AfDB halts payment in K5bn textbooks deal

Dust is yet to settle on the multi-billion kwacha textbooks contract between the Ministry of Education and a local firm as the African Development Bank (AfDB) has written Treasury to stop payment to the firm until investigations are concluded.

The development comes on the heels of a Nation on Sunday story that revealed that a publisher was holding on to books meant for the local firm Inspired Technology Consultants (ICTC) over allegations of a fraudulent bank guarantee letter from the consolidator.

Just two weeks ago, the High Court in Lilongwe also ordered the Anti-Corruption Bureau (ACB) to investigate how ICTC won the tender against the successful bidder TradeWings Limited.

In a letter dated February 17 2018, addressed to Secretary to Treasury, which Nation on Sunday has seen, the bank has ordered government not to make further payment to ICTC until investigations have come to a logical conclusion.

“As you are aware, between August and December 2017, the Internal Integrity and Corruption Committee of the African Development Bank took an investigation into allegations of the qualification of the supplier, Inspired Computer Technology Consultants (ICTC), in the context of the above referred protection of basic service programme.

“As you are further aware, the report was referred to the Director General of the Anti-Corruption Bureau [ACB] of the Republic of Malawi and to the government on December 19. Pursuant to … general conditions applicable to protocol of agreement for grants for African Development Bank, the general condition, you are hereby notified that as of the date of this notice and until further notice, and any further payment to ICTC must be stopped and all appropriate steps should be taken to protect the grant resources until the conclusion of the investigation undertaken by the ACB,” reads part of the letter.

The letter also warns government that failure to comply with this notice and order will lead to a total refund of the grant, a situation which may have serious implication on the fragile economy.

“Please take note that in case the bank’s requirements indicate that the above are not complied with, the bank will have no other option but to seek an immediate and full refund of the grant pursuant to Section 504 of the general condition. Additionally, considering the adverse media coverage and publicity on this matter, the government is requested to issue a press statement within a week of the date of this notice confirming that AfDB has completed its investigation into allegations of fraudulent practices by ICTC and that the case was referred to ACB and the government for further investigation”.

In compliance, Secretary to Treasury Ben Botolo, a fortnight ago issued a press statement which indicated that AfDB had completed its investigations and that the matter was now under ACB.

In an interview  with Nation on Sunday, Botolo confirmed receiving instructions from AfDB not to make any payment to ICTC before conclusion of the ACB investigations, but he refused to take further questions.

“It is true I have received the letter from the bank and we are complying with the set conditions. But I will not make any more comment because the issue is under investigation and if you need more information about the tender, check with Ministry of Education,” he said.

But, while Botolo sounded mean with information, other sources familiar with the issue say there is anxiety in government ranks because of the likelihood of AfDB asking for refund of the money.

“The bank’s investigations have already established wrongdoing in the way the contract was executed. And should the same position be confirmed by ACB, we are bound to pay back the bank. And this will have serious consequences; at the same time we will sacrifice the donor confidence. AfDB is among the few who are providing direct budget support so we needed to tread carefully,” said a source who refused to be named due to the sensitivity of the issue at hand.

But when asked about the fear of refunding the bank, Botolo maintained that it will be too early to make conclusions.

“My hands are tied. I cannot say much about that until investigations are concluded, then we will hear from the bank. What I have now is just an instruction not to make further payment until investigations are concluded. Let us wait and see what will happen after investigations,” he said.

Ministry of Education, Science and Technology spokesperson Lindiwe Chide said they are not aware of the payment stop order from AfDB. She asked for more time to find out.

Chide, however, said the ministry is aware of the ongoing investigation on the matter.

But, in a telephone interview, ICTC managing director Jane Nthakomwa expressed surprise with what she called ‘donor interference’ in an internal matter.

According to her, ICTC has a contract with the Malawi Government, and not the donor (AfDB).

“Our competitors have used every means to frustrate this contract, including using the bank. AfDB need not interfere; let the Malawi Government handle this issue. Why should they stop payment? We know this is a battle against us, but I can assure you, we procedurally acquired this contract following all the steps.

“Sadly, we are a Malawian company fought by international companies which would like to monopolise the business and they are doing every trick to frustrate our effort,” said Nthakomwa.

In 2015, as part of direct budget support, AfDB disbursed to Malawi $30 million (about K22 billion) under a Protection of Basic Service Programme.

The funding was split across sectors, which included health and education. Under the education sector, $9 million was allocated for procurement of junior secondary school textbooks—out of which $7 million (about K5 billion) was earmarked for ICTC to supply books to Central and Southern Region schools while other suppliers were to focus on the Northern Region.

The investigations, and the ongoing battles of this contract will likely further delay the delivery of books which were supposed to be done by the beginning of the first term—last September, according to sources. About 50 percent of the books are yet to be delivered as some publishers are refusing to release them due to some misunderstanding.