Judge Kenyatta faults RBM for suing wrong defendant

Reserve Bank of Malawi

Judge Kenyatta Nyirenda has faulted the Reserve Bank of Malawi (RBM) for naming wrong defendant in the case in which the bank wants to be allowed to award contracts to a foreign-owned firm.

In a civil case number 13 of 2021, the bank sued Sparc Systems Ltd and wanted the High Court to set aside the ruling of the Public Procurement and Disposal of Assets (PPDA) review Committee which ordered it to re-tender the wrongfully awarded tenders.

In its submission, Sparc Systems asked the court that PPDA should be added to the proceedings in order to defend their ruling which was against RBM to which RBM objected.

High Court Judge Kenyatta Nyirenda has since ordered RBM to amend its submissions and sue PPDA instead.

He said it was most misleading to name Sparc Systems Limited as 1st Defendant and Mitra Systems Limited as second claimant because the two ICT Companies are interested parties in the matter where the Central Bank is being accused of not following procedures in awarding the latter contracts to submit ICT equipment.

“Having held that the applicable legal regime in respect of procedure is the CPR, it is important that these proceedings should be properly entitled otherwise naming Mitra Systems and Sparc Systems Ltd as 2nd Claimant and 1st Defendant is most misleading.  The fact of the matter is that it is the Reserve Bank of Malawi that seeks to challenge the decisions made by the Review Committee.  Both Mitra Systems and Sparc Systems Ltd are interested parties in that they are most likely to be affected by the review proceedings one way or the other,” reads part of the ruling.

According to Judge Nyirenda, the case should be between the Central Bank, as the claimant and PPDA as the defendant, saying the two companies should be the first and second interested party in the case.

“It  is  further  ordered  that: (a)   (b)   (c) the  Claimant  should  file  an  amended  application  for  review  under section  60  (10)  of  the  Act,  properly  naming  the  parties  as  stated hereinbefore at  the  last  preceding  paragraph; the  Claimant  should  have  the  amended  application  for  review  under section  60(10)  of  the  Act  served  on  the  other  parties  within  3  days  of this  Ruling;  and the  Defendant  and  the  Interested  Parties  have  to  file  their  respective responses  within  7  days  of  being  served  the  amended  application. On a related note, hearing of the inter-party’s application by the Claimant for a stay of the decision of the Review Committee is scheduled for 18th May 2021 at 10 o’clock in the forenoon. Pronounced in Court this 11th day of May 2021 at Lilongwe in the Republic of Malawi,” reads the ruling.

RBM wants a stay of the enforcement of the decision of PPDA review Committee claiming that the judgement from the committee did not provide enough reasons. It also says that it looked at the beneficial owners of the firm Mitra Systems (which is owned by a Rwandan, Robert Benimana and Zimbabwean Martin Masawi) in awarding the contract to them. RBM also argues that the court should stay the decision of the PPDA as the equipment is needed urgently for running of critical systems for the bank.

Sparc Systems Limited had lodged a complaint to PPDA following a decision by RBM to award Mitra Systems the contracts for ATS and Flexicube  equipment despite the firm not qualifying to do so having only operated for 2 years against the bank requirement that the successful firm should have a minimum of 5 years’ experience in supply of ICT equipment.

The Central Bank had accused Sparc Systems Limited of failing to submit Manufacturer Authorization from Dell as per requirement as presented in section 3 of the bidding document.

However, during the review proceeding that further involved free mobile roulette, Sparc Systems Limited showed that it had matched the requirements to all the criteria including the Manufacturer Authorizations and technical details as requested in the bidding document, refuting RBM’s accusations that the company did not qualify at eligibility stage.

Sparc also refuted RBM claim that it had indicated only one traceable reference in the bidding document which RBM showed as a basis for disqualification.

The company then accused RBM of not following the procedure at bid opening by failing to go through the bid opening checklist to verify if the requested information was available in the bids, a normal trend that ensures that the availability of Manufacturer’ Authorization, bid security and bid validity period are checked and verified in the presence of representatives of bidders.

According to Sparc Systems Limited, even in the unlikely event that a document was missing, RBM had the right to ask for it according to section 31 of the tender document which gave powers to the central bank to ask for such documents for any responsive bid.

The company then accused the Central Bank of unfair treatment, breaching section 30 of the PPD Act of 2017 which requires that all public procurement proceedings be conducted in a manner which promotes transparency, accountability, non-discrimination, fairness, open completion, anonymity, economy, efficiency and responsiveness to modern information and communications technology.

“The decision to recommend Mitra Systems for the award violated Regulation 133 of the Public Procurement Regulations. This Regulation provides that only those who qualify may be awarded the contract. Mitra Systems had only two years post registration therefore did not qualify as per the requirement of 5 years of experience,” reads part of the submission from Sparc Systems Limited to PPDA.

In its determination after hearing from both sides, PPDA Review Committee has faulted the bank and ordered it to retender the supply and delivery of ATS Procurement reference number RMB/ICT/008/20 of Lot 1 and 2, and to retender the supply and delivery of Flexicube Procurement reference number RMB/ICT/007/20.

The Bank had also been advised to engage independent evaluators for the procurement, with the tender be published at a reduced period of 21 days, before the issue was taken to the High Court of Malawi.

PPDA had also advised all bidders who participated in the initial bids to bid again in the second bidding.

The two tenders at RBM came into the front news in November last year when Human Rights Defenders Coalition wrote the Anti-Corruption Bureau (ACB) to investigate possible corruption in the matter.

According to HRDC Chairperson, Gift Trapence, his organisation had received allegations that three companies bid for the procurement of ATS equipment: namely, Mitra K1,068,732,141.30; Sparc Systems Ltd K989,865,480.39 and Move Secure K 874,980,291.80.

He added that bids for the procurement of ICT hardware for Flexicube upgrade were as follows: Oranux K1, 049,631,250.82; Sparc System Ltd K 976,851,674.00; and Mitra Systems K 757,133,881.49.

“It is further alleged that Sparc Systems came first in this evaluation. It is, however, alleged that RBM has a policy that states that two big contracts cannot be given to one company and thus to hedge the risk, the evaluation team recommended splitting the awards.

“It is further alleged that this resolution was made even though Mitra has been in operation for less than three years and therefore does not have enough experience,” Trapence said in the letter.