Govt terminates Salima Sugar deal
The Greenbelt Authority (GBA) has terminated its shareholding deal with AUM Sugar and Allied Limited of India in Salima Sugar Company Limited due to breach of contract.
In a letter dated December 19 2023 signed by GBA chief executive officer Eric Dudley Chidzungu, said the agreement had been breached as revealed by results of a recent forensic audit.
He said the termination, which is in accordance with Section 12(3) of the shareholders agreement, was decided at a meeting held on December 6 this year in Lilongwe.
Reads the letter in part: “The shareholding agreement has been breached as per results of the Forensic Audit Report which has revealed that despite not paying in time your equity contribution you have also been defrauding the company by raising equity using company resources.”
The development comes barely a day after The Nation reported that the Ministry of Trade and Industry and other government agencies dismissed an appeal from the Human Rights Defenders Coalition (HRDC) to institute an investigation into alleged abuse of funds in the contract.
The ministry argued that it already conducted the same and that an audit into the allegations did not provide any evidence of wrongdoing or corrupt practices, money laundering and tax evasion.
GBA said the contract clause indicates that the agreement could have been terminated at any time by either joint venture (JV) partner for a good cause including a default of any payment after the expiry of 180 days of notice to make such payment or a breach of contract terms and conditions.
“If the other JV partner commits a breach or default of any or all terms and conditions of this agreement and such breach is not cured by the defaulting JV partner within 90 days of the non-defaulting JV partner has given written notice of the breach and required remedy,” reads the letter.
The government also indicates that valuation has been done to verify the equity contributions of both parties with that of AUM Sugar and Allied Limited standing at 12 percent.
During a press briefing held on 6 December 2023, Attorney General Thabo Chakaka Nyirenda acknowledged that $35 million (about K40 billion) that was invested in the venture could not be accounted for.
He vowed to recover the lost money, adding that a team of investigators, prosecutors, and legal experts was already on the ground to arrest the culprits.
Following the constitution of Greenbelt Initiative, the Malawi Government established Salima Sugar Company, but due to lack of the requisite technical know-how to operate the sugar processing plant, it sought the JV partner to operate and manage the project in Salima under a public-private partnership.
AUM Sugar and Allied Limited was identified as a potential partner for the project.
