GOVERNMENT PAYS SATTAR FOR ‘RESTRICTED’ CONTRACT UNDER ACB PROBE 

The Attorney General publicly terminated all Zuneth Sattar contracts. ACB also publicly restricted any government payments to some Sattar-connected contracts pending a criminal investigation. Behind the scenes, the government funded the Police and MDF to pay him. And the Attorney General approved.

BY PIJ INVESTIGATIONS

Government paid K1.3 billion for a contract belonging to businessman Zuneth Sattar despite the contract, and several others, still being under a restriction order by the Anti-Corruption Bureau (ACB) for possible corruption, the Platform for Investigative Journalism (PIJ) can reveal.

The contract is for supply of eight anti-riot water cannons which the Malawi Police Service procured from Sattar-owned company, Malachite FZE.

The Attorney General (AG) Thabo Nyirenda, whose office in January this year publicly terminated all Sattar contracts with the government—including the water cannons contract in question—approved the payment privately in a legal opinion sent to the Anti-Corruption Bureau.

Nyirenda’s basis for the decision is that the restriction order by ACB had become ‘academic’ following the earlier termination of the contract by his office.

The contract, Reference Number LP0 629951, is among various Sattar contracts the ACB restricted, in October 2021, from receiving any payments from government before issuing a follow-up notice on 8th November, 2021 restricting government from dealing with any of the Sattar companies or properties using Section of the Corrupt Practices Act (CPA). 

Those restrictions have never been formally lifted.

The Attorney General (AG), on 11th January 2022, further terminated the contracts, based on convenience and public interest pursuant to section 46 (c) of the Public Procurement and Disposal of Assets Act.

The Police procured eight water cannons at cost of USD 1, 754, 000 (K1.4 billion) each in a procurement deal mired by procurement irregularities including overpricing fears as exposed by the PIJ (READ MORE). The eight water cannons cost taxpayers through police a total of USD 14, 032, 000.00 (MK13.7 billion).

Simultaneously, the MDF was also forced to procure similar anti-riot vehicles and other equipment such as rubber bullets in a deal the MDF commander dismissed in an interview with PIJ as both unnecessary, contrary to military practices, and a symptom of corruption. The MDF procurement cost taxpayers around K8.4 billion (based on the sums in the police contract as PIJ has not seen the MDF contract details).

In total, the two contracts for supply of water cannons to police and MDF will cost the taxpayer not less than 23 billion kwacha.

Zuneth Sattar (in white shirt)

The payments not only continue, despite the criminal investigations stalling but also comes as the government has failed to embark on crucial infrastructure development projects, such as rehabilitating the crucial road network or construction of public schools, because the government says it has no money.

According to PIJ investigations, in February 2022, just under a month after President Lazarus Chakwera publicly criticized ACB director Martha Chizuma on 25th January 2022 during a special national address following the leaking of a private conversation in which Chizuma was recorded by a third party discussing the Zuneth Sattar investigation, Treasury, specifically released funds to the MPS and MDF to pay for the water cannons contracts.

This was despite the fact that suspension of the contracts by the ACB and termination of the contracts by the AG was public information.

MDF decided after receiving the funds to procure new arms and ammunition instead of paying for the under investigation contracts as the MDF knew–as the rest of the public and government–the contracts had been restricted by the ACB, according to well-placed sources. 

Police, however, opted to seek ACB’s interpretation on the restriction notice.

“We make reference to the above Restriction Notice issued on 8th November 2021 and wish to advise that Treasury funded us an amount of K1, 305, 454 towards the clearance of an outstanding debt USD3, 113, 454, 30 that the Malawi Police Service (MPS) has with Malachite FZE in relation to 8 water cannons supplied to MPS. As you are aware, the general warrant for this funding will lapse at the end of the financial year on 31st March 2022,” wrote Deputy Inspector General of Police Merlyne Yotamu to ACB after receiving the funding.

Attorney General Nyirenda

Subsequently, ACB director Martha Chizuma sought the Attorney General’s advice on the matter. 

In a letter sourced by PIJ, ACB boss informed the AG that the restriction order expired on 7th February, 2021 and the bureau had initially planned to apply for the extension of the Restriction in the event the investigations are not yet completed but did not make the move after the AG terminated the contract.

“On 9th January, 2022 we were notified of your press release which announced the cancellation of all contracts, Malawi Government currently has with companies connected with Zunneth Sattar. We, therefore, did not proceed with the application for the extension of the Restriction as the same would have been purely academic. We have now received the enclosed letter from Malawi Police Service who advise that they have received money amounting to $3,131,454.40 (three million one hundred thirty-one thousand four hundred fifty-four and forty cents) from Treasury being an outstanding payment owed to   Malachite FZE for the supply of the water cannons to MPS. 

“According to this letter, the general warrant for this funding will lapse at the end of the Financial Year on 31st March, 2022. On our side we believe that all factors considered the investigations should be completed by the end of April, 2022. We however kindly seek your opinion on how we proceed with this request,” wrote Chizuma.

The AG wrote back to the ACB on 25th February 2022, advising the bureau to authorize payment to the businessman—instead of asking the Bureau to renew the restriction order.

“I also observe that section 23 of the Corrupt Practices Act allows you to authorize and/or provide consent to a procuring entity to proceed with payment pertaining to a contract under a restriction notice even when the said restriction notice is in force. Since the said restriction notice has not been renewed because as you rightly observed in your request for legal opinion renewal of contract would be academic in the view of the fact that the contracts subject of the restriction notices have been terminated, the Malawi Police Service is no longer bound by the restriction notice and is at liberty to pay the contractor subject to compliance with section 46 (c) of the Public Procurement and Disposal of Assets Act. The Malawi Police Service should satisfy itself that payment is for goods delivered and specifically manufactured before 11th day of January 2022 date termination became effective,” reads the AG’s letter. 

Intriguingly, the AG did not request the ACB to renew the restriction order—if it had become legally irrelevant—to stop the payment. 

The ACB, too, which has never publicly rescinded the restriction order as required by law, did not raise the possibility of renewing the restriction on the contract but proceeded to authorize the payment as directed by the Attorney General.

Emboldened by the legal precedents set by the Police payment, Sattar through his legal representatives has now issued demands to the MDF to also make payments for contracts which, again, ostensibly, are restricted pending the end of the criminal investigations.

ACB officials did not respond to PIJ questions on the matter by the time we published the article.

However, sources say ACB then was under severe pressure to halt the Sattar investigation, with Director Chizuma receiving a public lynching from President Chakwera over the leaked audio recording and facing uncertainty over her future.

The Attorney General, in an interview, defended the move, saying his advice was in line with the law.

“My office terminated all the contracts on 8th January 2022 owned by or connected with Mr. Zuneth Sattar based on convenience and public interest pursuant to section 46 (c)  of the Public Procurement and Disposal of Assets Act, 2017. The statement was clear in spirit and form any payment will have to comply with the law. The legal opinion to ACB that you are referring to; is consistent with the statement I issued when terminating the contracts earlier.

“Therefore, it is incorrect to suggest that in public my office terminated the contract but in private asked the Police to pay, the legal opinion to ACB implies that Sattar can only be paid for the water cannons that he supplied successfully, and Malawi Police took delivery of the same. This is within the law, as per the contract signed, but anything coming after the termination of the contract is what can be regarded as illegal,” said Nyirenda.

Following the payments to police, Sattar, through his lawyers, is now demanding payments from MDF for similarly restricted contracts.

Charles Kajoloweka YAS Director

In an interview, governance watchdog, Youth and Society (YAS) Executive Director Charles Kajoloweka described the payments as undermining the rule of law.

Kajoloweka called for accountability for the AG’s actions and an investigation.

“It’s unfortunate that the government undermined the rule of law because when ACB moves in to enforce restrictions on certain transactions, it’s according to the law, so the law must be respected. This must not be tolerated, the individuals responsible must be held accountable, we should not allow a few individuals to tower above accountability,” said Kajoloweka.

Centre for Social Accountability and Transparency (CSAT) Executive Director, Willy Kambwandira, said the move only vindicates fears that the government is “not serious about the fight against corruption.” 

Kambwandira added: “It’s also clear from the revelations that there are some oversight institutions that are either in dilemma or confused and are blocking a noble cause. There is no unity, and there are efforts to frustrate the ACB. We are on a dangerous path.” 

Willy Kambwandira CSAT Executive Director

The development comes amid question marks over the AG’s handling of the Sattar case.

While the AG has been showered with praise for combating abuse of court claims to defraud the government through unlawful or unfair compensation lawsuits, his office and the office of Director of Public Prosecutions (DPP) have regularly faced accusations of frustrating, allegedly, the Zuneth Sattar investigations, starting with pressure that was mounted on him when various groupings wanted his office to rescind the decision of granting amnesty to corruption suspects.

The AG has advised the ACB against directly cooperating with the National Crimes Agency of the UK, initially debarred from public procurement scores of companies without including any companies belonging to Sattar (he later debarred Sattar owned or connected companies and terminated existing contracts following public pressure) and famously announced an amnesty to corruption suspects widely perceived to have been aimed at saving Sattar, or officials who broke the law in dealing with his companies, from prosecution. The amnesty was cancelled by President Lazarus Chakwera amid overwhelming public outrage.

The AG has also pushed for ACB investigations of other businessmen, such as Karim Batatawala, whose case is currently in court.

Sattar on the other hand,  who is under investigation by both the ACB in Malawi and National Crimes Agency (NCA) in the UK, for alleged corruption, has never been arrested by Malawian authorities. His business associate, Ashok Nair, was arrested alongside former Minister of Lands Kezzie Msukwa, but two High Court judges, separately, released both, arguing that they were arrested unlawfully.

In January this year, the Malawi Law Society (MLS) wrote the state agencies handling the matter including the Anti-Corruption Bureau (ACB), Director of Public Prosecutions (DPP), and the Attorney General (AG) when details emerged that some quarters of government and outside were out to scupper the pursuit of the matter because it allegedly involves them.

This is according to a leaked letter that the law society wrote to its members, appraising them on its activities in relation to the Sattar case, dated January 19, 2022, and titled ‘Update on MLS role in the alleged corrupt practices and dealings involving Mr. Zuneth Sattar and others’. The society indicated that it had penned the three agencies engaging them and providing the Society’s insight, recommendations, and ideas on the various legal issues that had emerged.