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How raw K750 million deal was fixed

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MAWERU—Signed statement

On Thursday, government issued a statement denying it had been swindled K30 billion in a fertiliser supply deal. Instead, it indicated it had been duped of K750 million. So, what do we know as to how the deal was facilitated?

By Mandy Pondani & Rebecca Chimjeka:

A day after government released a statement in which it indicated it has been duped of K750 million in a fertiliser supply deal with a United Kingdom firm, details are emerging of how the deal was fixed.

Among those involved in facilitating the contract could be one Moses Khombe, according to emails we have seen.

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On Thursday, the Ministry of Agriculture announced it had paid K750 million commitment fee to the supplier, United Kingdom-based Barkaat Foods Limited.

But the supplier terminated the contract after receiving the money and before supplying the 25,000 metric tonnes as agreed, said the ministry in a statement, signed by Principal Secretary Sandram Maweru.

The fixing

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From the details we have seen, this K750 million payment was 10 percent of the total contract sum.

These details are contained in an email which Khombe allegedly wrote on Tuesday May 3, 2022 to Secretary to the Treasury Macdonald Mwale, Maweru, Admarc General Manager Rhino Chiphiko and Smallholder Farmers Fertiliser Revolving Fund (SFFRFM) Chief Executive Officer Richard Chikunkhuzeni.

The email, with a subject headline ‘Revised Documents for Admarc and SFFRFRM’, reads:

“We presented to the supplier all issues that were raised during the meeting on Saturday.

“Further, under the guidance of the Bank in Singapore, a complete due diligence on the supplier was conducted. After a lengthy of [sic] discussion with the supplier we have come to an agreement….”

It says as per recommendation from the Ministry of Finance, the seller had accepted to issue a standard performance bond of 2 percent, the clause of which was in the Sale and Purchase Agreement.

“All payments to be made to the company which has a production line with Yara and no third party in this regard will be involved. This concern was raised by some members during the Saturday meeting and again it was a major concern too with the financier.

“We have changed the supplier’s name to match the name that has a contract with Yara. We have replaced Food Line Wholesalers with Barkaat Food Ltd,” it reads.

The mail further says:

“For us to secure the price of $290 per ton, both Admarc and SFFRFM to sign the revised Sale and Purchase Agreement and the invoices by closure of the day. Failing which, the prices will be adjusted upward from next week to $480 per ton. We believe this is avoidable if we can only comply with what the supplier is requesting from us.

“We need to pay a 10 percent commitment fee to the supplier by Friday this week. Out of this amount, Admarc will pay five percent and SFFRFM will pay the other five percent. After paying this commitment fee, the supplier will send the first shipment of 25,000 metric tons as a trial run,” it adds.

In its statement on Thursday, the ministry said the supplier terminated the contract before meeting this end of the bargain.

Who is Khombe?

According to his LinkedIn profile, Khombe is an independent consultant for a firm known as Synergy Holdings.

We contacted him yesterday for his comment on the revelations, he denied involvement.

“I do consultancies. I am a policy analyst and I am mostly involved with international clients,” Khombe said.

He added: “I am also just seeing it on social media that I was involved [in this fertiliser deal]. I don’t work for government and I have not transacted with the Ministry of Agriculture.”

We also contacted Mafuta Mwale and Maweru to seek their comment on Khombe’s involvement in the deal. Mafuta Mwale did not respond to our WhatsApp texts although he saw them. Maweru could not pick our calls.

When asked how Khombe got involved in the deal, Chiphiko who was also in copy of the emails in question also refused to comment.

“I cannot comment on the matter. I am on suspension,” he said.

How Admarc walked out

Government had announced earlier in the year that Admarc and SFFRFM would take control of AIP this year. So how is it that it was SFRRFM, and the ministry, that seem to have been left in the deal?

We have it on good authority from another contact privy to the deal that Admarc chickened out as it detected what the source called ‘red flags’ from the correspondences that had been exchanged.

“Admarc was suspicious and had a lot of questions because the prices were too low to be true and the timeframes for delivery of the fertiliser were too short. This raised disagreements somehow and Admarc opted out, leaving SFFRFM and the ministry in the deal,” said the source.

Deal under police probe

And as details continue to fall out of the cupboard, the office of Director of Public Prosecutions (DPP) has instructed the Inspector General of Police Merlyne Yolamu to institute criminal investigations into the botched deal.

DPP Steve Kayuni has, in a letter, asked the police boss to bring to book all individuals who were on the wrong side of the law in this deal.

“The rife reports and press releases undertaken at the Ministry of Agriculture and SFFRFM point to a serious revelation relating to procurement negligence and public finance management lapses among fiduciaries,” reads the letter, adding that any matter that raises suspicion of the loss of public resources ought to be investigated.

According to Kayuni, the issues raised are of serious concern to the public, namely pilferage of the much-needed resources and how that affects AIP for deserving masses.

On Thursday, Human Rights Defenders Coalition (HRDC) trashed the statement from the Ministry of Agriculture saying it raised a lot of questions.

“Where was the call for tenders flighted? What criteria was used? Where is the Public Procurement and Disposal of Assets Authority in all this? What prompted the government to use this model of secret procurement?” HRDC said in a statement.

It further wondered whether government had carried out any due diligence at all on the company.

“We feel that this alleged scam is reckless and embarrassing to the government,” HRDC chairperson Gift Trapence said in the statement.

The Anti-Corruption Bureau (ACB) told The Nation yesterday that the Ministry of Agriculture and the concerned agencies did not submit the disputed contract to the bureau for vetting.

In his statement, Maweru said Barkaat Foods Limited has committed to pay back the money by the end of this month. The company has since closed shop, according to allegations.

Maweru’s statement was in response to allegations that government has been swindled as much as K30 billion in the contract.

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