Ministry probes tobacco fraud claims

Government and one of the country’s major tobacco buyers, Alliance One, are investigating claims that scores of contracted farmers failed to sell their tobacco after non-contracted farmers fraudulently sold theirs to the company.

In a telephone interview, both the Minister of Agriculture Joseph Mwanamvekha and Tobacco Control Commission (TCC) chief executive officer Kaisi Sadala confirmed the matter.

Some uncontracted tobacco is dubiously
finding its way to the floors

“I can confirm that we are aware of the issue and the complaints of fraud. In fact, we learnt about it during our outreach programmes. We have since written the company (Alliance One) to investigate the issue. These are worrying developments, and that is why we need an investigation to sort it out once and for all,” said Sadala, in an interview with Nation on Sunday.

According to sources, non-contracted farmers allegedly used counterfeit barcodes, which the system could not detect.

The sources said the company was surprised to see growers bringing more tobacco bales after it had bought almost its target.

“These barcodes are likely to have been produced within the system. Meaning when the merchant thought it was buying tobacco from its contracted farmers, it was actually buying from other unknown sources who connived with insiders to have duplicate barcodes.

“The insiders may have deliberately delayed to issue barcodes to real beneficiaries so that they benefit their clients,” said a source.

In a telephone interview on Friday, Alliance One managing director Hugh Saunders admitted receiving complaints from farmers, saying they have also instituted an investigation in collaboration with police.

He indicated that some employees are already facing disciplinary action over the issue. He added that they have come across a number of counterfeit barcodes and so far they have quarantined over 350 bales on the same.

“We have also found that there are people who are producing counterfeit tickets. So, these counterfeit tickets are finding their way into the auction floors because of the electronic system that we have. We have picked up the anomaly in the floors,” he explained.

Saunders also conceded that over 100 farmers were yet to sell their tobacco, more than three months since the market opened.

“TCC has highlighted all the issues to us, however, we also got the same complaints through our hotlines, but not necessarily in the way TCC highlighted. We are investigating the issue and I hope, in a couple of days, we will come to the root of the problem, and bring to book all the perpetrators,” he said, while further committing to buy all the tobacco from their contracted farmers.

Member of Parliament for Kasungu West Sailesi Gulule, one of the frustrated growers who is yet to sell 50 bales under his contract with Alliance One, raised the red flag with TCC, that some employees of the buyer are at the centre of the malpractice.

“Apart from making fake barcodes, some employees are transporters. So, what happens is that the company, through clubs, book us when to sell our tobacco at the floors. So, they would easily prioritise people who are using their transport, this is why some sold their tobacco while others are still waiting for months,” he said.

With only few days to go before the market closes, the panic and frustration is evident among farmers.

As of Friday, the Mzuzu floors had over 45 000 bales while Lilongwe had over 20 000 from Alliance One, which has been offloaded but is yet to be bought – leaving the floors under stress to find extra space to accommodate more bales.

Auction Holdings Limited general manager for tobacco sales, Graham Kunimba describes the volumes as strange.

“It is strange to see one merchant with such a high volume of tobacco at this time, with some of the farmers not even selling a single bale. We do not understand what happened. For other merchants, we really do not have anything; the bales are offloaded and taken to the selling floor the following day,” he said.

Tobacco Association of Malawi (Tama) chief executive officer Felix Thole said they have also engaged TCC and Alliance One to ensure that farmers get what they are supposed to get in line with their contracts, regardless of the on-going investigations.

He, however, expressed concern that the delay to sell the tobacco had huge cost implications on the contracted farmer who services bank loans.

The suspected fraud exposes weaknesses of the much heralded integrated production system (IPS).

With an apparent interest of the buyers, IPS was introduced in 2012 where 80 percent of tobacco is bought under the contract arrangement while 20 percent goes under auction.

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