A Namibian fish and oil products firm which the government contracted to supply fertiliser two years ago is now demanding its pound of the flesh for the failed arrangement. But there is also a thought that this seems to be a new trick some officials in government are using to defraud taxpayers
By Deogratias Mmana:
In September 2022, the government, through the Smallholder Farmers Fertiliser Revolving Fund of Malawi (SFFRFM), contracted a Namibian firm to supply 200,000 metric tonnes of fertiliser.
The deal came amid revelations that Malawi had earlier contracted a United Kingdom meat seller to supply fertiliser but the company, Barkaat Foods Limited, terminated the deal after pocketing the money.
In the September 2022 case, it turned out that the firm, Nendongo Commercial Group, deals in fish and oil products.
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The fertiliser contract never materialised.
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But Malawi could pay a price as the firm is now on government’s neck, demanding a profit loss of about $3,400,000 (about K5.9 billion).
According to a document from the Ministry of Agriculture, the contract was for the company to supply 100,000 metric tonnes of NPK and 100,000 metric tonnes of Urea fertilisers at a price of $850 per tonne and $650 per tonne respectively.
The contract died a natural death after a company called Auzano Capital Management which was supposed to source financing to facilitate the deal allegedly failed to get the funds despite a government guarantee.
Reads the document signed by the company’s lawyer Chancy Gondwe: “Auzano Capital Management Limited were mandated to arrange financing and payment instruments to finance the supply.
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“A government guarantee was issued in favour of Auzano to support the arrangement of financing and Auzano failed to arrange the financing within the contracted time.”
At that time Nendongo Commercial Group, through its Chief Executive Officer Jonas Nendongo, refuted government’s claims of failure and the company sued the government for loss of profits.
The company argued that it had already shipped 4,000 metric tonnes through Beira, Mozambique and that the government should pay for loss of profits.
At that time, Nendongo claimed that it had spent about $3,400,000 for the artwork for the said fertilizer which was shipped to Beira, Mozambique.
In an interview on Thursday, Gondwe said the matter is now at an arbitration stage.
He refused to give further details including the exact amount of money being demanded.
He said: “As you may know, arbitration is a private and confidential process, and as such, I am unable to provide any specific details or updates on the matter at this time.
“I understand the public interest in this case, but I must respect the confidentiality of the arbitration proceedings and refrain from disclosing any information related to the ongoing dispute between Nendongo Commercial Group and the Government of Malawi.
“I will endeavour to provide more information once the arbitration process is concluded and any relevant details can be shared publicly. I appreciate your understanding in this regard,” Gondwe said.
Attorney General Thabo Chakaka Nyirenda confirmed the matter.
“The claim has just been brought to my attention. They are claiming damages for breach of contract. The claim is being defended,” Nyirenda said.
But Centre for Social Accountability and Transparency (Csat) Executive Director Willy Kambwandira has blamed the government for striking what he called “bogus deals” which become costly for the citizens.
“This is the price that we pay when the government uses its power to engage in dubious procurement deals.
“Unfortunately, public officers who deliberately violated procurement laws and procedures have not been personally held accountable and the government appears to apply all tricks to protect them from facing the law,” Kambwandira said.
He also blamed the National Assembly for being passive in its oversight role.
“Our Parliament too appears powerless as their enquiries on these issues have been ceremonial,” he said.
Kambwandira further said: “We suspect that these are some of the strategies to defraud Malawians as some of these companies have been found non-existent. We must tread carefully on the matter. We have some people in government who are ready to use every trick to loot public coffers. We also demand personal accountability on individuals who were involved in this deal.”
At that time, Chairperson of the Agriculture Committee of Parliament Chairperson Sameer Suleman blamed the government for its carelessness in handling such deals.
“And if not careful Malawians will continue to lose taxes through such type of issues,” Suleman said.
The Nendongo deal came hot on the heels of the drama of another fertiliser contract which the government, again through SFFRFM, entered with Barkaat Foods Limited.
In that contract, Barkaat was supposed to supply 25,000 metric tonne of fertiliser for the Affordable Inputs Programme.
In a statement, the Ministry of Agriculture said then that Barkaat Foods Limited had claimed it had a production line with Yara Limited, a globally-reputed fertiliser manufacturer supplier.
Barkaat, which was later found to be a firm that trades in meat, had already cashed $727,000 which it had demanded from the government “to lock the price” of fertiliser from the manufacturer.
It then terminated the contract, leading to the government fighting for almost a year to get back the money.
Last year, the Attorney General announced that the money had been recovered.
