Salima Sugar gets vinegary
Police in Lilongwe have arrested former Salima Sugar Company Limited (SSCL) chairperson Shirieesh Betgiri and are hunting for the company’s former chief executive officer Henri Njoloma and two others in connection with abuse of K50 billion at the company.
National Police spokesperson Peter Kalaya said in an interview yesterday that Betgiri was arrested on Wednesday this week and the law enforcers also have warrants of arrest for Njoloma, Prashant Sharma, Vikas Hirawatt and Sachin Nikam, who are believed to have travelled outside the country.
The action by the police comes barely a week after Attorney General Thabo Chakaka-Nyirenda vowed to recover the funds invested in the joint venture firm and could not be accounted for.
Said Kalaya: “We have information that the other suspects recently travelled outside the country and through our colleagues, the Interpol, we are following up.”
He also said more suspects are expected to be apprehended as investigations are continuing.
According to Kalaya, the suspects will answer charges ranging from uttering false documents, forgery, cheating, conspiracy to defraud and money laundering.
During a press briefing earlier this month, the AG said SCCL will continue to operate despite a forensic audit report revealing that private investors in the company defrauded the government.
Said Nyirenda: “The private investors only own 12 percent of the shareholding so the company will continue to operate because the government has invested a lot in it and it is the majority shareholder at 88 percent.”
He wondered how a private investor could be guaranteed $25 million (K42 billion) for raising loan capital while it failed to pay its equity share, contrary to the shareholding agreement.
A copy of the preliminary audit report shows that the company has failed to validate utilisation of $42.86 million (about K72.86 billion) out of the $76.5 million (K129.2 billion) borrowed from India and local banks to finance the setting up of the firm.
The loan from India was meant for construction of fuel tanks and irrigation network for the company, a joint-venture investment, in which the Government of Malawi is the majority shareholder.
The 122-paged report also reveals that government ended up guaranteeing $25 million (K42 billion) for raising of the loan capital which the investor failed to pay.
Reads the report: “We were not provided with supporting documents from government to substantiate and validate utilisation of $42.86 million from the $76.5 million net of $33.640 million used for the construction of three fuel tanks pegged at $26.5 million and irrigation networks pegged at $16.36 million.”
According to the report, the Green Belt Initiative Holdings Limited (GBIHL), a private limited company wholly owned by Malawi Government, went into a shareholding agreement with Aum Sal on August 27 2015 to form Salima Sugar Company under a PPP arrangement even when the investor was only two months old as a registered Malawian company which never submitted a bid.
Reads the report: “GBIHL was incorporated on July 2 2015 while Aum Sal was incorporated on July 15 2015 under Malawi Companies Act 2013.
“SSCL was incorporated on October 22 2015 while the shareholding agreement was signed on August 27 2015 just after incorporating GBIHL and Aum Sal.
“This means Aum Sal was less than 60 days old on the date of signing the joint venture agreement. However, it is stated that the company had been engaged in the business of hydropower, electrical engineering, and farming business Malawi.”
According to the report, in less than 60 days Aum Sal acquired technical competence for the production of sugar and allied products through technical partners engaged in the business of engineering procurement and construction of sugar, biomass power and chemical plants.
During the signing of the shareholding agreement in 2015, it is indicated that Malawi Government invested $35 million in the sugar project through SSCL consisting $33.640 million sugar mill, $800 000 in land and $744 000 in buildings.
Over and above the $35.184 million investment, Malawi Government also issued guarantees for the raising of $25 million loan capital in 2016.
These loans were obtained in tranches of $7 million, $12 million and $6 million from a local bank.
On the other hand, the investor Aum Sal was expected to contribute $17.1 million as capital share at least by May 31 2017 which was not completed until this year—six years after the set deadline, notes the report.
