Thursday, February 9, 2023

EXCLUSIVE: Chakwera implicated in MDF Sattar deals

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The Sattar state-capture scandal first made headlines in October 2021 with the arrest of Sattar in the United Kingdom following investigations by the National Crimes Agency (NCA). Primarily centered around three contracts for the supply of Armored Personnel Carriers (APCs), Food rations, and anti-riot water cannon trucks for the Malawi Police Service( MPS) and Malawi Defense Force (MDF), the NCA probe led to the exposure of a series of fraudulent procurement deals across regimes in Malawi.

The procurement of water cannon trucks and riot-equipment by the MDF commenced in April 2020 during the DPP regime. At that time, with MPS lacking the capacity to keep peace, MDF had been repeatedly called upon to assist with managing the mass protests that arose in the wake of the presidential election case challenging Arthur Peter Mutharika’s win of the country’s 2019 presidential election. The Supreme Court of Appeal had yet to render its judgment on APM and the DPP’s appeal to the High Court ruling that nullified the 2019 presidential election and called for fresh presidential elections. It was anticipated that there would be further widespread demonstrations upon judgment being rendered and subsequently during the possible fresh presidential election which had already been ordered by the High Court.

On 24 April2020 the MDF Internal Procurement and Disposal Committee (IPDC) then chaired by Lt. Brig. Mtachi approved procurement of anti- riot equipment at the costs of US$28,650,500.00 to be supplied by Crimson Trading LLC which is now known to belong to one Rafiq Ebrahim, Sattar’s closest business partner and proxy. The MDF IPDC also approved procurement of 6 water cannon trucks at the costs of US$10,524,000.00 to be supplied by

Malachite FZE, belonging to Sattar. For both procurements, the MDF IPDC opted for single source method, although it was possible to use restricted tender procurement given that the procurements were national security sensitive as designated under s.37(2) of the PPDA Act, 2017. The need for these procurements was presented to the MDF IPDC by Brig. B.G. Saenda who was the Chief of Military Operations at the time. Four days later on 28 April 2020, still during DPP, MDF sought permission from the Public Procurement and Disposal Authority (PPDA) to proceed with the procurements using single source method.

By law, PPDA is supposed to approve any method of procurement that is not by competitive open tendering. The Anti-Corruption Bureau (ACB) also has a statutory mandate to vet procurements. In respect of the MDF procurement of riot equipment and armored water cannon trucks, ACB withheld permission for anumber of reasons.

The ACB was not convinced that single sourcing would achieve value for money, and suggested that restricted tender could equally safeguard the sensitivity of the procurement while ensuring value formoney.

With Crimson Trading LLC and Malachite FZE both being Dubai based companies, ACB was also weary that then beneficial owners would be the same people or cronies. This as we now know is true of Crimson Trading LLC which on paper is owned by Ebrahim, Sattar’s close associate. Sattar himself owns Malachite FZE.

PPDA also withheld permission for the procurements. Meanwhile, MDF launched a persistent justifications campaign for the preferred method of procurement and supplied some of the information requested by PPDA and ACB. Subsequently, the contracts for procurement of anti-riot equipment at US$28,650,500.00 and armored water cannon trucks at US$10,524,000.00 were approved by ACB on 16 July 2020 and by PPDA on 28th September 2020.

Notably, while the procurement process was initiated during the DPP regime and APM’s presidency, at the time of final approvals in September 2020, the President of this Republic, the Commander-in-Chief of the Armed Forces, and Minister of Defense was Dr. Lazarus McCarthy Chakwera.

When Platform for Investigative Journalism (PIJ) reported that documents obtained pertaining to the NCA case against Sattar indicate that Sattar was found with Chakwera’s letter dated 30 September 2020 approving procurement of anti-riot equipment, the letter was in respect of this procurement initiated by his predecessors but inherited and approved by him.

Despite a history of the dubious nature of Malachite FZE and Sattar’s dealings with the Malawi government being outlined in the Baker-Tilly Cash gate report of President Joyce Banda’s era which Chakwera himself often referenced to highlight the extent of the proliferation of corruption in the country while he was Leader of Opposition, and despite the fact that the threat of widespread protests anticipated in respect of the Supreme Court of Appeal decision on the presidential election was no longer a factor justifying the urgency of the procurement of anti-riot equipment as justified in April 2020 when the procurement was initiated, Chakwera still went ahead and gave the final stamp of approval for the deal to proceed.

While it can be argued that Chakwera’s prioritization and approval of the urgent purchase of anti-riot gear from a company and a person with a documented history of dubious dealings with the Malawi government at a time when the country had well reverted to its usual tranquility was innocent and could be credited to his inexperience in an office he had only just been sworn into, the dubious procurement of APCs from Sattar’s Malachite FZE under Chakwera’s watch that subsequently followed raises some serious questions.

On 7th April 2021, as Chakwera was under 3 months short of clocking one year in office, MDF initiated a request to PPDA for permission to procure 32 Armored Personnel Carriers (APCs) for use in the United Nations Peace Keeping Mission in Democratic Republic of Congo (DRC).

The request was contained in a letter dated 7th April 2021 and signed by Brig. Gen. Kalino. Of note, the letter records that the Defense Council had authorized procurement of APCs at a meeting held on 16 October 2020. As per s.10(2)(a) of the Defense Force Act Cap 12:01 of the Laws of Malawi, the Minister of Defense is the chairperson of the Defense council. It stands to reason to conclude, therefore, that Chakwera himself chaired the meeting that authorized the procurement of APCs for use in DRC. Granted that the Minister of Defense may delegate chairmanship to any person nominated for that purpose in his absence, such a nominee would certainly have had to brief Chakwera on the outcome of the said meeting. The April 7th letter also reports that upon MDF’s request, the Commander-in Chief of the MDF, Chakwera, had authorized the procurement of 32 APCs at a cost of US$18,969,600.00 from International Armored Group (IAG) through Malachite FZE belonging to Sattar.

Curiously, as of 7th April 2021, the MDF IPDC whose mandate is to approve procurements had not sat to consider a request for this procurement, yet the Commander-in-Chief had already authorized

the procurement, the suppliers, and the price of US$18,969,600.00 which leaves us with the question of where and how the defense committee and the commander in-chief obtained information about the supplier and the pricing for the procurement.

Since the procurement was by single sourcing, MDF could have directly engaged IAG for the procurement, however, they chose to engage Malachite FZE of Sattar as an agent. MDF sought permission to proceed by single sourcing, PPDA withheld permission and raised a number of concerns in its letter dated 13 April 2021, noting as follows:

1. There was no justification for single sourcing when restricted tender could be used to safeguard security sensitivity of the procurement while at the same time obtain competitive pricing on the market since there are numerous suppliers of similar APCs on the international market.

2. There were no MDF IPDC minutes approving use of single sourcing method as the entity responsible for approving the method of each procurement as set out in s.26(2)(b) of the PPDA Act.

3. Value for money was unlikely to be realized because of the involvement of an agent, when the procurement could have been done directly with the manufacturer, IAG in this case.

4. There was no bid or quotation from Malachite FZE, despite the price having already been indicated as US$18,969,600.00.

5. There was no documentation evidencing the fact that Malachite FZE was the approved agent for IAG, the manufacturer.

Because of the foregoing, PPDA advised MDF to subject the procurement to competition by obtaining and comparing quotations from various suppliers. PPDA also required that the procurement be approved by MDF IPDC and that evidence of availability of funding for the procurement be provided. Irene Mlewa signed the letter for PPDA withholding the no objection.

 Interestingly, in an irregular move to rubber stamp the authorization that Chakwera had already issued, working in reverse, the MDF IPDC met on 20 April 2021 to consider, among others, procurement of APCs from IAG to replace the fleet in DRC. Notably, the IPDC was made to believe that the supplier would be IAG when in fact it was Malachite

FZE of Sattar as an agent of IAG. The total price for the two types of APCs approved by IPDC had also changed from the initial US$18,969,600.00 to US$19,993,600.00. The MDF IPDC meeting was chaired by Lt. Gen. P.V. Phiri.

Further working in reverse to dress the procurement with legal compliance, a proforma invoice was obtained from Malachite FZE which also submitted a letter of authorization as IAG’s agent specifically for Malawi. IAG’s letter of authorization is dated 11th April 2021.

Indicating that there had been under the table dealings with Sattar’s Malachite FZE , the proforma invoice from Malachite FZE is dated 8th February 2021, two months before the first request for permission to PPDA which was withheld and before MDF IPDC had met which leaves a lot of questions unanswered: Who obtained the proforma invoice from Sattar’s Malachite FZE? What was the conversation at that time since MDF IPDC had not met to consider the procurement and its method? Who was involved in the that conversation with Sattar’s Malachite FZE and in what capacity?

On 30 April 2021 Brig. Gen. Kalino resubmitted the request for permission to PPDA, this time attaching the proforma invoice, IAG’s authorization for Malachite FZE as its agent for Malawi specifically, and assurance of fund availability from Treasury on terms that the payment would be spread over three financial years. In his second submission to PPDA, Brig. Gen. Kalino yet again referenced the two separate authorizations for the procurement: one by the Defense Council chaired by the Minister of Defense Chakwera, and the second by President Chakwera in his capacity as Commander-in-Chief.

Flaunting procurement procedures and bypassing the mandate of the MDF IPDC in procurement matters, Chakwera dubiously gave authorization of the procurement of APCs on the back of the deprived people of his own country for use in a peace keeping mission in another country, he dubiously gave advanced approval of Malachite ZTE of Sattar as the supplier, and he dubiously gave approval of the pricing set by Malachite ZTE of Sattar.

In his address to the nation on 20th June 2022, while underscoring the key drivers of corruption in Malawi, Chakwera highlighted that in the four years between 2017 and 2021, MPS and MDF had awarded 16 contracts worth US$150 Million to five companies belonging to Sattar. However, he conveniently omitted the fact the he himself had dubiously authorized two of those contracts, and that in fact, he had brokered and negotiated one of those two contracts with Sattar as evidence on hand presents. This, ladies and gentlemen, is the man we have running the country. If Malawi is to make any serious strides in the fight against corruption, holding Chakwera accountable for his role in the APCs procurement deal would be a step in the right direction.

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