Kaloswe sues Admarc, ZCF over maize deal

The Zambian company which was used as a middleman in the maize deal has sued Zambian Cooperative Federation (ZCF) and Agriculture Development and Marketing Cooperation (Admarc) for breach of contract.

According to a statement of claim filed at the Lusaka High Court, Kaloswe Commuter and Courier Limited chief executive officer Isaac Kapambwe said his company entered into contract with ZCF for the supply of 100,000 metric tonnes of maize at a unit cost of US$215 per metric tonne at a total contract sum of US$21.5 million.

Kaloswe also signed a contract with Admarc to supply to the Malawian company the 100, 000 metric tonnes of maize the Zambian company bought from ZCF at the price of US$345 per metric tonne (total cost of US$34.5 million).

Kapambwe explained that the contract Kaloswe Commuter had entered into with Admarc was to be financed by Kenya based Eastern and Southern African Trade and Development Bank (the “PTA Bank”) and that to ensure efficient delivery of the maize to Admarc, the PTA Bank was to pay the full contract sum of US$34.5 million directly to the source that the commodity would be purchased from, that is, ZCF.

“The plaintiff will further aver that on 1st September, 2016 the PTA Bank transferred the US$34,500,000 into the defendant’s account, number: 0003203000439, held with First Capital Bank, Lusaka Main Branch but that ZCF was only supposed to get US $21,500,000 for the 100, 000 tonnes of maize supply to Kaloswe based on the contract, and release an excess of US$ 13,000,000 to Kaloswe,” he said.

Kapambwe claimed that on 30th August, 2016, he wrote to ZCF for an initial advance payment of US$350, 000 from the excess US$13 million to begin facilitation of transportation and associated logistics but that the request was rejected on the pretext that there was no need as the export permits for the maize had not yet been issued by the Ministry of Agriculture.

He has stated that it was wholly unjustified for ZCF to reject the request for payment as it was clearly indicated in the contract that “Zambia Cooperative Federation will assist the buyer by way of facilitating the process of obtaining all the relevant permits to allow the movement of grain from Zambia” and further argued that it was never a condition precedent either orally or in writing that the funds for logistics and associated costs would be released to Kaloswe upon issuance of export permit by the Ministry of Agriculture.

Kapambwe further stated that following the legal principle of “privity of contract”, ZCF is not permitted to interfere with the contract between Kaloswe and Admarc as it was not a party to it and he has since applied to the court for an order of interim injunction to restrain ZCF from spending, transferring, administering or dealing with the said US$34, 500, 000 paid into its account by the PTA Bank as per contract before determination of the matter.

“The Plaintiff (Kaloswe Commuter) is of the view that the actions of the Defendant (ZCF) are not in goodwill and are deliberately intended to frustrate, not only the contract between the Plaintiff and Defendant, but also the contracts between the Plaintiff and ADMARC and the transporter,” he said.

He has also requested for the courts to order ZCF for specific performance of the defendant’s obligation under the contract dated 31st May 2016 between Kaloswe and ZCF.

The issue has sparked headlines in the country but Agriculture Minister George Chaponda has distanced himself from the maize contract with Kaloswe saying the country bought the maize through Admarc.

Recently President Peter Mutharika appointed a Commission of Inquiry to investigate the Zambia-Malawi maize scandal.