…. Agriculture Ministry playing yoyo with tobacco firm
East Bridge Tobacco has paid K418 million for 106 078 kilogrammes of tobacco but the Auction Holdings Limited, under instructions from the Ministry of Agriculture is withholding it saying the company should pay in United States dollars, whilst another company Nyasa Tobacco is allowed to pay in Malawi kwacha, The Investigator Magazine has established.
Farmers at Lilongwe and Chinkhoma Auction Floors have been left in the cold after selling 1050 bales of tobacco to East Bridge Tobacco, a subsidiary of East Bridge Estates, a company Agriculture Minister Sam Kawale defended as a “saviour” in easing foreign exchange payments as it was to supply fertiliser in Malawi kwacha in a failed commodity exchange deal.
Documentation sourced from the company, shows that East Bridge was suspended last week by the Tobacco Commission after it had already made purchases worth US$240 747,07 at the Chinkhoma and Lilongwe auction markets.
On Monday 21 April, the company wrote to the Tobacco Commission CEO Evans Chilumpha protesting their suspension from the market when other companies are buying the same tobacco using Malawi kwacha.
“We believe this decision is discriminatory and unfair, especially considering that Nyasa Tobacco Buying Company Limited has been allowed to continue buying tobacco in kwacha despite similar circumstances,” reads part of the letters with stamps of acknowledgement from the Tobacco Commission and the Ministry of Agriculture.
The company had remitted K118 497 734.32 million to AHL Tobacco Sales Limited on 11th April- the day the Chinkhoma market opened and an additional K300 million was transferred on 17 April bringing the total to K418 497 734.32.
“While the license stipulates that tobacco purchases be made in US dollars, we respectfully request your authorisation to settle our transitions in Malawi Kwacha while continuing to bid in US dollars along with other market participants. We propose that settlements be executed at the prevailing exchange rate on the designated settlement,” the company wrote in a separate letter to the Commission dated 18th April.
The letter copied to the Ministry of Agriculture states that its parent company East Bridge Estates Srl imports fertilisers into Malawi and sales the commodity in Malawi kwacha helping Malawi save foreign exchange.
“This approach helps ease the pressure on Malawi’s foreign currency reserves. The proceeds from these fertiliser sales would be allocated for tobacco purchases. The exported tobacco will generate foreign earnings to be reserved for tobacco earnings, and a portion of which will be reinvested to procure further fertiliser supplies for Malawi,” writes the company.
Minister Sam Kawale selling point of the East Bridge deal was that that government will be paying with produce for export, which later changed after further investigations questioned the deal that was worth over US$250 million.
“We intend to buy 10 million kilogrammes of tobacco this year, process all of it in Malawi and create jobs. I am on my way to China to get processing machine for Malawi,” Hiam Tzutziashvili, founder of the company told The Investigator Magazine in a telephone interview.
Sources indicate that the Minister of Agriculture Sam Kawale and Hiam no longer see eye to eye that the suspension was initiated on orders from the Minister.
“Farmers just need to be paid their dues, if the money is with Auction Holdings let them pay the farmers. They can do their politics later. Ulimi wa fodya ngowawa,” said a farmer who told us was waiting for money for his 10 bales sold to East Bridge Tobacco.
A tobacco official blamed the Ministry and Tobacco Commission for their “childish” handling of the matter, saying the fact that Nyasa Tobacco is allowed to pay in kwacha’s, they do not have a valid case to deny East Bridge the same.
“East Bridge is using the same money government is paying them, now government doesn’t want it. Very childish. There is an opinion by the Attorney General on this matter, they need to respect it and get farmers their due,” another legal mind from Justice Ministry advised.
East Bridge Estates has nothing to do with Mphwiyo
The company also clarified that East Bridge Estates and East Bridge Tobacco has no association with fugitive Paul Mphwiyo whose relation was named as a Director of the East Bridge Commodities and Logistics.
A legal representative of the company explained that the East Bridge Commodities and Logistics was merely an “agent” for the fertiliser delivery into Malawi and they have since been dropped from the role.
“They have no interest or single share in East Bridge Estates- the company that had fertiliser supply company contract with government nor East Bridge Tobacco. They are not Directors of have no relationship with the company,” said the legal team member.
The Investigator Magazine will soon publish the squabbles that have engufled the East Bridge Commodities and Logistics.
