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BSR: Draxgate - a case that's built to collapse

The scandal concerning public procurement contracts awarded to a company called Drax is the latest and more visible illustration of the egregious corruption at the very heart of the Zimbabwean government.

This scandal has now extended to the purported prosecution of a criminal case which by all accounts is deliberately designed to fail. This note examines the matter and argues why it’s a purposefully created facade intended to hoodwink Zimbabweans into believing that the government is going after criminals when, in reality, it is protecting them.

Background facts

Let us begin with the background facts as they appear in the public domain, thanks to extensive investigations by media. The phenomenal investigation which has played out on social media has resembled Tshaka's famous military strategy of the cow-horn formation. There is one group advancing directly, two approaching from either side and another waiting in the background, coming in to assist as necessary. The corrupt are hemmed inside. Their only hope is the protective hand of a godfather or a godmother.

The facts as they appear are as follows:

On 19 December 2019, a company called Drax Consult SAGL signed a written contract with NatPharm, the government pharmaceutical company, for the supply of medical goods worth US$20 million. This was the culmination of an expression of interest offered by Drax Consult on 21 August 2019.

Although the written contract was signed on 19 December, the parties had already reached agreement following the acceptance of the expression of interest on 3 October 2019. Indeed, a letter from the Secretary for Finance dated 18 November 2019 showed that Treasury was “supportive of the offer” made by Drax and proposed payment terms starting with a 10% deposit. Information recently uncovered by ZimLive.com news site shows that this 10% deposit was indeed paid by the Zimbabwean government to an account of Drax Consult in MagNET bank, in Budapest, Hungary.

Later, another entity called Drax International entered into a contract worth US$40 million with Natpharm also for the supply of medicines to the government. A police document said this contract was “based on trust from the previous engagement”. This forms the basis of a second and similar charge against one Delish Nguwaya which is described in the next section.

As is evident, Drax appears in two forms - Drax Consult SAGL and Drax International - but both are represented in Zimbabwe by Delish Nguwaya and had the same shareholder, one Illya Dedga. According to an extensive report by ZimLive.com news site, Dedga is an Albanian former meat trader who is currently under investigation by Interpol in connection with suspected money-laundering arising from the receipt of funds from Zimbabwe under this deal.

It's important to note that the matter that led to the exposure of this scandal was the supply of goods for the fight against COVID19, which goods were overpriced by more than US$500,000. This is why some have referred to this scandal as COVIDGATE, revolving as it does on the COVID19 pandemic. But as is evident, it had begun long before the start of this pandemic.

The criminal charges

Delish Nguwaya was arrested and appeared in court on 13 June 2020 where he was remanded in custody on charges of fraud. The state alleges that the contracts “were entered through fraudulent means” and that Nguwaya’s conduct was “unlawful and caused prejudice to Good Administration to the Zimbabwe Government as the government officials acted on the misrepresentation to process contract papers” (sic).

The charge is based on the allegation that Nguwaya misrepresented the business of Drax Consult SAGL as a pharmaceutical company whereas it was “merely a consulting company with no experience in the manufacture or supply of drugs and medicinal products”. The charge sheet is embarrassingly thin on detail and is littered with avoidable errors.

Critical observations

The offence of fraud as alleged by the state is not immediately apparent from the charge sheet. Fraud is a crime of some complexity which requires meticulous presentation of facts that satisfy the essential elements. It cannot be presented in the farcical manner that appears on the charge sheet. The charge sheet makes broad and blad statements without any specificity. No effort is made to satisfy the constitutive elements of the offence of fraud.

The obvious challenge is that there is nothing which, if proven at trial, would disclose the alleged offence. The document is shockingly farcical and replete with silly errors, suggesting it was either rushed or forced on the investigating officer. It is not a serious document.

The charge sheet clearly states that Drax Consult delivered goods worth US$2 million to NatPharm in terms of the contract. There is no allegation in the charge sheet that the state suffered any financial prejudice in this first contract.

There is also no allegation that the so-called misrepresentation was material to the contract. It is not alleged that the identity of the supplier's business was essential to the contract. Nothing is shown as to the specifications that were set by the government. It freel and willingly agreed to the arrangement. In any event, NatPharm knew or should have known the party it was contracting with and what its business was. After all, this was a public procurement contract which should have gone through the public procurement process and in any event, NatPharm should have carried out due diligence. If it did not go through the public procurement process, that's a question for the public officers to answer.

The Zim Morning Post, the news site which first broke this scandal at the end of May 2020 has revealed that the Permanent Secretary for Finance, George Guvamatanga disclosed to the investigators that he raised red flags over Drax SAGL and Drax International and that these companies had failed security checks. Guvamatanga is a former CEO of Barclays Bank and would have known the importance of doing due diligence. There is no reason to doubt his alleged testimony as reported by the paper.

However, it is also clear that his concerns were ignored by the Ministry of Health and other parties, which raises questions as to why no one listened. How the central intelligence organisation, which normally vets any party that is involved with the government would have missed or ignored the clear shortcomings is scandalous. It is reasonable to assume that someone more powerful than all these actors wanted the deal to happen, the red flags around it notwithstanding. The investigations must focus on this line of inquiry: who was the chief enabler of this corrupt deal with a dodgy contractor?

The police charge sheet also reveals that Nguwaya is facing fraud and extortion charges. This information would have been evident from a basic police check before the government even negotiated with Nguwaya as the representative of Drax, let alone agreeing to two multi-million contracts and paying a million dollars to a dodgy Hungarian bank account. The critical question is how, in light of such findings, Drax ended up getting these lucrative contracts.

The government is in a fix. The fact of the matter is that on the face of it, these were existing contracts which government freely entered into and whose validity the government did not challenge. The government willingly paid the 10% deposit and received the goods as the charge sheet shows. If anything, therefore, the government is at risk of being sued by Drax for breach of contract. Whether or not the government successfully defends itself is a separate matter. It could be a long-winding legal battle, which might end in defeat. It is senior government officials who put the government and public funds in jeopardy and it is they who must be held to account. This brings su to the question why they are going after Nguwaya on thin and unsustainable charges.

Why is the government presenting such a weak case?

We have seen that the state's case against Nguwaya is extremely weak. It is submitted that this is deliberate. It is weak because it is supposed to be weak. The government wants to create a false and misleading impression that it is taking action against corruption. The reality is that it is skirting around the real issues and protecting bigger culprits whose conduct has been prejudicial to the state. The reason why the state has acted is revealed in its spurious reasons for opposing Nguwaya’s application for bail. It says Nguwaya’s offence “has courted public outcry and wrath”. The state would never have acted had the media not exposed this saga, which is is hitting too close to the President’s family and several senior government officials.

As we have observed, a basic check on Nguwaya would have shown that he was a person of a suspicious character. He was already facing fraud and extortion charges. And yet he negotiated and won two contracts worth US$60 million with the government. A basic check on the company that he represented, Drax, would have demonstrated that it was a business of dodgy circumstances. This was easily evident to Hungarian authorities where a red flag was raised as soon as the company’s newly opened bank account received two payments worth US$2 million from the Zimbabwean government. This is why it is the subject of money laundering investigations. Hungary is by no means a poster-boy of good governance, but even they were able to pick out the dodgy transactions which embarrassingly involve the Zimbabwean treasury.

That both Drax and Nguwaya are of suspicious circumstances and character is evident from the multi-pronged investigations that have been done by investigative journalist Hopewell Chin’ono, ZimLive.com and The Zim Morning Post. There is no way they could have got multi-million dollar public contracts without the aid of a powerful godfather or godmother. Nguwaya and Drax are mere fronts used to spiriting away millions of dollars out of Zimbabwe. Payments to obscure outposts in Hungary and Mauritius are indicative of the problem of illicit financial flows from Zimbabwe. This is evident in the grossly overpriced goods meant for use in the fight against COVID19 pandemic.

Lurking in the shadows

The Minister of Health, Obadiah Moyo, is at the heart of this scandalous story. According to the police charge sheet in the Nguwaya matter, it was the Minister of Health who “initiated” the process which led to the scandalous contracts. Moyo could not have initiated the process without engaging or trusting Nguwaya or his associates directly. If there is a godfather or godmother who weighed in in favour of Nguwaya’s expression of interest, Sibanda would know who that figure is and should name them. Ministers receive expressions of interest from many people but not all of them succeed, let alone when they involve multi-million dollar contracts. This one succeeded because Moyo approved of it, the obvious shortcomings of the characters notwithstanding. If there is a significant person of interest worthy of investigation in this matter, it is Obadiah Moyo.

Therefore, the case is weak because the government wants it to be weak. There are more credible and serious lines of investigation than the Nguwaya line. Nguwaya may be an accomplice to the crimes but he is not the principal actor. But the state has no interest in pursuing the big fish because the case it hitting too close to the heart of the government.

Nguwaya and the Mnangagwa family

The scandal prompted ZANU PF grandees to come out fighting in Mnangagwa's corner. At a press conference, Patrick Chinamasa who is the acting spokesperson of the party dismissed the view that Nguwaya had connections with the Mnangagwa family. He went on to threaten journalist Hopewell Chin’ono who along with ZimLive and ZimMorningPost has been a leading a relentless charge on this case. Chinamasa's denials and threats revealed more than they concealed.

Before that we had already seen weak denials of personal relationships between Nguwaya and members of the Mnangagwa family. Both Drax and Collins Mnangagwa issued statements stated on the same day denying any links. The language suggested that paternity of the documents could be traced to the same hand. Collins Mnangagwa, who is one the President’s several children claimed he did not know Nguwaya. However, that denial was debunked very shortly afterwards, as pictures of the Mnangagwa boys casually socialising with Nguwaya emerged. They also showed that Nguwaya’s presence in the lives of the Mnangagwas is ubiquitous, making the bare-faced denials embarrassing. The denials only served to raise more suspicions.

It does not go without notice that the President's wife, Auxilia, is a key player in the Ministry of Health, where she surprisingly landed the post of "ambassador" last year. She made her presence felt at NatPharm, which finds itself embroiled in this scandalous saga.

Constitutional breaches

Arguably, senior government officials involved in this saga are in breach of the Constitution. How the deals were awarded to Drax was unprocedural and contrary to basic rules of public procurement. The lack of due diligence or the failure to take heed of its outcomes is a clear breach of public procurement rules. Section 195 of the Constitution provides that “companies and other commercial entities … must establish transparent, open and competitive procurement systems”. There is nothing open, transparent or competitive about how Drax got these contracts from NatPharm, a government entity.

Furthermore, senior government officials failed to safeguard public funds. Section 308 of the Constitution provides that “every person who is responsible for the expenditure of public funds has a duty to safeguard the funds and to ensure that they are spent only on legally authorised purposes and in legally authorised amounts”. Additionally, it states that “every person who has custody or control of public property has a duty to ensure that it is not lost, destroyed, damaged, misapplied or misused”. There was gross overpricing of goods supplied by Drax. The Minister of Health has admitted to this which is why he claimed that Drax had agreed to reduce the contract price. This was only after public pressure from media revelations of the scandal.

Conclusion

The Nguwaya criminal case is much ado about nothing. It is a case that is deliberately designed to collapse. It's a cheap dummy. It is tempting to put this to police incompetence but this would be an insufficient explanation of this scandal. The weak case is a fraudulent attempt to fool the public into thinking that something is being done. Nguwaya will walk free and the public officers who should be held to account will carry on as if nothing happened.

More worrying is that what we are seeing in this saga mirrors what goes on regularly in the rest of the government. This is how the looting of public funds occurs in the government.

There is no appetite for action because those who are supposed to take action are the specialists in corruption. They and their associates are the actors behind pawns like Nguwaya and Drax. Despite this egregious corruption which is bleeding the country dry, they still find scapegoats to blame for the country's escalating woes.

WaMagaisa

wamagaisa@yahoo.co.uk

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