The Malawi Communications Regulatory Authority (Macra) and the Attorney General (AG) are in verbal war over a botched ‘spy machine’ deal.
According to the communication we have seen, AG Kalekeni Kaphale accuses Macra of ignoring his legal advice against terminating contract with Agilis International—the United States based firm hired to supply and implement the Consolidated ICT Regulatory Management System (Cirms).
The AG is also against Macra engaging another firm, Global Voice Group of South Africa, to implement the controversial project dubbed ‘spy machine’ because of perceptions that it will be snooping on mobile phone companies and their subscribers.
On the other hand, Macra director general Godfrey Itaye says he is surprised that the AG appears to renege on his earlier stance which Macra believed Kaphale was supportive of the authority’ position.
Apparently, the Macra board approved termination of the Cirms contract with Agilis, stating that the contract has been frustrated by force marjeure(unavoidable circumstances), according to minutes of a meeting held on May 16 2016.
But Kaphale contends in a letter to Itaye that it would be foolhardy for Macra to cancel the deal when the issue is currently in court. [u1]
Macra bought the Cirms machine in 2010 to improve monitoring of the telecommunications sector in the country. But it has faced resistance to sell the project to both consumers and telecommunications operators after operators branded Cirms a ‘spy machine’ despite repetitive calls by the regulator that the machine would protect consumers from exploitative behaviours by service providers. Telekom Networks Limited (TNM) obtained a stay order restraining Macra from implementing the contract.
Kaphale worries that government could end up spending billions to compensate Agilis for breach of contract.
The AG has since threatened that should the termination of the Agilis deal lead to loss of public money, government will sue Macra officials responsible for the fiasco, according to the AG’s letter to Macra director general Godfrey Itaye.
“This is to warn that government will not hesitate to sue any public officer that ignores legal advice and ends up exposing government to financial loss by reason of decisions that are successfully challenged by third parties [u2] and over which legal advice was already provided by my office,’’ reads the letter in part dated May 18 2016 and copied to Chief Secretary to the Government.
In the letter, Kaphale draws the Macra’s DG attention to his legal advice against cancellation of the contract with Agilis pending conclusion of litigation.
In an earlier letter dated March 21 2016, Kaphale informed Macra that he has reviewed an opinion sought from legal firm Tembenu, Masumbu and Co. and M Global and agreed that a court order presents a force majeure event for the contract.
He also advised Macra to withhold further payment under the contract until the court rules on the case. The AG also advises Macra to inform Agilis about the reason for withholding of the payments.
But Kaphale says he does not agree that an occasion has arisen to terminate the contract.
Said Kaphale: “I gather, however, that management nonetheless proceeded to take the matter of termination of Agilis to the board and that the board approved management’s proposals. I can only repeat the contents of my letter of 18th May 2016 to both management and the board.”
Kaphale said the matter of Macra seeking a refund had not been communicated to him and that he had not advised on it.
But in his response to Kaphale dated May 19 2016, Itaye expresses surprise at the contents of the AG’s May 18 letter letter.
Itaye says Macra’s understanding was that the AG had agreed to an earlier letter to him that an incident of force Majeure ) had occurred with respect to the Agilis contract.
Itaye acknowledges in the letter that Kaphale did not deal with the aspect of whether the contract had been frustrated leading to discharge.
He, however, contends that they sought Kaphale’s opinion on the matter on the way forward through a letter dated April 6 2016 to which Macra did not get a response. He says their primary intention was to recover the money they had already paid Agilis because they had already lost $13 million (K9.2billion) and did not see any worse loss that could emanate from their case.
But Kaphale informed Itaye in a letter dated May 19 2016 that he never received the letter of April 6 2016.
Said Kaphale: “… even if I had, the question you raise was effectively answered in the letter dated March 21 2016.”
In the said letter, Kaphale advised against terminating the contract and added that since roll out of the Agilis contract was facing legal challenges and that the matter was still in court, any award of another Cirms contract to another operator before the legal problems besetting the current rollout would be an exercise in futility as similar legal challenges would arise.
Nevertheless, Macra board advised management to write Agilis asking the firm to refund $6.9 million (K4.6 billion) following the frustration of the contract, according to minutes of a Macra board meeting Weekend Nation has seen.
Kaphale said the issue of the recovery of the money was also not communicated to him and he never advised on it and fears that Agilis may take legal action and be successful in its claim for damages leading to further financial loss by the government.
Said Kaphale in the letter: “Already, $13 million (K9.2billion) has been lost under the contract; hence, there is no need to terminate the contract.” He, therefore, advised Macra to withhold further payments and not to terminate the contract.
Kaphale on Friday last week confirmed to have given legal advice to Macra on the Agilis contract.
Said Kaphale: “I know I advised Macra on the issue but I have no comments to make to any third party as my legal advice is always confidential. I cannot discuss it in public. Only the recipient public office can, if it chooses, waive the privilege and discuss it if they wish.”
In a brief response to Weekend Nation, Macra acting communications manager Clara Mwafulirwa said the regulator has not terminated the contract. Cirms is expected to generate $3 million for Macra in annual revenue.
Under the contract with Agilis, the authority was supposed to make an outright purchase of the system at a contracted price of $6.9 million in 2010.
Macra, after a protracted court battle with one of the mobile operators—TNM—in October 2015 was given a go-ahead by the High Court to proceed with implementation and use of the Cirms to monitor mobile phone operators.
However, according to minutes of the Macra board meeting, the stay orders obtained by TNM in April 2015 stopping Macra from proceeding with implementation of Cirms occasioned an inordinate delay in the performance of the Cirms contract; hence the decision to terminate the contract with Agilis.
According to the minutes, management also advised that in order to protect the Macra’s interests, the authority should proceed to write Agilis asking for refund of $6.5 million paid, indicating what amount was paid before November 27 2015 and the sum that was paid after 27 November 2015 and that a reasonable deadline for such refund should be 14 days from the date of the letter.
The minutes read: “In the event that Agilis comes up with a set off claim on the 13th March 2015 contract, the Authority will counterclaim for part of the money paid on the previous contract with respect to which there was not full consideration furnished by Agilis in terms of performance.”
The minutes also indicated that Macra Management felt Agilis was entitled to set off against the money being refunded to the Authority or its expenses incurred by Agilis prior and up to November 27 2015 in the performance of the Cirms contract.