WITHOUT TENDER, GOVT CONTRACTS LL FOREX BUREAU TO SUPPLY K128BN WORTH OF FUEL

Breaking the law, without any competitive tendering, the government through NOCMA wants to procure 128 billion kwacha worth of fuel from an alleged UAE company that will be paid half the contract sum upfront. All payments, however, will not go to any UAE company, but to a Lilongwe-based Forex bureau, raising further eyebrows. 

Question marks have emerged over a forex bureau allegedly linked to a UAE royal Sheikh Ahmed Bin Faisal Al Qissim

By Golden Matonga and Josephine Chinele

Without any tender or competitive bidding as prescribed by the procurement laws, the Malawi government through the National Oil Company of Malawi (NOCMA) is set to procure 128 billion kwacha worth of fuel from a supplier who will be paid a 50 percent upfront through a local forex bureau. 

The deal–to procure 125 000 metric tons of diesel and 125 000 metric tons of gasoline from, purportedly, Sheikh Ahmed Bin Faisal Al Qassimi, a United Arab Emirates-based trader through a Lilongwe-based forex bureau, QLV Digital Fx (Malawi) Limited–has raised suspicion and fears of conspiracy to defraud the state.

Experts are drawing parallels between the proposed deal and a botched 750 million Kwacha deal to procure fertiliser from a company that was eventually revealed to be a UK-based butchery. 

Under the current proposed deal, the fuel is expected to be procured at a rate of $295 per ton meaning the total amount of 250 000 tons of fuel is USD 74 million (equivalent to 128 billion kwacha). 

By law, NOCMA, as a procurement entity, is supposed to publicly advertise all tenders for competitive bidding of all procurements above the threshold of 100 million Kwacha. 

According to the Public Procurement Disposal of Assets (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. 

Yet, NOCMA has not opened any tender or invited any other bids for the contract. 

The origin of the deal, as confirmed by the NOCMA board resolution and a letter to the MERA Board, sourced by PIJ, was the expression of interest dated 22nd July 2024 purportedly prepared by Sheikh Ahmed Bin Faisal Al Qassimi. 

“We, The Office of His Highness Sheikh Ahmed Al Qassimi, express our interest and commitment to supply the fuels (Diesel 50ppm and Gasoline RON 93) to National Oil Company of Malawi Limited (NOCMA) in the quantity of 125 000MT of Diesel 50ppm and 125 000MT of Gasoline RON 93,” wrote the author of the letter. 

The company introduced His Highness Sheikh Ahmed Al Qassimi as a member family, Ras Al Khaimah and a UAE diplomat engaged in the Oil and Gas business for more than 50 years. The letter also introduced Prof. Dr Marcin Tomasz Łapa, and Mr Jakub Tadych as Directors of the company. 

Lapa and Tadych plus Mr Arthur Phiri from Kanengo, Lilongwe are identified as directors in the special purpose vehicle to be paid the contract sum, according to information in the contract documents and sourced from the Registrar of Companies. The QLV DIGITALFX was registered on 26th September 2023.

Intriguingly, the expression of interest by the company is dated 22 July 2024 while the CEO of NOCMA wrote the Board of MERA to approve the deal on 19th July 2024, meaning the CEO of NOCMA wrote his letter even before the expression of interest was made by the alleged UAE company, according to documents sourced by PIJ.

“For the contract with NOCMA, the Office is authorised to manage the transaction and cash flow of its local company, QLV Digital FX Limited, fully registered and incorporated in Lilongwe, Malawi,” it adds.

That request–dated 22 July 2022– is– supposedly–followed by a board resolution by NOCMA requesting MERA to approve the deal.

In a letter dated 19th July 2024, the NOCMA CEO Clement Kanyama asked MERA to approve the deal, among other conditions, “50 per cent of the value of each consignment not exceeding 25 000 metric ton to be paid upfront and secured by a bank guarantee, with the balance to be paid within five days upon transfer of title to NOCMA.” 

A corresponding board resolution – dated the same date as the day the NOCMA CEO letter (19th July 2019) – was authored, asking NOCMA to secure a bank agreement to guarantee the deal.  

A Malawian Forex Bureau 

While the Sheikh is purportedly UAE-based, and “has access directly to refineries or its affiliated distributors, that is securing the best pricing and transaction conditions,” as claimed in its expression of interest, the deal identifies a local forex bureau as the representative of the company and says it should be paid in Malawi kwacha.

A search in the company registry, however, shows the company, with certificate number COY-MDFJAR, already existed from 26th September 2023 —raising doubts about the credibility of the claim that it has been created as the special purpose vehicle for the deal. (Representatives of QLV Digital FX Limited did not respond to questions by PIJ).

Sources close to the fuel supply business told PIJ that the UAE company had no prior dealings with the Malawi government but that both MERA and Nocma came under severe pressure from powerful quarters in government to approve the deal. 

In a written response, Fitina Khonje, spokesperson for MERA confirmed the MERA Board had approved the agreement.

“NOCMA requested MERA (the Authority), for a regulatory review and approval based on an offer from the said supplier who offered to supply fuel and be paid in Malawi Kwacha. The Authority guided NOCMA to do due diligence on the supplier and seek approval from PPDA for single sourcing. The Authority awaits a due diligence report and a response from PPDA on the same,” wrote Khonje.

(PPDA and NOCMA did not respond to questions sent by PIJ on the matter.) 

One source further suggested the deal could be a ploy to disguise payments to local officials and may further haunt taxpayers in the future as the payments in Kwacha agreed at today’s rate may be changed to accommodate exchange rate changes.

(PIJ sought the comments of the UAE company but did not respond as PIJ went to press).

But a source, speaking on condition of anonymity for fear of reprisals, said that by inviting the company to supply fuel, NOCMA was capitalising on the failure of some contracted companies to deliver on their assigned quotas but said the move was still law-breaking.

“Normal fuel transactions are done with LCs (letters of credit) and not on a cash basis. What is happening is that we are giving them money to buy the fuel. They have not ensured that the exchange rate is volatile, but by the time the fuel is delivered, there is no guarantee that the supplier will get the dollars to supply. 

“They will transfer the burden back to the taxpayer. The SPV is a forex bureau. So the payment is going to a forex bureau, which will deal with a forex bureau. It's like buying fertiliser from a pharmacy. We have introduced an entity that is not supposed to be involved in fuel procurement,” said the source.

Principal Secretary for the Ministry of Energy Alfonso Chikuni, who also sits on the board of NOCMA and MERA, asked for more time to respond to questions on the legality of the procurement.

Needs more time to respond to questions. Principal Secretary for Energy Alfonso Chikuni

Another fraudulent deal?

According to the UAE’s company profile on its website, the company is involved in property and real estate investment, recruitment for other businesses, oil and gas, clearance for imports and exports, data analytics, and digital solutions, among others. 

Governance experts say even though Malawi can strengthen sanctions against such curtails, including the AIP butchery scam that is seriously organised to dupe Malawians, those in positions of dealing with and detecting this deliberately undermine procedures to pave the way for corruption.

Civil society groups, expressed shock on Wednesday over the deal, describing it as a massive attempt to defraud the state.

Reacting to the revelations, Centre for Human Rights and Rehabilitation (CHRR) Executive Director, Micheal Kaiyatsa, described the deal as suspicious and full of irregularity adding it was obvious from the framing of the deal that someone wanted to illegally benefit from the contract.

He likened the deal to the UK butchery deal in which the government was defrauded of huge sums of money.

“The money involved is taxpayers’ money. Such deals mean that the taxpayer is funding the dubious deals, and if it goes south, it’s the taxpayer who suffers because that money would have been used to procure medicines,” said Kaiyatsa. 

Youth and Society (YAS) Executive Director Charles Kajoloweka said despite the government having the capacity to do due diligence on the deals, corrupt cartels still succeeding and thriving in state deals.

“If you dig deeper into these dubious procurement deals, you may find specific individuals that are politically connected are the most perpetrators that connive with business persons and suppliers to defraud Malawians,” said Kajoloweka.