Failed arms deal cost govt K15bn

The Democratic Progressive Party (DPP) administration has paid Paramount Group over $34 million (about K15 billion) of the K58 billion contracts the  Joyce Banda regime initiated with the South African arms supplier, Nation on Sunday has learnt.

Finance, Economic Planning and Development Minister Goodall Gondwe disclosed this after Nation on Sunday last week revealed that government rescinded its decision to cancel the K58 billion (US$130.3million) deals with Paramount.

Attorney General (AG) Kalekeni Kaphale also confirmed last week the decision to renegotiate the deal, almost a year after government announced the deals were “abrogated”.

But speaking on Monday, Gondwe also said a total of $110 million (worth of contracts have been cancelled since September last year when the new administration started reviewing the contracts.

He confirmed that the decision not to cancel all the contracts with Africa’s biggest arms manufacturer was taken shortly after the initial announcement that the deals were cancelled.

Efforts to speak to Paramount Group liaison officer for Malawi, Cyrus Miles, on the matter proved futile as of Thursday.

But according to Gondwe, the $110 million (around K49 billion) worth of contracts include weaponry yet to be supplied or manufactured, but which the current administration no longer needs.

The paid $34 million is for military orders already delivered or specifically being manufactured already at the request of the administration and Gondwe said the renegotiated deals are now on payment upon delivery basis unlike the dumped previous credit supply arrangement.

“One year ago, what we did was to cancel what we call a suppliers credit, they give you things and you don’t pay for it. We don’t borrow money to pay for it, but you pay the supplier in instalments,” said Gondwe.

But Gondwe insisted that the initial decision to cancel the deals was right, adding that the International Monetary Fund (IMF) also raised similar concerns on the costs of the procurement ordered at a time the country was struggling economically.

“It was too much. At the time we were cancelling it, I thought that was going to be it. I thought we were going to fight them. I thought we were going to go to court and it was all cancelled.

“The amount was $143 million (K63.6 billion), according to what I see. We cancelled that, but they had already delivered some of the things [equipment] and they had manufactured some of the things. The total amount of the things delivered and manufactured was $34 million.  They were all military goods.

“The two [consignments cost] together were $34 million and we agreed that we were going to renegotiate for these things only. This is why your paper said why is Gondwe talking about cancelling, the other one [Attorney General] is talking about negotiations. The negotiations are only for these suppliers agreement,” said Gondwe.

He said while there was no lawsuit from the arms supplier, government realised that it had an obligation to pay the company after discovering that some of the weaponry, including six patrol boats, had been delivered.

He said other ordered equipment was being manufactured specifically for Malawi.

“They were very kind [Paramount] and very civilised. We found that some things had already arrived in Malawi, including some six boats and they were things which were being manufactured for us only which we really had to pay for,” said Gondwe.

He said government, despite facing financial challenges, has already paid all the money for the delivered goods.