South African arms dealer Ivor Ichikowitz’s formerly cosy relationship with the Malawian government has run into stiff headwinds since the election of a new administration under President Peter Mutharika.
Last week two government ministers said a defence contract clinched between former president Joyce Banda and Ichikowitz’s Paramount Group had been partly cancelled and placed under investigation.
This week a joint statement between Paramount and the Malawi government was released denying that the contract was illegal or had been terminated.
Daniel Jenya, personal assistant to the Malawi finance minister Goodall Gondwe,said the company had asked the government to endorse what had originally been a Paramount communiqué.
In addition to the confusion over the defence contract, a Malawi State House source said that Mutharika had rejected Ichikowitz’s request for an audience on the sidelines of the recent US–Africa leaders’ summit in Washington last month.
Mutharika’s Democratic Progressive Party (DPP) toppled Banda’s People’s Party(PP) in disputed elections in May this year.
In a telephone interview last week, finance minister Goodall Gondwetold Mail &Guardian Centre for Investigative Journalism (amaBhungane) that the government had cancelled Paramount’s US$145-million flagship arms deal with the Malawi Defence Force, calling it “illegal, expensive and unsustainable”.
The Office of the Director of Public Procurement, which has a legal oversight mandate over all procurement activities in Malawi, also said that it knew of no contracts between the government and the group.
Malawi information minister Kondwani Nankhumwa suggested that Banda personally handed out the deal to supply patrol boats and other military equipment.
“Government procedures and legislations do not allow the president to dispose of national assets or award contracts. It was wrong and illegal,” he said.
Nankhumwa, the government spokesperson, added that the government is reviewing all Paramount’s contracts, including lucrative deals in fuel and agriculture that Banda allegedly doled out last year.
The joint statement takes a notably different tack. Denying that the defence contract has been terminated, it said Paramount was “engaged in ongoing constructive dialogue to replace the old contract in order to meet the government’s requirements”.
It said the contract “was concluded according to Malawian governmental processes and was signed by both the former minister of finance and the former minister of defence”
“At the time of signing a legal opinion was secured from the Malawian Attorney General confirming both the legality of the agreement and its validity under Malawian law.”
Paramount also downplayed the government investigation, saying it is normal for an incoming administration to review the policies and programmes of its predecessor, including procurement contracts.
“No alleged irregularities have been brought to our attention, nor do we anticipate that there will be any. We support the review … and have written to the president of Malawi offering our full co-operation,” said the group’s director for global marketing, Nico De Klerk.
Last year Paramount supplied seven armed interceptor boats for use in patrolling Lake Malawi amid heightened border tensions with Malawi’s northern neighbour, Tanzania.
It was also commissioned to provide training for soldiers and maintain the boats for five years.
In the same year, the group, through another South African company, Canvas and Tent, allegedly supplied equipment to Malawi peacekeeping troops in the Democratic Republic of Congo.
The UN, in charge of peacekeeping operations in the DRC, rubbished Banda’s claim that Malawi was obliged to buy military gear for its troops in peacekeeping missions.
In his statement last week De Klerk said Banda’s government had approached the company, but declined to give details.
“It is not appropriate…to comment on the procurement details and procedures followed by a sovereign and democratically elected government,” he said.
Banda reportedly agreed through a supplier credit agreement that Malawi would pay Paramount US$-5-million quarterly for eight years, meaning the government would eventually have shelled out US$160-million.
In last week’s interview, Gondwe agreed that the new government remained legally bound to meet its contractual obligations. However, he said it would accept no further arms deliveries and would pay Paramount just$16-million — $31-million for equipment that had been delivered, less the price of a presidential jet Banda sold to the company.
“Paramount has acknowledged our concerns regarding the deal. Malawi will now pay only US$16-million because we bartered the jet,” Gondwe said.
Banda allegedly “bartered off” the French-made Dassault Falcon 900EX jet, which her predecessor, the late Bingu wa Mutharika, bought with US$22-million of donor money.
The jet was sold in 2012 to Bohnox Enterprises limited, a Paramount subsidiary, for US$15-million to settle arms debts.
The sale of the jet allegedly flouted section 172 of the constitution, which makes it illegal to spend government money not deposited in the consolidated fund of Malawi’s reserve bank.
The British Telegraph newspaper revealed last year that the Ichikowitz Family Foundation paid for a campaign by London-based PR company Bell Pottinger to rebuild Banda’s standing among foreign donors following a corruption scandal.
Ichikowitz’s brother, Paramount executive director Eric Ichikowitz, confirmed to The Telegraph that he had paid Bell Pottinger. “The family foundation believes that President Banda is a force for good in Malawi and that she is striving to improve the lives of all Malawians,” he explained.
“It is keen for her efforts to be duly recognised by the international community and fairly represented in the international media.”
He added that “there is absolutely no connection between contracts undertaken by Paramount Group and its companies and any charitable work undertaken by the Ichikowitz Family Foundation.”
In the run-up to the elections, Malawi’s opposition parties claimed that Ichikowitz money had served to bolster Banda’s well-resourced campaign.
De Klerk said Paramount’s support for Malawi “is a matter of public record. It became one of the issues of political debate in Malawi, among Malawian parties, and not with the group itself”.
Paramount also sponsored the UK-Malawi Trade and Investment forum in London last year.Ivor Ichikowitz was part of the Malawi delegation and a panellist during a session on infrastructure investment.
Through another subsidiary called Trans Africa Capital, the company also signed fuel and agricultural contracts with the government, including a lucrative deal to supply fertiliser under the government’s farm input subsidy programme.
The DPP-led government has also overturned Banda’s decision to award South Africa’s Legacy Hotels a contract to run the government-owned, multibillion-kwacha Umodzi Park complex in Lilongwe, comprising the Bingu wa Mutharika Conference Centre, the Presidential Hotel and the Presidential Village.
The government said Banda had illegally interfered with procurement processes when she ordered a new tender despite Peermont Hotels, another South African group, being the preferred bidder.
Ichikowitz’s main purpose at the Africa – US summitwas reportedly to make an impassioned plea to the US government to allow African leaders to use aid moneyto strengthensecurity institutions to deal with threatsto Africa’s security (See sidebar).
“In the normal course of business it is our policy to engage with the head of state in countries in which we have on-going relationships,” said De Klerk. “No formal request was made for any meeting in the US and as such no request was denied.”
Contacted for comment, Banda’s spokesperson, Andekuche Chanthunya,said:“As far as we know there is no official investigation. But Mrs Banda is ready to cooperate with the government should there be one”.
Banda previously defended the defence contracts, arguing that Malawi is vulnerable to many security threats ranging from transnational organised crime to terrorism.
“Buying of equipment for the army to us is a must and a priority …our army is vulnerable and not well-equipped to face anything and protect Malawians,” she told The Telegraph.
In recent years, African countries have doubled their annual military spending to US$45-billion, according to the Stockholm International Peace Research Institute.
- Collins Mtika is a Nyasa Times Journalist at the M&G Centre for Investigative Journalism in Johannesburg, South Africa.
The M&G Centre for Investigative Journalism, a non-profit initiative to develop investigative journalism in the public interest, produced this story. All views are the centre’s. See www.amabhungane.co.za for its stories, activities and funding sources.Follow and Subscribe Nyasa TV :