment, compensation to five Malawian workers who had body parts severed by machinery in the line of duty and sharing accommodation between married male and female employees.
The petition is dated October 30 2017 and signed by 51 members of staff. In the petition the staff gave management up to January 1 2018 to address the concerns or face unspecified action.
Reads the petition in part: ‘We are forced to share a room which is three metres by four metres between two adults. In terms of privacy, there is no logic in two adults of the same sex sharing a room as one is deprived of his privacy.
“Sometimes married couples are forced to share a room with an unmarried adult which is uncalled for, according to Malawian culture and values.”
“Safety is highly compromised such that as we are writing this, more than five people have lost their body parts due to non-availability of Personal Protective Equipment (PPE). To date, these injured employees have not been compensated or given better treatment apart from an Indian worker who was flown abroad for better treatment.”
Henri Njoloma, chief executive officer of Green Belt Initiative (GBI) which is Malawi government’s organ holding 40 percent stakes in the joint venture company, admitted to Nation Newspaper in a telephone interview having been served with the petition.
Njoloma said the company was being run by shareholders a situation which was creating some kind of conflict at times.
“Yes, I am aware of the petition in question which reached our office. As part of the board running the company, we held preliminary discussions on the matter. We duly referred the matter to Ministry of Labour.
“The problem we have is that the company is in its formative stage hence it does not have a fully fledged executive management. But we hope things will improve as we are now recruiting a CEO and other senior management positions,” said Njoloma
The clashes between staff and management emerged mid last year when local staff blamed management for importing labourers from India whom they [Malawian staff] claimed were being remunerated better than locals doing the same job.
The Malawi Congress of Trade Unions (MCTU) president Luther Mambala blamed the company for the manner it was handling staff, saying it was a violation of the country’s labour laws and breach of constitutional obligations.
“The staff are being kept in dormitories as if they are in a boarding school. That is not acceptable. These people have families and their privacy should not be compromised. The mere fact that the staff at the company are not offered formal contracts clearly spelling out terms and conditions and not putting them on a pension scheme is a gross violation of the laws of this country.”
The new Pension Act stipulates that pension schemes are mandatory.
“By paying staff by hand not through banks, the government is losing out on tax. How is paye (Pay As You Earn) deducted from the salaries,”? quelled Mambala.
He said his organisation would task the labour union for sugarcane companies to engage the company management on its behalf in order to make a case for the staff who are facing challenges.
Minister of Labour and Manpower Development Francis Kasaila however denied any knowledge on the matter and referred to labour commissioner Hlalerwayo Nyangulu.
Nyangulu in response said: “I am aware of this issue because it was indeed referred to my office last year. I tasked the district labour officer in Salima to investigate the issues. But we are yet to get a report as to what exactly is happening.
“The problem is that sometimes workers seem not to know where to report issues but had it been that it was reported to our district office we would have known the issues earlier. We will, therefore, get in touch with the district office to find out the situation on the ground.”
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