Government in February asked Paramount Group, a company based in Lilongwe, which has various public contracts, to supply 10 000 tonnes of fertiliser under the Affordable Inputs Program (AIP) initiative without any contract. Government did also not seek approval from the Public Procurement and Disposal Authority (PPDA) claiming the supply was an adjustment to the previous season’s AIP contract for the supplier.
The precise amount of fertiliser is not clear but is estimated to be in billions, with the recent controversial procurement of 25 tonnes of fertiliser for the same programme estimated at K30 billion kwacha.
Following the eruption of another scandal in which the government paid K750 million to a UK-based butchery to supply fertiliser, while bypassing procurement laws, officials are now under intense pressure to doctor evidence in the second case uncovered by PIJ, with officials reportedly being requested to backdate procurement processes.
Among others, the office of the Public Procurement and Disposal Authority (PPDA) was reportedly under pressure to backtrack awarding of a no-objection letter to support the procurement.
The PIJ requested the Ministry of Agriculture, PPDA and SFRM and treasury to provide all procurement documents related to the contract including, among others, the advertisement requesting suppliers to bid for the supply, the IPC minutes that endorsed the procurement and the no-objection from PPDA.
Both SSFRM and the Ministry of Agriculture did not provide the documents as requested, despite the Access to Information law mandating the officials to release such information.
PPDA spokesperson Kate Kujaliwa told PIJ that PPDA did not have information on the procurement given by the PIJ, suggesting the procurement authority was not involved in the procurement as indicated by our sources.
“We have been trying to establish the fact as per the questionnaire sent. However, the reference you made does not match any communication on our end. Would you be kind as to verify with SFRM on details to help us give you the correct information,” said Kujaliwa.
The development is not only in contravention of Government procurement laws but also established practice in the AIP procurement, in which the government annually hires suppliers. To adjust by 15 per cent a contract for fertiliser without seeking ODPP no objection would be in contravention of the law if proven, as the figures are expected to run in billions.
The revelations come as the government is facing another procurement scandal related to AIP supply from an obscure UK supplier.
It has emerged that the Ministry of Agriculture bypassed the Anti-Corruption Bureau (ACB) in the K750 million fertiliser import deal with a United Kingdom firm, despite the law demanding to vet of all high-value procurement contracts.
The contract was granted to Paramount Group, while the government was yet to grant letters of credit to Paramount Group.
Reacting to the PIJ findings, Parliamentary Committee on Agriculture Chairperson Sameer Suleiman, called for an investigation into the procurement, adding the fertiliser procurement initiatives have been overtaken by cartels.
He said the committee will demand an explanation from the Ministry on the procurement and called upon law enforcement to also investigate the matter.
“We are not surprised, this has been happening for a while. Last year too, they procured fertiliser even outside the budget, before the budget was passed. This is also contrary to what we were told that they will be procuring from manufacturers and cut out the use of middlemen. Is Prakesh a manufacturer,” said Suleiman.
Prakesh Ghedia is the Managing Director of Paramount Holdings, the supplier of the fertiliser, which is based in Kanengo in Lilongwe.
The Law
According to PPDA thresholds revised annually and established by Section 9 of the Public Procurement Act, in 2018, MPS could not make any procurement above K40 million without seeking PPDA approval, and every procurement valued at K50 million was supposed to be published in public and goods which could be procured via quotations were limited to K10 million while procurements above K400 million, had to be subject to open tender using the International Competitive Bidding framework and also subject to approval by PPDA.
In this procurement, expected to be in billions, no tenders were flouted and no PPDA approval was sought.
Ministry Ducking and Diving
Maweru refused to respond to PIJ questions on the matter, while Minister of Agriculture Lobin Lowe could not be reached upon several attempts.
SFFRM CEO Richard Chikunkhuzeni asked for more time to respond on the matter, but did not respond to the questions we sent.
Paramount Holdings Managing Director Prakesh Ghedia asked for more time to respond to the questions on the matter. “I am out of the country. Will meet when back,” Ghedia.
We asked Ghedia to respond to the questions.
However, sources close to the matter confided to PIJ that a cover-up attempt was underway, with officials in the ruling Malawi Congress Party and government pressurizing officials to backdate documents to avoid another scandal.
Paramount Holdings
Paramount Holdings is not new to controversial procurements with Malawi government. In 2018, the company was forced to pay back some MK200 million back to Lilongwe Water Board (LWB) after the Mobile Water Treatment Plant it supplied to the utility company turned out to be faulty and never functioned for a single day.
The devil, though, is in the details. The procurement’s evaluation process was manipulated and awarded to Paramount Holdings limited, a company with no experience. And no pre shipment factory inspection on the machine in India was done to check compliance to specifications for Malawi environment and water quality, investigative journalists uncovered then.
To make matters worse, a performance guarantee was not secured from Paramount Holdings as a cover for non-compliance by the supplier.
In 2019 as the government sought to purchase some 100 ambulances for K4 billion kwacha, Paramount Holdings emerged one of the two successful bidders, alongside Movesa. They were both asked to arrange for inspections at their cost. This was after the government had cancelled the original tender which was initially awarded to Vision International of South Africa, which applied to the government to supply the ambulances without any official tender process.
Paramount Holdings took the inspection team to Dubai – to see their suppliers, and some pictures leaked showing officials dining with a bidder – a conduct procurement specialists described as suspicious and an act of fraud.
Yet Another Fertiliser Controversy
Butchery scandal erupted after the Parliamentary Committee on Agriculture alleged that the government had lost about K30 billion in a dubious fertilizer contract.
But in the statement, Ministry of Agriculture Principal Secretary Sandram Maweru said the Smallholder Farmers Fertiliser Revolving Fund of Malawi (SFFRFM) had a contract with a United Kingdom-based company Barkaat Foods Limited to supply fertiliser for the 2022/23 AIP programme.
The company, according to the statement, had a deal with the actual supplier Yara Limited UK for an initial 25 000 metric tonnes of fertiliser and demanded a commitment fee of $727 000 (about K750 000 000) to lock the price. The money was remitted through Ecobank.
Reads the statement: “Barkaat Foods Limited failed to supply and consequently terminated the contract citing loss of the production line at Yara UK and that they could no longer commit to supply the fertiliser and agreed to transfer the fee back to SFFRFM through the same Ecobank.
“This advance commitment fee payment of about K750 million is under recall by Ecobank and will be received by the end of this month of October 2022.”
It has since emerged that the Ministry of Agriculture bypassed the Anti-Corruption Bureau (ACB) in the K750 million fertiliser import deal with a United Kingdom firm, despite the law demanding the bureau to vet all high-value procurement contracts.
The contract was granted to Paramount Group, while the government was yet to grant letters of credit to Paramount Group.
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