Agricultural Development and Marketing Corporation (Admarc) chief executive officer (CEO) Foster Mulumbe yesterday admitted that Zambian maize supplier Kaloswe Commuter and Courier Trading duped them by lying that it had maize stocks.
He said Admarc discovered this when the supplier asked for payment to be made to Zambia Cooperatives Federation (ZCF) when a contract had already been signed.
Mulumbe said this when he appeared before the Public Accounts Committee and the Parliamentary Committee on Agriculture, Irrigation and Water Development which are holding public inquiries into Admarc’s maize procurement from Zambia.
During the meeting, the legislators asked Mulumbe to explain the speed at which the deal was struck if indeed there was no undue influence from external forces.
Admarc officials, who appeared at the inquiry which lasted for four and a half hours, included deputy CEO Margaret Roka Mauwa, director of finance Harry Kanjere and director of operations Feckson Kanthonga.
Interestingly, Mulumbe also disclosed that Admarc was in the process of identifying Tanzania as a potential country to import maize from when the Ministry of Agriculture, Irrigation and Water Development communicated that it had held a meeting with Grain Traders Association of Malawi which had identified Kaloswe as a supplier in Zambia.
This was despite a well-known maize export ban in effect in Zambia at the time. According to Mulumbe, Admarc was also convinced that Kaloswe’s stock was not from the current growing season.
He admitted to the committee that there was no due diligence on Admarc’s part because they worked on mere communication that Kaloswe had the maize and would deliver it.
Admarc discovered that this was not the case when a contract was signed with Kaloswe but amended to mean that payment would go to ZCF, Mulumbe said.
The committee also demanded an explanation on how two contracts were signed with two different maize suppliers at a time when there was no approval from the Office of the Director of Public Procurement (ODPP).
Mulumbe and other senior Admarc officials were at pains to explain how ‘hasty’ decisions were arrived at on June 17 2016, which included signing of the contracts with ZCF and Kaloswe Commuters and Couriers Ltd and applying for a No Objection order from ODPP.
“Admarc dealt with two entities on the same day, within hours. How were such decisions arrived at? I find it very confusing that on the same day that Admarc discovered Kaloswe would not supply, at the same time wrote the ODPP. I want the CEO to tell us the truth,” Dowa East MP Richard Chimwendo Banda queried.
Mulumbe explained that Kaloswe amended the contract, advising Admarc that the letter of credit from PTA Bank should bear the name ZCF.
He said Admarc could not present a contract with Kaloswe to PTA Bank when the beneficiary of the letter of credit was ZCF.
Parliament also learnt that no payment was made to Kaloswe or ZCF out of the $34.5 million letter of credit signed with PTA Bank for the supply of 100 000 metric tonnes of maize.
The MPs seemed convinced, however, that by December 31, 2016, only 4 112 metric tonnes of maize had been supplied to Admarc and no payment was made.
“Whatever borrowing we have with PTA Bank will be based on $345 per tonne multiplied by 4 112 metric tonnes which was delivered. We will only be debited what PTA Bank will pay the supplier which is less than $2 million,” Mulumbe said.
The Admarc CEO, however, admitted that no advice was sought from Ministry of Justice and Constitutional Affairs before signing the contracts. He said Admarc company secretary scrutinised the process diligently.
Mulumbe also clarified the $215 versus $345 per tonne controversy, which led some people to allege that fraud and corruption had taken place in the deal.
“The $215 per tonne cost was calculated as delivery from the northeast of Zambia while $345 per tonne was for Lilongwe delivery which Admarc opted for,” Mulumbe said.
Contrary to reports that Kaloswe has sued Admarc for breach of contract, Mulumbe said no such court summons had come before the institution.
He also clarified that he was not suspended but applied for leave which started on Monday, January 16.
Throughout the inquiry, the MPs seemed unprepared because the only documentation in their custody to support their allegations was supplied by Admarc, including copies of contracts with Kaloswe and ZCF as well as communication from PTA Bank on the letter of credit.
Civil society organisations, whose submission formed the basis of the inquiry on Tuesday only submitted partial contracts which they gleaned from news reports.
Some responses to questions from the committee members were contained in the documents which Admarc supplied but the MPs did not have time to go through them.
On few occasions, there was an exchange of words between committee co-chair Kamlepo Kalua and Mulumbe when he hit back that he should not be intimidated, especially when he had not been given a chance to respond to the questions.
Kalua had reminded Mulumbe that he was under oath and would be dealt with accordingly if he gave false information to the committee.n