Malawi risks losing assets it holds abroad if Secucom Holdings Limited, a Swiss registered firm in court over a multi-million dollar national identity cards contract, goes to the International Court of Arbitration over nonpayment of $100 million (about K40 billion).
The claim includes interest that has accrued over a period of 12 years.
The International Court of Arbitration is an institution which handles international commercial disputes at the International Chamber of Commerce
“Our position now is to take the matter to the International Court of Arbitration because [the Malawi] government has failed to pay us even after we waived all interests on promissory notes and agreed on $8 million which is far less than the $100 million in interest that we are owed,” Anatol Weinstein, chairperson and chief executive officer Secucom Holdings Limited, said in an e-mailed response.
On December 7 1999, government awarded Secucom a contract to develop and supply national IDs at a contract price of about $27 million only to revoke it seven months later. This was during former president Bakili Muluzi’s administration which wanted to change the country’s status as the only sub-Saharan nation whose citizens do not have national IDs.
In the contract, the two parties agreed that the $27 million would be paid by eight promissory notes of about $3.3 million each, to be paid on presentation as they respectively matured for payment. The two parties also agreed on 0.2 percent penalty interest per day and a maximum of six percent per month to be charged each day on promissory notes that remained unpaid.
After 12 years of nonpayment, the amount is running to about $100 million based on the agreed penalty interests in the contract.
According to court records, the last settlement negotiation meeting between Secucom and government was held at Ministry of Justice in Lilongwe on July 22 2011.
The two parties went back to court and reported that the Attorney General and Secucom’s lawyers had agreed on a settlement sum of $8 million payable by instalments to be agreed.
Records show that the Attorney General asked Secucom’s lawyers to draft two sets of consent orders: one showing that the settlement sum of $8 million will be paid by equal monthly instalments of about $6 000 over a period of 12 months, and the other showing that the settlement sum will be paid by equal quarterly instalments of $2 million for the government to choose one.
But to date, nothing has happened.
Attorney General Anthony Kamanga last week told The Nation that they plan to renegotiate after Treasury advised them to do so.
“After our discussions with the Secucom representatives, we pushed that to Treasury who asked us to renegotiate because government cannot afford to pay for this,” he said.