Public Procurement and Disposal of Assets Authority (PPDA) Director General Eddington Chilapondwa has said his institution was sidestepped in the fertiliser procurement deal which saw the government losing K750 million to a United Kingdom (UK)-based firm.
The law requires that deals of that magnitude pass through the authority.
Chilapondwa said Thursday that his institution did not give a No Objection to the transaction.
He, however, admitted that issues related to AIP fertiliser purchase fall under public procurement because expenditure from the national budget is involved.
“It is only PPDA that is empowered to give an approval on these matters. So all AIP fertiliser, be it commercial, under SFFRFM [Smallholder Farmers Fertiliser Revolving Fund], the procurement has to go through PPDA,” he said.
He was quick to note that, in the current scenario, PPDA did not handle the matter.
“PPDA will only handle a matter that goes through public procurement system. When a submission comes to our office, we take the responsibility to handle that and when we handle that, we have protocols we observe. If it is of another threshold, it has to be submitted to the Anti-Corruption Bureau.
“But to answer your question directly, [the document on procurement] is not yet with PPDA. All I can say is that it is not yet with us and was not submitted to PPDA,” Chilapondwa said.
Malawians were last Thursday left in shock when Secretary for Agriculture Sandram Maweru told them that UK-based firm, Barkaat Foods Limited, which government paid K750 million for the supply of fertiliser under AIP, terminated the contract before supplying the commodity – but after pocketing the money.
Maweru said Barkaat failed to supply 25,000 metric tonnes of fertiliser after the government paid it K750 million.
The Ministry of Agriculture chief executive officer said the ministry had engaged SFFRFM to handle AIP procurement processes this year.
According to Maweru, SFFRFM engaged Barkaat Foods Limited, which he said had a production line with a well-known supplier, Yara Limited.
He said SFFRFM was asked to pay K750 million to lock the price, which it did and after pocketing the payment, the company terminated the contract.
“Barkaat Foods Limited failed to supply and consequently terminated the contract citing loss of production line at Yara UK and that they could no longer commit to supply the fertiliser,” Maweru said in a statement.
According to Maweru, the company agreed to transfer back to Malawi K750 million through the same Ecobank through which it was paid.
“This advance commitment fee payment of about K750 million is under recall by Ecobank and will be received by the end of this month of October 2022,” the statement further reads.
In an interview Thursday, Malawi Institute of Procurement and Supply (Mips) Chief Executive Officer Feston Kaupa said if what the PPDA is saying is anything to go by, this can be described as a fraudulent transaction.
Kaupa said the deal is not even worth to be described as a procurement transaction because nothing is said to have been procured.
“The Malawi Institute of Procurement and Supply (Mips), as a regulator of the procurement and supply profession, is keenly following up the matter with the relevant institutions to ensure that we protect our members in case of any undue influence or, indeed, discipline them in accordance with the Mips Act,” Kaupa said.
An internet search on Barkaat Foods Limited gives a number of entries for the firm, including that of a slaughterhouse based in the UK which has in the last three months undergone dissolution.
Speaker of Parliament Catherine Gotani Hara has since said her office has directed that a Joint Committee be formed immediately with membership from the Public Accounts Committee as constituted in July 2022, the Agriculture Committee, the Budget Committee and Statutory Commission to probe the matter.