…deal K40 billion expensive
…govt guarantees to pay if crops fail
…Romanians are based in Lilongwe
Fresh from a disastrous butchery debacle, President Lazarus Chakwera administration has upgraded its taxpayer’s money fleecing projects, by guaranteeing payment of K133 billion to a Romanian registered firm, a country well associated with money laundering.
For a tonne of fertiliser, the landing cost, according to our investigations is at around K550 000 (US$500) per tonne while the government barter trade has priced the tonne at almost K900,000 raising questions as to who will benefit from a K400 000 per tonne difference.
“The deal is K40 billion to K50 billion expensive. They advertised for fertiliser in the country, then they jump and go all the way to Romania. The desperation to is real,” said a source from the Ministry of Agriculture who mentioned Mendrina Mloza Banda, Principal Secretary for Administration as having been planted by “someone big in the OPC” who is calling the shots on fertiliser contracts.
The Investigator Magazine can name Secretary to the President and Cabinet Colleen Zamba as being mentioned to have travelled to South Africa and Dubai to discuss fertiliser with potential suppliers which are not in her domain.
There are strong indications that the company has hidden its directors from the public register and used local lawyer Likhwa Mussa to sign on behalf of the company. This could mean the company was registered by “Chief” the same gang Zamba is alleged to have pushed for his contract at NOCMA.
“Malawi government is comfortable to sign a multibillion-kwacha deal with a local lawyer. Who are the Directors of this hidden institution? There is something wrong with the secrecy and the guarantee. Chakwera is setting Malawians to pay this in cash,” said an accountant in public service who said there are dozens of unqualified people being picked from outside civil services who are being recruited to manage procurement in key ministries.
“This is more than cashgate. This is a rundown of the treasury. All deals don’t add up in a business sense. We don’t have forex, yes, but the secrecy in contracts raises too many questions,” said another expert saying the government should come in the open and state who and how they identified the supplier.
The Investigator Magazine has been informed that the company’s officials have been lodging at a hotel in Lilongwe for the past years and they are suspected to be dealing in illegal mining.
“With a sovereign guarantee, these people can go and borrow millions of dollars and disappear leaving Malawians with an egg. There is something amateurish about this administration and handling of public finances,” said another money expert who The Investigator Magazine had engaged to track the company.
Only one name Haim Tzutziashvili appeared but could not be traced further. The company has the same opaque profile as Bridgin Foundation, another scam President Chakwera embarrassed himself in 2022.
The deal is for 300,000 tonnes of fertiliser expected to be in Malawi by 24 July 2024 which means only 150 000 tonnes will be in Malawi by December 2023 to cater for the 2023/2024 farming season.
Ministers on Thursday tried to justify the abnormal and secretive allocation of 600 000 tonnes to a Doba Doba (middleman) whose profile shows it imports Russian-manufactured fertiliser from PJSC Acron. This could raise questions if the fertiliser is from Russia and using a Romanian shell company to cover its exports to Malawi.
The contract if implemented will quadruple the money Malawians will pay to K550 billion in case they don’t grow enough crops to pay for the total of 600 000 tonnes of fertiliser the Romanian company is supposed to supply.
The first batch of 50 000 metric tons of Urea was supposed to have been shipped on 31st May and is projected to arrive in Malawi by 25th July 2023.
Minister of Finance Sosten Gwengwe and his Agriculture counterpart Sam Kawale were forthcoming with details but could not say who identified the Romanian company whose portfolio is very wide and does not include fertiliser manufacturing.
The company website, one of the many with the same address says its core business is to supply medical equipment that is imported from Canada, Turkey, India, China. It says it was established only in 2018. The jump from a butchery to a medical equipment firm is remarkable for the administration.
Its Agriculture profile does not have many details only listing commodities it deals with and five pages of fertiliser types. It does not say where it has supplied the Russian fertiliser and the report The Investigator Magazine has bought from the European Register of companies does not contain any declarations of registration related to the fertiliser business.
Different websites list Romania as safe haven for mafia, trafficking, and money laundering schemes. It does not make sense that the Malawi Government would secretly identify a company in such jurisdiction.
“This is guarantee will be activated only when the fertiliser arrives in Malawi,” Gwengwe justified the deal on Thursday. He said the commodity exchange where produce will be used to exchange with fertiliser was to mitigate the forex challenges.
“This is one of the three commodity exchange programmes. We said it about Egypt,” said Kawale.
However, the two Ministers could not disclose who identified the company whose website tracking by our experts shows they only updated the fertiliser component in April 2023 and does not manufacture fertiliser, contrary to President Chakwera’s own directive that fertiliser should not be sourced from middlemen.
Kawale said the prices to be paid will be Admarc gate prices, but the contracts reveal higher than normal prevailing prices though he could not say how the government will source the commodities.
“This is not AIP fertiliser, it is commodity exchange,” said Kawale.
According to the documents, Malawians will have to farm 250,000 tonnes of soybeans, ground nuts, 200,000 tonnes of maize and pigeon peas, 50000 tonnes of rice and sorghum, and 25000 sugar and cotton to satisfy the contract. Most Malawi produce does not meet EU specifications which means can’t pass a serious supply chain, making the whole thing bogus.
The contracts despite being long and detailed do not specify the quality, variety, and where the crops will be delivered raising questions if the paperwork is even legitimate.
“Knowing this government, 600 000 tonnes could have been a pomp ceremony. Then we could have seen who is delivering. Suddenly they are secretive, and they can’t even tell you how the commodities will be collected and where they will be delivered. Like Bridgin, Quay, and Baarkat Butchery, this all looks suspicious. A US$124 million contract would contain more than one-sided detail. This whole contract was drafted in Malawi by suspicious characters. A serious company would protect its interests, the contract shows this company is bogus,” said a contract law specialist.
The Investigator Magazine will in its print edition publish details of the cartels that surround President Chakwera, and his family and are planting procurement and finance teams to be fleecing different government departments.