Malawi maize scandal, Kaloswe contract was terminated

Mon, 09 Jan 2017 09:29:40 +0000

By Bennie Mundando

DETAILS have emerged that Kaloswe Commuter and Courier Ltd has to-date failed to pay the Zambia Corporative Federation (ZCF) for the white maize for export to Malawi after entering into a contract to make the stock available.

On 31st May, 2016, Kaloswe approached the Zambia Corporative Federation (ZCF) and signed a contract to buy the maize at US$ 215 per tonne from its depots dotted across the country.

Among the terms in the contract, ZCF was only going to release the maize after Kaloswe made a full payment in advance per/multiple load prior to the commencement of uplifts and collections from the sources.

Kaloswe was also subject to incur 1.5 percent surcharge on contract value if it failed to perform the purchase within seven (7) days of signing the agreement in order to avoid time-wasting and getting ZCF to incur unnecessary costs.

In order to raise money to facilitate the maize purchase, Kaloswe entered into another contract with Malawi’s grain marketer, Agricultural Development and Marketing Corporation (ADMARC) to supply 100,000 tonnes of maize without the knowledge of ZCF on 17th June, 2016.

On 24th June, Kaloswe entered into another contract with Zambia Business Horizon Solution Ltd of Lusaka West to handle logistics for the transportation of 100,000 tonnes of the same maize to Malawi.

Unfortunately, among the terms of the contract with ADMARC was a provision that Kaloswe was to supply maize first before ADMARC could issue any payment through a confirmed letter of credit (LC) from a mutually acceptable bank.

Faced with the dilemma, Kaloswe failed to pay ZCF for the maize and therefore, could not export the commodity to Malawi and as a result of this delay, ADMARC terminated the contract on 11th October, 2016 and opted to look for another supplier as hunger loomed in that country.

The government of Malawi quickly arranged with the Zambian government to get the supply of maize and ZFC was recommended. A contract with ADMARC was signed after which PTA bank wrote an LC to ZCF to commit to the payment once the transaction was made.

Both ZCF executive director James Chirwa and Malawi’s Minister of Agriculture, Irrigation and Water Development, George Chaponda, confirmed that no payment has been done to the maize that has already been ferried into Malawi because one of the terms on the contract was that ADMARC will only start paying when ZCF deliverers 10,000 tones.

As at last week, ZCF had only exported 5,000 tonnes of maize to Malawi.

However, Kaloswe, according to ZCF court documents, mistook the LC for the money transfer and applied for an order of interim injunction from the High Court to restrain ZCF from spending, transferring, administering or dealing with the US$34, 500, 000.00 allegedly paid into its account by the PTA Bank over its contract with ADMARC.

But according to an affidavit in opposition to application for interim injunction, ZCF finance manager Allan Malisawa submitted that under the failed contract between ZCF and Kaloswe, the parties understood that the process of gathering the maize commodity through collections from provinces involved ZFC having to pay the farmers.

Mr. Malisawa said according to the addendum on the contract, Kaloswe was supposed to pay a surcharge of 1.5 percent against its contract value and that after going into a contract with ZCF on 31st May, 2016, Kaloswe entered another contract on 17th June 2016 with the hope of raising money that it was required to pay without the knowledge of ZCF but could not do so because one of the terms of the contract was that Kaloswe had to deliver the maize before getting the payment.

“Having found himself in this predicament as a result of speculative pursuits in business deals, the plaintiff (Kaloswe) failed to deliver the white maize to ADMARC of Malawi who then cancelled and terminated his contract.

“The Malawian government then quickly arranged with the government of the Republic of Zambia to get a supplier of the white maize who then recommended the defendant (ZCF) to supply the badly needed commodity (white maize) in Malawi,” Mr. Malisawa said.