Written by Jack Kaulembe

Background

Molande: Aided in defrauding tax-payers money

In a Mafioso enthused fashion, B Mollande (Former State House Communications Director) aided defrauding the Malawian taxpayer through a construction company called FISD Limited. Under the Project – “Sustainable Rural Water & Sanitation Infrastructure for Improved Health and Livelihood” financed by the African Development Bank (AfDB), FISD signed 2 contracts (Ntcheu and Phalombe): The one for Ntcheu was signed on 12 December 2017 and was expected to be completed by 11 December 2018.

However, none of them have been completed. In fact, the Client, (the Ministry of Irrigation and Water Development) noting that there was no progress, terminated the Ntcheu Contract on 29th May 2019 citing “serious contractual breaches by the contractor”.

The Contract had been extended by 108 calendar days i.e. up to 25th March 2019. Following termination, Mr. Mwenechanya of FISD fully engaged Mollande to move government machinery and sundry (as he used to) to influence the unjustifiable K1.2 billion Kwacha to FISD Co. Ltd.

The architecture of the fiasco is as follows:

1. Although the Contract allowed amicable resolution, using The Dispute Board (set up by NCIC) as first-tire approach, FISD skipped this stage. They leapt straight and sought arbitration with NCIC for what they termed “flawed termination”; to which NCIC nominated QS Chimangafisi, Eng. Kunsinda and Eng. WTM Chirwa. Out of the 3 NCIC nominees, FISD chose Eng. WTM Chirwa to which the Client, Ministry of Water was indifferent.

2. Upon completion of his assignment, Eng. Chirwa declared that the Ministry action to terminate the contract was within the contractual provisions. He, therefore, ordered FISD Co. Ltd to pay the Ministry of Water K281 mil. This payment excluded a duplicate payment of U$375,731.54 done by AfDB.

3. According to the Contract, the Arbitrator’s ruling is final. Therefore, the Ministry had to move to redeem the award, the advance payment, and the Performance Security (K236 mil) from the guarantor (EcoBank). FISD quickly moved by issuing the Attorney General’s office with a Stay Order from the commercial court that set aside the Arbitral Award.

4. The Commercial Court quickly moved to appoint a new arbitrator (Edgar Kachere) on 27th February 2020 contrary to provisions of the Contract that specified that NCIC ought to have done the nominations for another Arbitrator again.

5. Within one months and 10 days of landing the assignment, Cl. Kachere (the new arbitrator), on 31st March 2020, reversed the award; this time in favour of FISD and to the whooping tune of K1.23 billion (comprising K913 mil, as award and K317 mil as interest from 31st July 2019. Note that, with the help of collaborators in the plot, Cl. Kachere arrived at the ward without visiting the site under contention; neither did he engage the Client (Min of Water). Moreover, it did not take place with the knowledge of NCIC, contrary to the provisions in the Contract. All this was happening during the DPP led Government where Mollande was a King.

6. With all the indebtedness that Government has, within 4 months of the flawed award, on 13th August 2020, the Tonse Alliance Government shockingly effected a part payment of K627 mil to FISD; in spite the MoF knowledge that the incumbent AG has moved to contest the award.

Questionable Setting and Reversal of Award

The Contract stipulates that the Arbitration procedures are UNCITRAL which require the hearing to be done with utmost transparency, and at a pre-determined venue and by an arbitrator duly agreed by all parties. However, predictably:

1. The Ministry of Irrigation and Water Development and NCIC were sidelined in the second arbitration process. Judge Manda appointed the new arbitrator and contacted the whole process singlehandedly.

 2. An intern (Mr. Kaliza) at the office of the Attorney General also single-handedly oversaw the whole process on behalf of the AG but without his approval and instruction. No wonder even the former AG was incredibly angry upon receiving full scope of the malfeasance

3. It is evident from the proceedings that it was carried out in a closed-door environment by accomplices to the crime. Ironically, Eng. Chirwa’s ruling was copied and pasted, only this time inverted with inflated figures in favour of FISD.

4. Later the former AG sternly warned Mr. Kaliza for taking on an assignment without approval and permission. It is clear from the records that the AG did not act negligently, rather calculatingly, he was bypassed because, in one of his letters to the Court he says “procedurally, when a counsel in the AGs chambers has received a file, he is supposed to consult the Hon. AG himself for directions and seek instructions of the Client.” Mr. Kaliza did none of them but still proceeded to attend to the application.

5. Records indicate that “he orally addressed the Court where he informed the court he was not opposing the application and that he did not oppose the proposal to have Mr. Kachere appointed as Arbitrator without establishing the misconduct of the former Arbitrator Eng. Chirwa”. Moreover, the rule of arbitration demands that parties themselves must agree. All court directions were made in the absence of Ministry of Water

6. The process of part payment of K627 million also bypassed the office Secretary to Treasury. A lawyer in the MoF hurriedly pushed for the payment despite resistance from the AG’s office. It moved amazingly fast, ostensibly under duress from Mollande and DPP beneficiaries who initiated the scum.

Plans to Perpetuate the Scheme

While the Contract in Ntcheu is in limbo (terminated and contested), the one in Phalombe is at stand-still. With no sign that it will be completed in the near future. This is how FISD played the chess game:

1. In March 2020, using Bright Molande (a trusted friend of Mr. Mwenechanya and beneficially of many Government fraud schemes) to bully the then Chief Secretary, installed Henry Njoloma as Principal Secretary for Water (a DPP cadet and former director at FISD). In this way he would be assured that the Ministry’s support is bolstered, and the fraud is perpetrated. Indeed, Njoloma’s hands are tied such that he cannot even decide on a straightforward case of FISD’s failure to perform in Phalombe. It is clear that the next FISD windfall will be for the Phalombe Project.

2. Just before the change of Government, Mr. Mwenechanya quickly switched allegiance from DPP to Tonse. Using the Tonse Alliance Minister, he has now secured a placement as a Board Member at NCIC. The main objective of him sitting at NCIC Board is to control any future disputes, ostensibly, serving the old guard in the process.

Pertinent Questions

1. After the termination of the Ntcheu contract, Mr. Mwenechanya (without consulting the Client) engaged NCIC to commission an Arbitration process. However, according to the Contract, mediation by an NCIC constituted Dispute Board (DB) would be the first step in dispute resolution. What would have motivated him to skip an especially important contractual procedure and how and who did he convince at NCIC?

2. Albeit the palpable gaffe in skipping amicable resolution, NCIC went ahead to nominate 3 potential arbitrators. Mr Mwenechanya captured the selection process. His preferred arbitrator was Eng. Chirwa because he thought he was weak. Was the Ministry of Water indifferent to his choice all the while?

3. Upon Eng. Chirwa’s determination for FISD to pay Ministry of Water K281 mil, Mr. Mwenechanya sought “a stay order’ the commercial court for it not to be enforced and eventually to be invalidated through Cl. Wapona Kita. Predictably, the application landed on the desk of Judge Manda. History has it that where the 2 have been pair-bonded, the outcomes have been preposterously questionable. At this point there was already a congenial water PS, Njoloma. What was remaining on the jig-saw was signing-up like-minded people; Viz – 1) someone malleable from AG’s office who would represent Water (not the AG himself), 2) a new harmonious lawyer as a new Arbitrator. They identified an intern, Kaliza, from AGs office, Cl. Edgar Kachere as arbitrator (without involving or advising the NCIC or indeed the client, whatsoever). How could they have imagined that this process would be acceptable to the AfDB who are the financiers, even though the Water PS supposedly accepted it?

4. Cl. Kachere neither bothered to visit the contested site, nor did he meet the Ministry of Water. The argument was that the available documents (including those prepared by Eng. Chirwa) had utility to bring a fair conclusion. If one juxtaposes his ruling against the one from Eng. Chirwa, one sees that he just changed semantics i.e. where Eng. Chirwa determined the Contractor was in the wrong, Cl. Kachere determined that it was the Client who was in the wrong. How, did he make a faux-pas determination and the Court accepted it?

5. How did the collaborators get the case heard, judgment passed and part payment of K627 million made by Treasury within a record time of 4 months? Who was the strategic collaborator at treasury since records indicate that the ST is contesting the payment?

6. What happens to the beneficiaries since the funds have been paid and will continue to be paid in spite of no functional water facilities and a closed project?

7. Although the K1.2 billion is not coming from the AfDB (because treasury is paying although unbudgeted for), there is an obligation from the bank to be suspicious about the goings-on. How long will the AfDB remain quiet as their name gets muddled?

8. Meanwhile, Mollande (the chief strategist) remains the biggest beneficiary. For how long will the Tonse Alliance procrastinate on their promise to drain the swamp?

We should not allow this in the new Malawi. Let us all expose this and ensure that perpetrators are brought to book. See attached documents for further details

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