Admarc dragged to court over contract

Financially-struggling Agricultural Marketing and Development Corporation (Admarc) has been dragged to court over its cancellation of a contract to sell Dalitso General Suppliers Limited, maize valued at K2.05 billion.

In May this year, Admarc, penned an agreement to sell Dalitso 10 000 metric tonnes of white maize at K204 per kilogramme, according to the copy of contract signed by the parastatals’ suspended general manager Rhino Chiphiko, which we have seen

However, in June, Admarc cancelled the contract when Dalitso had already paid for 6 500 metric tonnes. The parastatal attributed the decision to a Ministry of Agriculture’s resolution to suspend the sale of maize by Admarc until consolidation of the country’s maize requirements.

Our calculations show that the volumes which had already been paid for cost K1.365 billion and the remaining tonnage of 3 500, at K210 per kilogramme, was valued at K650 million.

“We have noted that you paid for 6 500mt of the total tonnage of 10 000mt pursuant to the contract of sale of Malawi white maize…We are, therefore, hereby notifying you that you can proceed to collect the 6 180mt balance. 

“We are also giving you seven days’ notice of cancellation of the rest of the contract,” reads the letter signed by acting general manager Jerome Chim’gonda Nkhoma.

Meanwhile, Dalitso has obtained an injunction stopping Admarc from effecting the contract cancellation which it argues has resulted in loss of income on its part.

Judge Michael Mtambo granted the injunction on August 16 2022 in the High Court of Malawi, Commercial Division. The case registration number is commercial division 313 of 2022. 

The Lilongwe-based company, according to court documents in our possession, has stated that Admarc supplied 7 000mt contrary to the 6 500 which it paid for as indicated in the contract cancellation letter.

“The cancellation of the contract without following the provisions of clause 16 of the agreement requiring proof of prohibition from the government of Malawi raises serious questions.

“Due to the defendant’s breach of contract, the claimant has suffered loss of 3 000 metric tonnes of maize legitimately expected to be purchased from the defendant which has resulted in the claimant not being able to meet its supply demands by its customer resulting in loss of income,” argues Dalitso’s lawyer McHaven Ngwata in his court application

Dalitso also suspects that Admarc terminated the contract so it can sell the maize to other clients at a higher price.

“As it stands now, the defendant has begun selling the maize to the public at a higher price of K300/kg. I verily believe that the purported cancellation was merely meant to increase the price from K210/kg and the defendant is hiding under the government prohibition,” reads the court submission.

Admarc’s spokesperson Agness Ndovie promised to respond to our questionnaire but had not done so as we went to press.

Admarc’s key maize sale deals have, since the turn of the year, been locked in controversy.

The parastatal attracted strong condemnation when it signed with a Zimbabwean company Grain Millers Association of Zimbabwe to supply maize valued at $22 million.

The contract signed by Admarc board chairperson Alexander Kusamba Dzonzi and Grain Millers Association on May 20 2022, Admarc was expected to supply 100 000 metric tonnes by July 2023.

The contract stipulates that the Zimbabwean company would collect 33 000mt of maize every month.

However, the deal was put on hold amid allegations that the board flouted contract procedures such as letting the board chairperson to sign the deal on behalf of Admarc, instead of an official from management.

Other officials such as leader of opposition in the National Assembly Nankhumwa opposed the move to export the maize when the country was facing hunger.