New twist to Salima Sugar wrangle
The battle for Salima Sugar Company Limited (SSCL) ownership refuses to die as co-shareholder AUM Sugar and Allied Limited (Malawi) has taken the matter to the International Court of Arbitration of the International Chamber of Commerce’s (ICC) Dispute Resolution Services.
The company has also, through their lawyers KD Freeman and Associates, requested Attorney General (AG) Thabo Chakaka-Nyirenda to review the forensic audit report which revealed mess of funds at SSCL where K50 billion payments could not be validated.
GBIHL terminated the deal with AUM Sugar and Allied Limited (Malawi) because it was based on false claims.
Communication Weekend Nation has seen indicates that AUM SAL, through India-based counsel, Sangramsinh Yadav, on March 11 2024 wrote the international court requesting arbitration following the termination of their shareholding agreement in SSCL by Greenbelt Initiative Holdings Limited (GBIHL).
A letter from the International Court of Arbitration to concerned parties states that the court received the request from AUM SAL on March 12 2024.
AUM SAL is owned by Ulka Industries Pvt. Limited, an Indian company which holds 77.06 percent shares and Mother Dairy and Energy Farms Limited, a public limited company incorporated under the Laws of Malawi owning the remaining 22.94 percent shares.
According to the letter on the case number 28522/CPB titled ‘AUM Sugar & Allied Ltd (Malawi) vs GBI Holdings Ltd (Malawi)’, the Malawian company has been given 30 days to answer to the request as per Article 5(1) of the ICC Rules of Arbitration.
However, GBIHL has been given a flexibility to nominate a co-arbitrator in the answer or in any request for an extension of time for submitting the answer and if this fails within the 30 days, the court will appoint a co-arbitrator on its behalf.
“If any of the parties refuses or fails to take part in the arbitration or any stage thereof, the arbitration will proceed notwithstanding such refusal or failure,” reads the letter dated March 18 2024 and signed by counsel Colleen Parker Bacquet.
The arbitration agreement, according to the letter, provides for Malawi as the place of arbitration although it says the claimant, AUM SAL, has proposed that the seat of the arbitration be shifted to any location in a country that is a signatory to the New York Convention.
But the letter says the parties are free to settle their dispute amicably at any time during arbitration and may also wish to consider conducting an amicable dispute resolution procedure pursuant to the ICC Mediation Rules, which also allow the use of other amicable settlement procedures and ICC will be ready to assist in finding a suitable mediator.
In his 10-page communication to the secretary general of ICC under the banner ‘Submission of Request for Arbitration between GBI Holdings Ltd. and AUM Sugar & Allied Ltd’, Yadav argues that Greenbelt Authority (GBA) falsely claims in its letter of termination of the deal dated December 19 2023, that AUM SAL breached the agreement as per the results of the forensic audit report.
Thus, the principal relief AUM SAL is seeking through the arbitration is a refund from GBIHL of its alleged entire investment of approximately $12 million along with interest from the respective dates of receipt of the said funds by SSCL.
“Needless to state recovery of the entire expenses pertaining to the arbitration proceedings, including the advocates’ fees, shall also be sought, however, AUM Sugar & Allied Ltd. is not presently in a position to quantify the same,” reads part of the letter.
In its letter addressed to the AG and copied to Greenbelt Authority (GBA) chief executive officer, the law firm has laid down five “fundamental flaws” to challenge the forensic audit conducted by Audit Consult.
These include lack of evidence indicating that Audit Consult is a certified forensic accountant, use of ISRS 4400 Standard and use of sampling, time limitation for the forensic auditor and lack of comprehensive evidence and specificity.
Against this background, the letter reads: “The disgruntled AUM SAL believes the findings are characterised as inconclusive, indicating a scenario where definitive evidence or concrete data to support clear outcomes were not sufficiently obtained or presented.”
“In light of the complex dimensions of the issue at hand, which are beyond legal and economic we respectfully request for your consideration to still resolve the issues by arbitration as per the intention of the drafters of the shareholding agreement of 27 August 2015,” says the letter signed by Shadreck Mhango.
In an interview, Mhango said the review request was a follow up on an earlier letter calling for amicable resolution of the matter through arbitration which the AG turned down.
He also confirmed referring the matter to the international court in line with the express provision of the shareholding agreement between the parties.
But reacting to the development, Ministry of Justice public relations officer Frank Namangale said while all necessary steps were being undertaken to respond to the court of arbitration, government feels there is nothing to arbitrate on because throughout AUM SAL acted dishonestly.
Namangale also described AUM’s request to review the forensic audit report conducted on SSCL as baseless.
He said: “They did not comply with the Private-Public Partnership Act, and we made this clear to them. Their investment was unlawful and illegal. We expect them to, at least, respect criminal proceedings underway. This is our position.
“These are the people who engaged in improper transfer pricing and illicit externalisation of foreign currency, causing untold damage to the Malawi’s economy.”
GBIHL and AUM SAL signed the Shareholding Agreement of the SSCL on August 27, 2015, under the Public Private Partnership (PPP) 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.
