How Goodall Gondwe cost Malawi $6.8 million in fertilizer deal

The Anti-Corruption Bureau can’t  prove that Finance Minister Goodall Gondwe and two senior officers got kickbacks for insisting that a Saudi Arabian firm gets the first fertilizer subsidy contract in 2005.

But what can be proved for sure is that their decision cost the country US$6.8 million dollars.

Gondwe, the most popular and influential minister in the Mutharika administration, reportedly ignored technical advise that the Saudis had no capacity to handle the deal. A recommendation was made that South Africa was the best bet for Malawi.

This  was the first fertilizer subsidy deal for the 2005/06 farming season  to replace the Targeted Input Programme.  The ministry of finance sought technical expertise from the Smallholder Farmers  Fertilizer Revolving Fund of Malawi (SFFRFM) to help import 70,000 mt for the programme.

This may have been the beginning of the end for Gondwe as the most respected Minister in late Mutharika’s cabinet. He was later sacked to allow for smooth investigations.

An Anti-Corruption Bureau report, only released to the President and not made public yet, found two senior public officers, and Gondwe , to have acted corruptly leading to the loss of $6.8 million.

The officers were Dr Milton Kutengule then secretary to treasury  and Nebert Nyirenda who  was director of Public Enterprises Reform and Monitoring Unit (PERMU). He is now Principal Secretary at Ministry of Trade while Kutengule’s lost his job around the same time after being implicated in  the Finance Bank scandal.

The two led by the minister, according to ACB had coerced SFFRFM management to procure 35,000 metric tons of Urea fertilizer and 35,000 mt of 23:21+4s against the country’s set public procurement laws, regulations and procedures.

ACB established coercion in every step and decision the three undertook at different levels of the deal to make sure the fertilizer was bought from Pioneer Chemicals come what may.

Bureau investigations established that in March 2005, Gondwe called for a meeting with SFFRFM management where they were told of the fund’s involvement in the fertiliser procurement process.

After the meeting, claims ACB, government organised a fertiliser surveillance trip to Saudi Arabia, the United Kingdom (UK), Ukraine and Russia to check fertiliser prices, production capacities and other logistics pertaining to procurement.

Nyirenda was the leader of delegation, which included SFFRFM general manager Bester Ndisale, operations manager Bizwick Chinguwo and Alex Namaona from the Ministry of Agriculture.

According to ACB, the decision by government to send a team on such a mission was unlawful.

“The surveillance trip, identification, discussions and negotiations and finally the awarding of the contract to Pioneer Chemicals was against Malawi’s Public Procurement Laws, regulations and procedures…” reads the report in part.

According to the report, it is Nyirenda who identified Pioneer Chemicals while in Saudi Arabia and the team decided to visit their plant.

What they found, says the report, was that Pioneer Chemicals had a small factory and did not have the capacity to meet the requirements of the subsidy fertilizer programme. This was communicated to the ST, Kutengule.

The delegation also recommended that the prices on offer in Saudi Arabia were generally not different from those offered in South Africa.

But, according to the investigative report, the team’s recommendations annoyed Gondwe who demanded to know why they wanted fertilizer bought from South Africa and not Saudi Arabia.

“Dr Gondwe ordered the SFFRFM management not to do anything in relation to the decision-making process with regard to where the subsidy fertilizer would be bought,” reads the report in part.

This decision defeated the technical advisory role of SFFRFM management in the procurement process, notes the report.

“Dr Goodall Gondwe, Dr Milton Kutengule and Mr Nebert Nyirenda then decided that the subsidy fertilizer would be bought from Saud Arabia, specifically from Pioneer Chemicals.

SFFRFM went on to award Pioneer Chemicals a contract to supply 35 000 metric tons of Urea and another 35 000 tons of 23:21+4s fertilisers totalling 70 000 metric tons.

This was done between April 22 and 25 2005.

To cover up the malfeasance,  a tender was floated by government inviting interested eligible suppliers to supply and deliver 70 000 metric tons of fertilizers, according to ACB.

But the worst was still to come. Pioneer Chemicals only managed to supply 35 000 metric tons and failed to supply the other half, effectively putting the subsidy in jeopardy.

In the race against time, between June and September 2005, Brian Bowler, then ambassador to Belgium, was requested to push Pioneer Chemicals to supply the fertilisers as per agreement.

The ACB found that Bowler managed to find an alternative supply from a company called Akta Alliance, which had supplied fertiliser to Pioneer Chemicals at a lower price.

Since Bowler could not get any joy from Pioneer Chemicals, he recommended that government buys from Akta Alliance at a much lower price, but the Ministry of Finance never showed interest.

When that failed, government was forced to source the reminder within the country. The Accountant General proceeded to award contracts to five local companies.

Farmers World were awarded the contract to supply 20 000 tonnes, Export Trading supplied 5, 000 tonnes, Rab Processors 3 000 tonnes, Nyiombo Investments Limited 6,000 tonnes and Agrimark got 1,000 tonnes to supply.

“[As a result], the Malawi government incurred a loss of $6 898 150 for procuring locally the 35 000 tonnes of Urea that Pioneer Chemicals failed to supply…” ACB said in its findings.

Gondwe could not be reached this week because he is said to be in the United States where his family lives after seeking permission from the ACB.

But last week, ACB spokesperson Egrita Ndala said in an emailed response that there was no need for Gondwe to ask for permission from them because he has not been arrested yet.

Nyirenda and Kutengule are still freely roaming the streets. 

“I am not aware of the report [by ACB] you are talking about. It’s
true I was at the Ministry of Finance at that time. As a public
officer, you have several layers of reporting. If you are an officer,
you report to a senior officer until the matter reaches the PS and
Minister,” said Nyirenda.

“There were various suppliers that we recommended and decisions were
made in that process from the whole procurement and sourcing process,” he said, admitting that Pioneer Chemicals was one of the fertiliser suppliers he participated in recommending to be awarded