By Cathy Maulidi:
The Malawi Government will have to pay East Bridge Estate Company over $250 million (K273.8 billion) if it proceeds to terminate the contract it signed with the company, Malawi News has established.
The deal has hogged the limelight in the past two months for its nature and the questionable manner in which government entered it.
Government, through the Ministry of Agriculture, signed the deal in May this year for the Romanian firm, which has local offices, to supply 300,000 metric tonnes of fertiliser for which Malawi will pay back with one million metric tonnes of farm produce over a period of two years.
Government signed the deal without approvals from the Anti-Corruption Bureau (ACB) and the Public Procurement and Disposal of Assets Authority (PPDA) as is provided in the procurement law.
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Amid criticism, including from the World Bank, Malawi Law Society and others, government has been defensive of the contract.
It has finally buckled under pressure as Times revealed this week that government is terminating the deal—apparently as one of the conditions to prop up its image before the International Monetary Fund (IMF) whose assistance the government so badly needs as the economy tanks.
Today, we can report that government has already recalled the sovereign guarantees that the Ministry of Finance Sosten Gwengwe granted to East Bridge Estate Company.
The recalling of the guarantees has come after the Attorney General Thabo Chakaka Nyirenda advised the ministry that the deal be halted because the transaction was undertaken without following proper procurement and authorisation procedures.
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“We have recalled the sovereign guarantees on the advice from Attorney General. Ministry of Finance’s concern is only the sovereign guarantees which were recalled on the 12th of July,” said Gwengwe in a written response yesterday.
Already, government has informed the IMF that it is going to nullify the deal following the Attorney General’s advice.
But despite all these developments, East Bridge Estate directors are fully operating on the ground working to deliver on the contract, we can confirm.
To add to that, the company’s Chief Executive Officer Haim Tzutziashvili has landed in the country to oversee operations of the local office in regard to the deal.
We visited their offices in Lilongwe Friday and we found the office active as they are also in the process of recruiting staff to assist in the handling of the deal.
We have information that they are recruiting 65 people to add to the existing 19 that they have.
One of the local directors of East Bridge, Teddy Moya, said they are “100 percent” implementing the contract as government has not written them officially that it is terminating the contract.
“We are moving forward. We just read in the papers but government has not informed us officially that they are terminating the contract,” he said.
The information we have gathered indicates that East Bridge is already getting set with lawyers to move the court if government terminates the deal.
The information further indicates that East Bridge has already spent over $250 million (about K273.8bn) on the deal and they shall seek a refund of the money if government moves to terminate the contract as it has planned.
We took these findings to Moya who said, “Yes we have spent over $250 million but government has not told us that it has terminated the contract.
“Our terms and conditions are very clear and if government terminates the contract, the terms and conditions of the contract will surely be followed.”
When asked if that includes that government will refund the money, he responded, “obviously.”
But Moya also said that he does not believe that the government would terminate the contract at the point it has reached.
Recently, the company directors have been travelling to different countries reportedly in search for markets of the produce they would get from Malawi after they have delivered on the deal and to also finalise talks with suppliers of fertiliser and port authorities at Beira in Mozambique.
“A lot has happened in terms of us making sure that we deliver on the contract and when all is set, Malawians will be made aware,” Moya said.
When asked if Malawi is ready to refund such huge sum now, Gwengwe said his ministry only withdrew the guarantees and the rest remains in the hands of parties that signed the contract.
“Canceling can only be done by parties to the contract in this case, Ministry of Agriculture, we have just recalled the guarantees,” he said.
Minister of Agriculture Sam Kawale did not pick our calls or respond to our questionnaire.
But when asked if the country is ready to make such huge refund, Attorney General Nyirenda said, “Let us cross the bridge when we come to it.”
Meanwhile, Chairperson for the Agriculture committee of Parliament Sameer Suleman has described the turn of events as a sad.
He blamed it on government which he said continued to give a deaf ear when warned against going into such deals.
“What we know is that the sovereign guarantee has been withdrawn and as a country we refuse to have any further transactions with East Bridge,” Suleman said.
