Details have emerged in what has been branded as maizegate that despite information in the media concerning purchase of 100,000 metric tons of maize from Zambia only 5,000 metric tons have delivered, Nyasa Times understands.
Information and documents Nyasa Times has sourced reveal that Agricultural Development and Marketing Corporation (Admarc) got caught up in the web of potential fraud and corruption when they entered into multiple contracts with several suppliers from Zambia who pledged to supply about 300,000 metric tons of maize Malawi government had initially planned to import from that country.
The documents in our possession indicate that Admarc between May and June, 2016 quoted and entered into contract agreement with several maize suppliers from Zambia including Kaloswe Commuter and Courier Ltd and Zambia Corporative Federation (ZCF) who agreed to respectively supply 100,000 metric tons of white maize for commercial purposes.
The contracts signed got a blessing of Office of Director of Public Procumbent (ODPP) who gave no-objections on June 18th, 2016 for Kaloswe-Admarc deal and on July 14th for ZCF deal.
Malawi – Zambia Deal
Firstly, Malawi government had approached the Zambian counterpart to procure 300,000 metric tons of maize. Minister of Agriculture, George Chaponda and Admarc officials met Zambian team on May 18th, 2016 to seek for importation the grain since there was maize exportation bad in that country.
Zambian government through its Food Reserve Agency (FRA) on June 11th, 2016 refused to sell maize to Malawi on the basis that it had not enough carryover stocks to export until a new crop is bought later that year, forcing Admarc to sign contracts with Kaloswe and ZCF on June 17th, 2016 to supply 100,000 metric tons respectively at a cost of US$34.5 million (US$345 per ton).
As stipulated in the contracts, both ZCF and Kaloswe were supposed to supply the maize within 120 days from the date of the contract but details started emerging that revealed that Admarc had initially caught up in web of lies and dishonesty when it discovered that Kaloswe had also entered into contract agreement with ZCF to purchase maize that was to be supplied to Malawi.
The contract between Kaloswe and ZCF was signed on May 31st, 2016. Kaloswe was to buy maize from ZCF at US$ 215 from ZCF’s depots across the country which was to be sold to Malawi at US$345 per ton, meaning the company was earning about US$130 per each metric ton.
Based on contract terms, ZCF was only going to release the maize after Kaloswe made a full payment in advance per/multiple load prior to the commencement of uplifts and collections from the sources.
Kaloswe was to incur 1.5 percent surcharge on contract value if it failed to perform the purchase within seven (7) days of signing the agreement in order to avoid time-wasting and getting ZCF to incur unnecessary costs.
Since Kaloswe had no funds to purchase maize to export to Malawi, it silently entered into contract with Admarc to supply 100,000 tonnes of maize without the knowledge of ZCF on 17th June, 2016. However things get complicated when it discovered that it could only be paid by supplying maize first before Admarc facilitate payment through a confirmed Letter of Credit (LC) from a mutually acceptable bank.
On June 24th, Kaloswe was forced to enter into another contract with Zambia Business Horizon Solution Ltd of Lusaka West to handle logistics for the transportation of 100,000 metric tonnes of the same maize to Malawi.
And on July 4th, noting it was running out of time and was struggling to raise funds for maize purchase, Kaloswe asked for contract amendment with Admarc, advising the grain marketer to issue payments to ZCF through its First Capital Bank account since their deal with the Malawi’s grain marketer was not on cash basis.
However, Kaloswe did not manage to supply the maize despite demanding for payments from Admarc, a development that forced the grain marketer to investigate the company. Admarc eventually realized it made a deal with a ‘devil’ whose existence was suspicious and that had no capacity to supply the maize following its dilly-dallying in supplying the grain.
Admarc terminated the contract on October 11th, 2016 after several months of discussions, and opted to revert to its earlier contract agreement with ZCF who by December had only managed to supply 5,000 metric tons out of agreed 100,000 metric tons.
Payment for the maize has not yet been made due to contract Malawi government signed with PTA Bank- which is providing a loan of K26 billion through CDH Bank as Credit Manager- which stipulates that payment will only be done when the supplier delivers 10,000 metric tons of the agreed maize quantity.
ZCF Executive Director, James Chirwa confirmed that no payment has been done to the maize that has already been ferried into Malawi because one of the above stated contract condition.
Meanwhile, Kaloswe Commuter and Courier Ltd and ZCF have engaged in legal battle despite reports indicating that the first did not make any payments to the latter for the white maize for export to Malawi after entering into a contract to make the stock available.
However, Kaloswe, according to Zambia’s Daily Nation, mistook the LC for the money transfer and applied for an order of interim injunction from the High Court to restrain ZCF from spending, transferring, administering or dealing with the US$34, 500, 000.00 allegedly paid into its account by the PTA Bank over its contract with Admarc.
According to an affidavit in opposition to application for interim injunction, ZCF finance manager Allan Malisawa submitted that under the failed contract between ZCF and Kaloswe, the parties understood that the process of gathering the maize commodity through collections from provinces involved ZFC having to pay the farmers.
Mr. Malisawa said according to the addendum on the contract, Kaloswe was supposed to pay a surcharge of 1.5 percent against its contract value and that after going into a contract with ZCF on 31st May, 2016, Kaloswe entered another contract on 17th June 2016 with the hope of raising money that it was required to pay without the knowledge of ZCF but could not do so because one of the terms of the contract was that Kaloswe had to deliver the maize before getting the payment.
“Having found himself in this predicament as a result of speculative pursuits in business deals, the plaintiff (Kaloswe) failed to deliver the white maize to Admarc of Malawi who then cancelled and terminated his contract.
“The Malawian government then quickly arranged with the government of the Republic of Zambia to get a supplier of the white maize who then recommended the defendant (ZCF) to supply the badly needed commodity (white maize) in Malawi,” Malisawa said.
Meanwhile, both commission of inquiry set by President Peter Mutharika and the Anti-Corruption Bureau (ACB) have started investigating the saga amid confirmed reports that Admarc’s Chief Executive Officer, Foster Mulumbe has been sent on forced leave until the matter is concluded.
Mulumbe and other government officials including Minister George Chaponda are accused of pocketing about K9 billion out of the deal.
They both cliam no payment has been made yet and deny any wrong doing.Follow and Subscribe Nyasa TV :