…guarantees worth K250 billion issued
…deal signed in December 2022 before approval
…Kawale, Zamba and Mlodza Banda at the centre of it
For a nation that cannot feed itself with 3.8 million people facing starvation, the Minister of Agriculture Sam Kawale went on national television to churn lies about the Romanian fertiliser deal, which we can reveal is worth K250 billion (USD 248 million).
The Investigator Magazine can reveal Government issued two sovereign guarantees and that experts say it is impossible to pay back with crops looking at Malawi’s present production and food capacity.
The guarantee which has been leaked to the public is the second one, and the third one is expected to be issued to bring the total cost of the 600,000 tons of fertiliser to K500 billion kwacha. The Minister in his fire fighting interviews staged with reporters who have allegedly been paid, only acknowledged K125 billion guarantee and hid the other one.
“The guarantee between the parties requires the Guarantor to issue two (2) Irrevocable, Assignable, and Divisible Sovereign Guarantee as payment security instruments of equal value,” reads the sovereign guarantee. Finance Minister Sosten Gwengwe and Kawale only acknowledged one hiding the other.
The Investigator Magazine can name Kawale, Secretary to the President and Cabinet Colleen Zamba and Principal Secretary in the Ministry of Agriculture Madrina Mlodza Banda as the trio that has worked hard to fool the Cabinet and push for the most expensive fertiliser deal in the history of subsidy programe.
Kawale contradicted himself during the interviews claiming that East Bridge has a production line and later stating that no manufacturer of the fertiliser can pay accept barter trade and require security deposit.
“Sovereign guarantees are security deposit. The Minister is committing Malawians to pay K250 billion. This is very expensive considering that fertiliser prices are falling,” said our financial analysts engaged in the deal. He described Kawales interviews as “sham and disoriented after being caught.”
Kawale has avoided commenting on the pricing of the deal.
East Bridge SRL does not produce fertiliser
The Investigator Magazine has solicited services of an account investigations expert and can reveal that the company which Kawale has vouched, and claims has references, has never produced a single bag of fertiliser in the world. The agriculture component was added only after the Malawi fertiliser deal was made.
“The Minister cannot say which country is the production line of the company. The company says its fertilisers are Russian made. The accounts of the group of companies have declared losses through and through which is a characteristic of a company running away from paying taxes. Let the Minister tell the nation how these people were identified,” said our analyst.
Kawale told MBC that East Bridge approached the Ministry in September 2022, but he could not name the people that approached Government. He later claimed that the Romanians have been in Malawi for three years.
Our investigations reveal that some Romanian nationals have been engaging in illegal mining and trading of minerals and have been based at the Presidents Hotel in Lilongwe.
Deal signed before approval
The Investigator Magazine has confirmed that Mlodza Banda signed the agreement with two Malawians, not Romanians, lawyer Likhwa Mussa and one Ted Moya who have registered a company locally as a subcontracted group of East Bridge Srl.
Kawale cannot produce credible Romanians as due diligence reports were largely faked and the deal is between Malawians, using the Romanian address.
“The deal means the Malawi Congress Party (MCP) doba dobas and the suppliers that Zamba has been negotiating in South Africa and Dubai will use the cover of East Bridge to supply fertiliser at a very high cost. Government will not have any crops to exchange with as Kawale claims, the sovereign guarantees will be invoked and Malawians will pay cash,” stated an insider.
The deal was signed on 14 December 2022. The Cabinet Committee on Agriculture rejected it due to lack of due diligence. It was rejected at least four times, according to members of the committee.
There are conflicting versions from the members of Chakwera cabinet on how the matter was introduced. Others claim it was rejected, while others claim it was approved.
The Investigator Magazine has evidence that the approval from Cabinet only came in March and April 2023, almost four months after the Ministry of Agriculture had already sealed the deal.
Kawale, Zamba took it to cabinet
Minister Kawale told the media that the Romanians approached the Ministry in September 2022. This means the K750 million butchery deal had already been passed and this was a fresh offer which he inherited in office on 26 October 2022 when he was appointed as Minister of Agriculture.
Kawale then proceeded to have the deal signed on 14 December 2022, which had options of cash payment or commodity exchange. The Minister authorised a deal only 36 working days in office.
After cabinet committee rejected the deal, apparently the Minister of Agriculture took it to the whole cabinet using the influence of the Secretary to the President and Cabinet.
The fact that the deal had already been signed was hidden. The Cabinet was used to rubber stamp.
A cabinet source claims Finance Minister Sosten Gwengwe looked surprised when the items were introduced, especially the number of sovereigns guarantees the company was seeking at once.
Zamba made it look like it’s the Presidents deal
The lobbying for the deal has always been presented as something that President Lazarus Chakwera is aware of and endorsed. The Investigator Magazine could not find a direct link between the President and the company.
However, State House insiders claim President Chakwera had a meeting with Zamba over her “behaviour” as she reportedly has been flying in and out of the country on the pretext that she is not feeling well.
“The SPC has been a frequent flyer into Dubai and South Africa. She met fertiliser, oil and other suppliers. She allegedly has been signing contracts for things that do not concern her. This deal was presented as if President Chakwera was aware. He was not,” said our source at State House
He said the President was aware of Zamba’s stretching her influence across government department that is why he removed her as Head of Presidential Delivery Labs which has been given to her deputy.
The fallout, Cabinet abstains
The Investigator Magazine story published on Friday caused panic and Minister Kawale is said to have called for a meeting that lasted from 7.30pm to 10pm on Friday night. Zamba did not turn up for the meeting, according to our sources.
Our sources said other Ministers were angry with the turn of events and outright rejected holding of a press conference, leaving the Minister of Agriculture to face the music alone.
There are allegations that the meeting discussing possible bribery of the media to change the narrative. One established daily newspaper on Monday pumped up the deal without publishing the critical details of the ownership, procedures justifying the single source allocation of K500 billon worth of contract and how government will pay off the huge produce committed in the contract.
Kawale neglected to tell the nation that the Ministry of Finance had issued K250 billion worth of Sovereign Guarantee and who identified the company.
The Minister also lied that the deal was for Small Holder Farmers Fertiliser Revolving Fund (SFFFRM) when all the documents indicate the discussions were between the Ministry of Agriculture and the East Bridge Srl.
K100 billion more expensive
The Minister of Agriculture in his choreographed interviews focused only on saving foreign exchange but lacked honesty on the pricing of the fertilisers which will be K400,000 more expensive per ton than those on the market, meaning with two sovereign guarantees, government will pay about K100 billion more than prevailing rates.
Our sources at SFFFRM have disputed the version that they will be responsible for the fertiliser already accusing the Ministry of Agriculture of shortlisting expensive fertiliser suppliers for the secretive 2023/2024 contracts.
The Investigator Magazine has been furnished with the list of those expected to supply 2023 AIP programme who were identified secretly by the Ministry for the first time in the history of subsidy programme.
No crops to pay back.
The Minister of Agriculture told Malawians that the deal will open markets for Malawi produce but he could not say how the crops will be sourced at the time national maize production has fallen and up to 3.8 million people will require food aid this year, according to the United Nations.
“Malawi only produced less than 3 million tons last year of maize. 3.8 million require food aid which is normally maize. The Minister of Agriculture commits itself that within a year or two it will have 400,000 tons of maize and 500,000 tons of soy and groundnuts to pay for this barter trade. They might think Malawians have low thinking capacity,” said another agricultural expert in the Ministry.
UNICEF sent an appeal to help close to 600,000 young children that are facing malnutrition in Malawi while Kawale expects the country to be able to produce to repay his deal.
Admarc according to 2023/2024 budget has only been allocated K12 billion to buy maize but the money is yet to be released according to a May 9 report in the Nation newspaper. 200,000 tons would require government to spend K100 billion to procure maize for the programme which is the equivalent of 80 percent of the subsidy budget.
In terms of soybeans, the country production is estimated to be only around 300,000 tons, meaning under the East Bridge deal, all soy beans will have to be surrendered to the company to offset the fertiliser costs. There is no mechanism in place to produce on contract.
Malawi’s groundnuts production has only peaked at 400,000 tons making it a tall order for the government to source the required tonnage to meet the contractual agreement.
“The Minister has exposed his ignorance in terms of agriculture in Malawi. Malawi failed to fulfil 187,000 tons of maize flour to South Sudan. It is laughable that the whole Minister of Agriculture would go in public to state that we will supply 200,000 tons of pigeon peas when we only grow 78,000 tons. The problem is that Mlodza Banda and the Minister are overriding experts. This deal, the barter trade is a disaster in making. It is simply cashgate, it should be cancelled. If they want and they are sincere, let them advertise for anyone who wants commodities,” charged a senior Ministry of Agriculture official.
The official who gave The Investigator Magazine a critical view of the crop production in Malawi said with the projected La Nina phenomena for the 2023/2024 farming season it was “a very sick joke” to commit Malawi to a contract based on crops who depend on weather conditions.
“It shows the Government can’t plan or think ahead. They talk of deliveries by July 2024. The meteorological services have warned we will have La Nina this farming season. If you combine Cyclone Freddy this year and La Nina next farming season, any right-thinking person cannot agree to a contract to pay back with produce. We have simply no crops to pay back with, we can’t feed ourselves now,” said another agriculture expert.
Kawale has insisted the deal will go ahead despite the glaring impossibility experts have told him.
The Investigator Magazine continues to investigate the company in Romania, we will update on its history and links to Malawi.