Government duped twice in 10 years

R

ecovering the K750 million the Malawi Government was recently defrauded in a fertiliser import deal with a UK-based firm may not be as easy as government wants us to believe.

In the past 10 years government has had two similar experiences. In 2012 and 2016, it lost K550 million in two contracts with Kenyan firms.  The money is yet to be recovered.

In an Auditor General’s report for the year ending June 30 2013, the Malawi Government paid $500 000 (K513 million) to a Kenyan law firm, Kairu Mbuthia and Kiingati Advocates, it engaged to oversee rehabilitation of Malawi Government property in Nairobi. However, the work was not done.

Reads the report: “It was observed that Mr. K Mbuthia through his letter Ref. No. 6/21/12 dated 29 June, 2012 addressed to the Secretary for Foreign Affairs and International Cooperation indicated that the contractor had partially completed works on the roof and other works at the official residence yet the contract agreement was actually signed on 19 September, 2012 and the contractor commenced the repair works at the site between September and October, 2012.”

The audit found that the company also rehabilitated Malawi Chancery in Nairobi at a cost of $197 892 when similar rehabilitation works years later, by another firm, cost $12 000.

In another incidence, in 2016, government through the Department of Civil Aviation paid a Kenyan company $48 000 (K49 million) to supply and install an elevator in the control tower at Kamuzu International Airport (KIA) after the first one malfunctioned.

But the contractor disappeared before doing any work and has not been traced to date.

In an interview on Wednesday, former Attorney General (AG) Kalekeni Kaphale, whose office was tasked to review the file on the contract, said he assigned a lawyer when he was leaving office to commence court action against the foreign company, adding that he had vetted the court documents.

But no one has so far been held accountable for the loss of the money in the two deals.

However, in a separate interview on Monday, Director of Public Prosecutions (DPP) Steven Kayuni disclosed that his office has started investigations into the failure by the undisclosed company to fix the elevator at KIA.

The DPP could not say how long the investigations will take but hinted that funds for the exercise have now been made available.

Asked why it has taken so long to begin litigation on the two Kenyan cases, the Attorney General Thabo Chakaka-Nyirenda said in an interview that there were several processes that were being undertaken.

He said he is worried with what he called “careless and incompetent” people who are not held accountable for the loss of the taxpayer’s money.

In an interview last week, procurement specialist Alinafe Banda-Malisawa said the K750 million fertiliser deal exposes weaknesses in the procurement processes.

She said under normal circumstances a risk assessment is supposed to be done before making upfront payment. She added that advance payment is more common in procurement of works than goods.

Banda-Malisawa said: “If it has to happen in goods then you need an advance payment guarantee as a security on your end. For procurement of works this is common because you use certificates but for procurement of goods I would say it is not a good practice. But if it happens there has to be an advance payment guarantee.”

On the possibility of Malawi Government reclaiming its money in the absence of the guarantee, the former Malawi Institute of Procurement and Supply president said it depends on what is stated in the contract.

In the statement issued last week, Ministry of Agriculture Principal Secretary Sandram Maweru said Smallholder Farmers Fertiliser Revolving Fund of Malawi (SFFRFM) had a contract with the United Kingdom-based company Barkaat Foods Limited to supply fertiliser for the 2022/23 Affordable Inputs Programme (AIP).

According to the statement, the company had a deal with the actual supplier Yara Limited UK for an initial 25 000 metric tonnes of fertiliser and demanded a commitment fee of $727 000 (about K750 000 000) to lock the price. The money was remitted through Ecobank but later the company failed to supply and consequently terminated the contract citing loss of the production line at Yara UK.

Said Chakaka-Nyirenda: “I am trying to collect the information on the UK transaction to be used to recover the $750 000. I am also working on recovering funds lost in 2012 and 2016.”

Former Justice and Constitutional Affairs minister Samuel Tembenu told Parliament in 2017 that when the Department of Civil Aviation acquired funding to replace the lift, it wanted to cooperate with the Japanese manufacturer Mitsubishi, but that it was the manufacturer who referred the department to an agent in Kenya and that’s how they ended up dealing with the company.

In 2018, Parliamentary Public Accounts Committee (PAC) members travelled to Nairobi as part of their inquiry into the management of public funds at the mission in Kenya, but have not yet provided an update on the outcome of their investigation.

Former PAC chairperson Alekeni Menyani, in an interview days after the Kenya trip, described the case as a ‘cartel’, but could not give more details, as doing so would jeopardise progress.