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More Fisd revelations

Government paid firm whopping K627 million

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Chikosa Silungwe

Revelations have emerged of how senior government officials under the former ruling Democratic Progressive Party and Fisd owners plotted to defraud Capital Hill billions of taxpayers’ money.

Fisd has been implicated in shoddy deals involving millions of Kwacha under projects that were awarded by the administration but were never completed.

Malawi News investigations have uncovered that in December 2017, Fisd was awarded two contracts under the Sustainable Rural Water & Sanitation Infrastructure for improved Health and Livelihood to construct gravity fed schemes in Ntcheu and Phalombe districts. The project was financed by the African Development Bank (ADfB) where Ministry of Irrigation and Water Development was the client.

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It is alleged that the contract for the Ntcheu project was terminated on May 29 2019 after Ministry of Irrigation and Water Development noted serious contractual breaches by Fisd such as prolonged delay in completion of the project.

However, termination of the contract led to misunderstanding among parties involved, leading to the arbitration by the National Construction Industry Council (NCIC) which had Ministry of Irrigation as a client, NCIC as the arbitrator and Fisd on the other hand.

The arbitrator declared that the termination of the contract was fine and went further to order Fisd to pay the government K 281 million.

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Following this determination, it meant that the Ministry of Water had to redeem the award, the advance payment and performance security of K 236 Million from Ecobank who was the guarantor.

However before payment was effected, Fisd obtained an injunction from the courts preventing the Ministry of Water from redeeming the money.

It is alleged that the commercial court then appointed a lawyer as a new arbitrator, albeit in very controversial circumstances in February 2020 without the involvement of NCIC as stipulated in the contract.

Within 10 months of his appointment, the new arbitrator had reversed the award to now in favour of Fisd and determined that Ministry of Water should pay Fisd a whopping K 1.23 billion.

Malawi News investigations covert investigation reveals that on August 23 2020, government made part payment of K 627 million to Fisd despite that Attorney General Chikosa Silungwe was in court contesting the initial award.

Malawi News understands that former Attorney General Kalekeni Kaphale is on record to have objected the manner in which the new arbitrator was appointed.

When contacted for his comments, Silungwe confirmed that K 627 million was paid to Fisd even though his office was in court challenging the determination of the award.

“Treasury indeed made the decision to pay Fisd because it was the decision of the High Court for government to award Fisd their money…this was because Fisd lawyers threatened to have Secretary to the Treasury and other public officers in the Ministry of Finance arrested for failure to honour a judgment and it was either we try to make legal arguments and risk the officers being arrested or we pay and somehow claim it later if our appeal is successful so the office of the Attorney General advised that they pay for now as we were already in court for the appeal,” Silungwe said.

According to Silungwe, they did not want officers to appear like they are not respecting court orders.

He however said that the K 621 million was paid considering the circumstances that either officers were going to be arrested for contempt of court or government pays and pursue the whole issue as part of the main appeal.

He said the police then came in to say there were criminal fraud elements and arrested the four directors of Fisd.

Commenting on the matter, Centre for Social Accountability & Transparency Executive Director Willy Kambwandira deplored what he termed shocking levels of corruption in government institutions where he said civil servants connive with contractors to swindle public funds meant for development projects.

“The case before us is clear example of organised scheme intentionally crafted to defraud Malawians millions of their taxes by some selfish and greedy individuals who had transformed government into a cash cow to fast track their wealth. Unfortunately, public institutions that were tasked to oversee implementation of such projects relegated their roles to advertising and approving tenders, and had affiliated themselves to political parties. This effectively breeds corruption which is costing Malawians billions of their taxes in compensation for work that was not done or of substandard quality,” he said.

Meanwhile, the court in Lilongwe has released on bail the four Fisd directors who were arrested in connection to the matter on charges bordering on fraud, uttering of false documents and corruption.

The court released the four yesterday after satisfying a bail bond of K 10 million each.

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