Malawi Government has filed a $15 million (about K26.2 billion) counterclaim against AUM Sugar and Allied Limited (AUM SAL) as compensation for alleged mismanagement and improper payments at Salima Sugar Company Limited (SSCL).
The counter-claim comes after AUM SAL, which sought arbitration from the same International Court of Arbitration (ICA), claimed a refund of $12 million (about K21 billion) from Green Belt Initiative Holdings Limited (GBIHL) as its alleged entire investment along with interest from the respective dates of receipt of the said funds by SSCL.
In a written response on Tuesday, Attorney General (AG) Frank Mbeta said the pleading stage is progressing and that a hearing of the matter is scheduled for early next year.
“Once the audit findings are tested before the tribunal, government will consider referring them. Any such action would apply only to people within our jurisdiction,” he said.
The matter dates back to March 2024 when AUM SAL took the issue to the International Court of Arbitration of the International Chamber of Commerce’s (ICC) Dispute Resolution Services after GBIHL, the parent company for Salima Sugar and GBI, terminated its August 27 2015 shareholding deal with AUM SAL in SSCL due to breach of contract.
A forensic audit found abuse at the sugar company, including that up to $30 million (about K52.5 billion) could not be accounted for, but AUM SAL described the audit, done by Audit Consult, as flawed.
Mbeta said his office, together with the forensic auditors, has reviewed the audit and financial records regarding alleged questionable invoices, related-party transactions and fund transfers, involving AUM SAL and several other local and international companies.
In 2024, Mbeta’s predecessor Thabo Chakaka-Nyirenda snubbed AUM SAL’s demand to review the forensic audit report.
Later that year, the High Court of Malawi Commercial Division directed that AUM SAL and GBIHL should proceed with the arbitration “without delay”.
AUM SAL is owned by Ulka Industries Pvt. Limited, an Indian company which holds 77.06 percent shares and Mother Dairy and Energy Farms owning the remaining 22.94 percent shares.
GBIHL and AUM SAL signed the shareholding agreement of the SSCL under the public private partnership venture wherein GBIHL held 40 percent shares whereas the Indian company held 60 percent.
SSCL was incorporated on October 22, 2015, under laws of Malawi and under the said agreement AUM SAL was required to contribute $17.1 million while GBIHL was to put in $11.4 million. Further, SSCL was to further take a loan of $43.6 million to complete the project.
