LL FOREX BUREAU SCORES 4.4 TRILLION FERTILIZER DEAL. AGAIN, IT BREAKS THE LAW

Forex Bureau scores ‘deal of the century’. But once again it's crooked.  

Quick facts: 

• The group wants a K75BN contract to supply 900 000 metric tonnes of fertilizer to the Ministry of Agriculture 

• The same group illegally obtained and contracted to supply K128 billion in fuel to NOCMA

• Fertilizer contract done without any tender

• The group wants the Malawi government to pay them in Kwachas 

• Govt has asked PPDA to provide a no objection to the contracting

• No procurement cost provided to PPDA

BY PLATFORM FOR INVESTIGATIVE JOURNALISM

The Malawi government continues pursuing deals with a controversial business group claiming to represent the United Arab Emirates (UAE) royal family while flouting the laws governing procurement in the country which are aimed at arresting corruption and abuse of office.

While the group claims to be representing the rich Gulf nation, a previous PIJ investigation found links to a local company called QLV Digital Fx (Malawi) Limited in whose accounts money from a previous controversial fuel deal was supposed to be deposited. 

After the highly illegal and controversial fuel procurement deal that was eventually canceled and the subsequent granting of a mining license which also broke the country’s mining laws, PIJ has seen evidence of attempts to grant the company a contract for procurement of fertilizer across the country.

Through the Ministry of Agriculture, the government wrote the Public Procurement and Disposal of Assets (PPDA) to seek a no-objection to the granting of the contract to supply 600 000 metric tons of Urea and 300 000 metric tons of NPK. The fertilizer would be delivered in a consignment of 25, 000 metric tons.

While the letter does not specify the cost of the fertilizer deal, previous government procurement of fertilizer provides working figures on how much the deal could cost the government. For example in 2022, again controversially, the government paid US$727,000 (K750 million) to a meat company for the procurement of 25,000 metric tonnes of fertilizer meant for the Affordable Inputs Programme (AIP). Based on the costs of the 'Butchery' the costs of the deal is around K75 billion.

Based on the international average cost of fertilizer as recently released by the Reserve Bank of Malawi. For example, UREA costs on average just $287 per metric tonne (500, 251 kwacha).

The amount is way above the threshold any government agency,  ministry, or department is permitted by law to procure without tender. 

According to the PPDA Circular dated 1st April 2024, all goods above 100 million Kwacha in every government department, agency or company (including NOCMA) are supposed to be done through Requests for Quotations (RFQs). 

Procurement between 100 million to 10 billion Kwacha are supposed to be done under National Competitive Bidding (NCB) rules and those above 10 billion Kwacha are expected to be done under the International Competitive Bidding (ICB) rules. 

The government, through the Ministry of Agriculture, alleges via the request sent to PPDA that the basis of the contract is a government-to-government agreement – between Malawi and the United Arab Emirates –a fact that has come under question as previous PIJ investigations have brought into question as evidence uncovered shows the company is registered in Malawi and operates as a forex bureau.  

Furthermore, despite making similar claims in the fuel procurement deal with NOCMA, the PPDA has rejected NOCMA’s request to authorize the contract citing the violations of the procurement laws.

Reports further indicate that the royal family that the company claims to represent has also disputed any links to the contracts the company is pursuing in Malawi.  While a source claiming to represent the royal family has reached out to the PIJ to distance the UAE rulers from the deals in Malawi, PIJ could not independently ascertain his authority in the royal family. However, the source was able to pinpoint several areas confirming knowledge of the royal family and even referred to privileged correspondence that suggested he was well-positioned to speak on the matter.

But while confirming the request to PPDA, Minister of Agriculture Sam Kawale argued that the request to PPDA did not amount to an intention to grant a contract but just seeking information on whether the law could permit such a contract.

“The Ministry of Agriculture has sought guidance from PPDA on how to proceed with government-to-government procurement. There is no contract, only an MOU, which is not a legally binding document, that’s why there is no amount as you have said,” said Kawale.

He added: “Seeking guidance and asking for No Objection are two different things.” 

Dixie Kampani, Principal Secretary in the Ministry of Agriculture, said in a separate response: “The Ministry of Agriculture has sought guidance from PPDA on how to proceed with Government to Government procurement.” 

He added: “There is no contract, only MOU, which is not a legally binding document, that’s why there is no amount as you have said.” 

Marcin Lapa, a representative of the company, asked for more time to respond to questions sent by PIJ. In the PIJ investigation on the fuel deal, documents identified Marcin Lapa–alongside Jakub Tadych and Arthur Phiri– as the directors for QLV Digital Fx (Malawi) Limited, a company that was to be paid K128 billion for an oil deal with NOCMA.

Reacting to the revelations, Michael Kaiyatsa, Executive Director for the Centre for Human Rights Rehabilitation (CHRR), a governance and human rights watchdog, called for an investigation into the matter, describing the deals as suspicious. 

He said the government has shown no accountability in its conduct over the deals and warned of entrenchment of corruption.

“It’s particularly concerning that the government appears to have learned little from past mistakes. After the botched Barkaat Foods Limited deal, which cost the country K750 million, we expected a more cautious approach to safeguarding public resources.

“The recent trend of questionable deals, including the substantial payment to Barkaat Foods, underscores a troubling trajectory in Malawi's governance,” said Kaiyatsa.

Wales Chigwenembe, a social accountability expert, said the development highlights the government’s continued onslaught on the set public procurement laws.

“Every time the government comes with such requests is contravening the law and this has implications on governance and principles of social accountability monitoring,” Chigwenembe said.

A chain of bad deals

The PPDA was also yet to respond to our questions on the matter, which among others sought to establish the legal questions over the authenticity of the claim that the company is representing the interest of the UAE government. 

PIJ exposed question marks over the legality of the deal, particularly the infringement of the procurement laws by, among other things, procuring a service without a tender. 

In addition, the Malawi government was due to pay 50 percent of the contract sum in advance—before making any fuel deliveries. This provision of the agreement raised doubts over the capacity of the purported UAE company. This agreement provision also raised suspicion about the upfront payment possibly being aimed at helping the company finance the contract. 

The company requested the Malawi government to pay for the contract in the local Malawi Kwacha currency (despite the fuel expected to be imported from the UAE and the agreement being couched in a language that made it look like a government-to-government arrangement). All payments to the company were also to be deposited into the bank accounts of a Lilongwe-based forex bureau, named QLV Digital Fx (Malawi) Limited. 

The directors of the Forex bureau, the PIJ investigation further uncovered, were the same directors of the purported UAE company. 

The chain of events surrounding the awarding of the contract also raised suspicion. 

On 22 July 2024, the purported office of Sheikh Ahmed Bin Faisal Al Qassami wrote an expression of interest to supply a tender to the Malawi government through the National Oil Company of Malawi (NOCMA). Yet, documents acquired by PIJ show that on 19th July (three days earlier), NOCMA Chief Executive Officer Clement Kanyama wrote the CEO of the Malawi Energy Regulatory Authority, seeking approval for awarding a contract to the group.

Following the controversy that followed the awarding of the contract, sources say the boards of PPDA, NOCMA, and MERA met to discuss the request for no single sourcing. 

From securing that K128 billion fuel deal, we reported how the self-proclaimed representatives of the Sheikh Ahmed Al Qassami group have acquired a gold mining and exporting license for a small-scale mine in Kasungu (again breaking Malawi's laws).

This article was published by the Platform for Investigative Journalism (PIJ). PIJ is committed to professional and independent accountability journalism. This article has been amended to correct the original calculation of the estimated cost of the planned purchase.