Thursday, June 13, 2024

Malawi Maizegate: Failure to pay Zambia Corporative Federation cost Kaloswe contract to supply Maize to Malawi


Some casual workers loading maize on a cargo wagons on Chipata-Mchinji Railway line.The train was exporting the commodity to both Malawi and Mozambique
Fresh details have emerged showing that Kaloswe Commuter and Courier Ltd, the Zambian firm contracted by Zambia Corporative Federation (ZCF) to export maize to Malawi had its contract terminated after the company failed to pay ZCF.

This prompted the country’s Agricultural Development and Marketing Corporation’s (Admarc) to terminate the contract on October 11, 2016 and opted to look for another supplier as hunger loomed in Malawi.

Information released by The Maravi Post shows that on May 31, 2016 Kaloswe approached the Zambia Corporative Federation (ZCF) and signed a contract to buy the maize at US$ 215 per tones 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 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 tones of maize without the knowledge of ZCF June 17, 2016.

On June 24, 2016, Kaloswe entered into another contract with Zambia Business Horizon Solution Ltd of Lusaka West to handle logistics for the transportation of 100,000 tones 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 October 11, 2016 and opted to look for another supplier as hunger loomed in the country.

Consequently, the Malawi government quickly arranged with the Zambian government to get the supply of maize and ZFC was recommended, and the 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 made 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.
And as of last week, ZCF had only exported 5,000 tones 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.

According to the addendum to the contract, Malisawa revealed that Kaloswe was supposed to pay a surcharge of 1.5 percent against its contract value after going into a contract with ZCF on May 31, 2016.

Malisawa told The Maravi Post that Kaloswe therefore entered into another contract on June 17, 2016 with the hope of raising money that 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 maize to ADMARC of Malawi who then cancelled and terminated his contract,” Maliwasa said.

“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”, he said.

Admarc however still insists that it is buying the staple grain from ZCF, a government agency; documents show that Admarc may have used a private Zambia company that may be more expensive than if the deal were government to government.

The Country’s grain marketer has reportedly paid US$34.5 million (MK26 billion) for the maize, which is US$13 million (MK9.5 billion) more than the US$21.5 million (MK15 billion) it could have paid had it bought the maize from Zambia government.

On Thursday the High Court in Mzuzu ordered Agriculture Minister Chaponda to stop from executing his duties until a probe into the Zambia maize import is over.
Eventually, the development has divided legal minds in the country while others describe the decision as “extremely unusual for the court to issue an injunction against the Executive, arm of government.

Both Edge Kanyongolo, an associate professor of law at the University of Malawi’s Chancellor College, and Malawi Law Society (MLS) president John Suzi-Banda observed that the court’s decision under the country’s laws is valid, and as long as it is, it does not matter whether somebody disagrees with it or is aggrieved with it, until it is discharged.
Minister Chaponda, who gave a ministerial statement in last Parliament sitting on the saga’s procurement, has been refusing to resign arguing that his hands are clean and that those wanting him to leave the office are doing it out of jealousy.

Meanwhile, the Journalists Union of Malawi (JUMA) has slammed some “invisible political machinations” behind the action  by the Malawi Revenue Authority (MRA) to seal the headquarters of the Times Media Group because of outstanding tax payments.

JUMA strongly believe that, in a frantic effort to save the battered image of the government, authorities are using the state machinery in trying to muzzle the media group from further providing the local and international community with information regarding the belligerent purchase of maize from Zambia.

“JUMA would like to point out to government the serious consequences of such a decision, which may lead to loss of employment by staff of the media company, loss of livelihoods for their dependents, as well as loss of their socio-economic contributions to the societies where they belong.

The statement further reads that to avoid plunging the nation into further misery, poverty and inequality, JUMA would like to encourage the leadership to reconsider its decision, re-open and engage in a dialogue with the Times Media Group as it does with all other tax defaulters.


    • Who are the shareholders of Kaloswe? They seem have been behind the export ban because they wanted to be the only ones exporting maize under everyone else’s noses. Government made it so difficult for grain traders to export maize while they freely allowed Kaloswe to carry on exporting. Meanwhile the executives at Kaloswe failed to source financing for the deal hence the deal failed. They were undoubtedly very shallow minded by thinking that they coukd handle a deal like that without working capital. Clearly these individuals had political connections which assisted them to effected the ban.

    • Nostradamus I knew you were uncouth from way back. Didn’t know you were ignorant as well. Let us debate as Zambians with intellect do, with poise.

  1. “Fresh details have emerged showing that Kaloswe Commuter and Courier Ltd, the Zambian firm contracted by Zambia Corporative Federation (ZCF) to export maize to Malawi had its contract terminated after the company failed to pay ZCF.This prompted the country’s Agricultural Development and Marketing Corporation’s (Admarc) to terminate the contract on October 11, 2016”
    Did ZCF contract Kaloswe? If yes why ADmarc would cancel kaloswe contract?

    • ZCF and GVT as the BOSS bali mucibe, as we’re watching and reading the nonsense on Zed media confronting the Malawi media… and we know how lawyers are working day and night to represent their clients in different cases surrounding this matter…

    • Somebody big own kaloswe. If Kaloswe was for people like GBM or HH or any opposition leader we would know it is by now. But thia kaloswe is indeed a big man’s company. I mean powerful man

  2. Don’t rush to judge otherwise you’ll be forced to eat your vomit. So the Post in Malawi has not been paying tax just like our own old Fred?

  3. Who was buying the maize, Kaloswe or the Malawan GVT?? How Kaloswe be the transporter and buyer in the same contract between ZCF and the Malawan GVT? was it Zed-Malawi GVT contract ot MALAWI-ZED contract with KALOSWE as middle man/Agent on any part of the 2 GVTs in contract????? ZAMBIA wansebanya, wanting to wash the dirty using your own sons, ba Kaloswe….. Transporter having the contract to buy and export maize, the comodity that was on export barn?

  4. What is Dollar Syria’s position on this version? Anyway, we know that ACC won’t comment now untill the investigation is over, and after the final report from the malawan part, is released… seems that the malawana part is more hurt by our known zambian thieves who want to implicate the transporter and get away with it all even if they breached the contract… Kaloswe, we know about the case you’ve filled against (PF) ZCF and other issues sorrounding this lawlesness by the so-called GVT… Be assured of our support, we who’re amongst pipo abaishiba how international relations go about

  5. Truth is Malawi doesn’t like paying for the goods & services it procures from other countries especially Zambia since they consider Zambia to be one of their provinces because of KK. All they want is repeat of free fuel which Sata gave them at Late Mutharika’s funeral. For Mugabe & Zim who started importing maize from Zambia later in 2004 at time of Mwanawasa who was anti Mugabe regime, pays for his maize up front. Zim started importing in 2004 after it lost all its commercial white farmers in 2002/03 farming season, who migrated to Malawi, Nigeria, Mozambique, Zambia, etc. When Zambia had similar maize deficit in 1994/5 we imported actual millie-meal from Malawian millers. For Zim the problem for Zambia is fulfilling orders not Commission of Inquiries.

  6. @Umwina Zambia uwaenda, Kaloswe can be a transporter but they also contracted another transporter to transport maize, being a transporter does not mean that they can not do any other business, so they are the ones who had the contract with Malawi and another contract with ZCF where they were supposed to buy maize to take to Malawi but they couldn’t execute both contracts since they had no money to pay up front to ZCF.

  7. Another thing when Kaloswe entered in these contracts they did not know that their will be a barn as the contracts happened way back before the barn, which I am sure they even obtained a permit for that.

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