Lawyers query East Bridge deal

The Malawi Law Society (MLS) has written the Office of the Attorney General (AG), Anti-Corruption Bureau (ACB) and the Director of Public Prosecutions (DPP), asking them to investigate the Ministry of Agriculture’s fertiliser procurement deal with East Bridge Estate.

The government recently announced that it had signed a fertiliser deal with the Romanian company, further indicating that it was a commodity exchange arrangement.

In the deal, Malawi is expected to pay back, in the form of produce, 250,000 metric tonnes (mt) of soya beans at $528 per mt— which translates into $132,000,000 (K132 billion)— and 250,000mt of groundnuts at $725 per mt costing $181,250,000 (about K182 billion).

However, MLS claims that the deal flouted some of the country’s laws.

A letter to the three government agencies, which the society’s president Patrick Mpaka has signed and is dated July 4 2023, notes that there appears to be a violation of procurement and public finance management laws.

“[There are violations of laws] starting with apparent failure to obtain certification from the Minister of Finance that funds were available for the procurement going through due diligence to initiation and conduct of procurement proceedings and ending with apparent illegitimacy of the signatures on the agreements,” it reads.

MLS argues that, given the events and public interest surrounding the Baarkat and East Bridge public procurement deals, it recommends that the three agencies take appropriate steps to protect public interests.

“On the authority of Section 64(d) of the Legal Education and Legal Practitioners Act, [we] therefore recommend and call upon our addressees hereto to take appropriate steps to protect the public interests under the procurement and public finance management laws involved as discussed in the paper with a view to promoting transparency, accountability and efficiency in this specific procurement but also to set a standard for legal compliance in future transactions,” the letter reads.

In an interview Sunday, AG Thabo Chakaka Nyirenda said he has been out of office, hence he is yet to see the letter.

“I need to read the letter. Without reading the letter, I may not be able to comment. I would not even understand the circumstances under which the letter was written,” he said.

DPP Masauko Chamkakala was not immediately available for a comment.

In June this year, details emerged that the government signed a $124.5 million (K125 billion) agreement with the Romanian company before its consultations with the ACB were finalised.

It transpired that the Ministry of Agriculture wrote the ACB in April 2023, asking it to conduct due diligence on the company, but, before consultations between the ministry and the ACB were finalised, the government proceeded to sign the contract.

On May 11 2023, the ACB raised a number of issues in response to a letter from the Ministry of Agriculture, with the ministry giving a response to the bureau.

But before the bureau gave its response, the deal was signed on May 19 2023.

It also emerged that the ministry’s submission to the bureau was not for the purpose of procurement vetting.

When asked if the ACB gave a nod to the deal, its spokesperson Egrita Ndala said in a response to our inquiry: “In April 2023, the Ministry of Agriculture wrote the bureau asking it to do due diligence on a company known as East Bridge with whom the ministry had entered into a commodity exchange agreement.

“The bureau did its part and responded to the Ministry of Agriculture on 11th May 2023, when the bureau raised a number of issues. Later, the Ministry of Agriculture wrote ACB back on the issues raised. The bureau was yet to respond back to them on the same.

“It should be understood that the submission came to the bureau not as a procurement vetting submission through PPDA [Public Procurement and Disposal of Assets Authority] under Section 37 of the PPDA Act. The Ministry of Agriculture [and not PPDA] wrote to the bureau.”

Section 37(11) of the PPDA Act says “Single source method of procurement or any high value procurement shall be subject to vetting by the Anti- Corruption Bureau, pursuant to the powers conferred on the bureau under Section 10 of the Corrupt Practices Act”.

On PPDA’s part, its spokesperson Kate Kujaliwa said at the time that the authority asked the Ministry of Agriculture to seek the AG’s guidance as the transaction does not fall under the public procurement legal framework.

“The PPDA provided guidance to the Ministry of Agriculture [to the effect] that they should engage the Attorney General and Ministry of Finance as this agreement does not fall under the public procurement legal framework,” Kujaliwa said.

Recently, government spokesperson Moses Kunkuyu defended the deal, saying Malawians should not be worried because no money will be paid before the product is supplied.

Kunkuyu further said this is a commodity exchange deal where after the company has supplied the fertiliser, the government is going to pay back using farm produce such as soya, maize and other products.

Human Rights Defenders Coalition Chairperson Gift Trapence faulted the government for giving half-baked information on the deal.

Trapence reminded the government that in the spirit of the Access to Information Act, it needs to open up to the citizenry and provide the right information.

“And the government should be aware of the procurement processes which must be adhered to in such deals,” Trapence said.

When Finance Minister Sosten Gwengwe spoke on issues related to the deal in May this year, he asked Malawians to give the deal the benefit of the doubt.

According to the agreement, the parties executed a sale and purchase agreement dated December 14 2022, including its addendum dated May 17 2023, and a commodity exchange agreement dated March 22 2023.

An addendum to the sale and purchase agreement, signed on May 18 2023, reads: Through a sale and purchase agreement dated 14th December 2022, and a commodity exchange agreement dated 22nd March 2023 by and between the parties, the seller agreed to sell and the purchaser agreed to purchase 600,000 metric tonnes of fertilisers being 300,000 tonnes Urea and 300,000 tonnes NPK under a commodity exchange/ barter arrangement.”

It also reads: “The purchaser has since obtained approval for the issuance of the Sovereign Guarantees as provided for under the Public Finance Management Act of the laws of Malawi in favour of the sellers for initially a tonnage of 300,000mt, being 150,000mt NPK and 150,000mt Urea, which instruments will be issued on 18th May 2023 in line with addendum.”