Big Saturday Read: Draxgate and a controversial amendment
The first part of this BSR explains the objections to the proposed Constitutional Amendment No. 2 Bill, which is presently before Parliament. I should refer readers to more detailed commentary on this proposed amendment which I did in a series of BSRs in February.
The first BSR gave a broad overview of arguments for and against amendmending the constitution. The second BSR analysed provisions concerning the appointment of judges while the third BSR examined provisions relating to the representation of women and youths in Parliament. Anyone who wants to read the detailed arguments can read these BSRs.
What’s the rush?
Many people have wondered why the government is rushing this proposed amendment at a time when the nation is under lockdown due to the COVID19 pandemic. The constitutional amendment is hardly a matter of life and death. It is not something without which the nation cannot survive if it’s not passed. There are far more pressing matters, such as the egregious corruption at the heart of procurement of medicines and equipment under the auspices of fighting the pandemic.
The economy is reeling under unprecedented pressures. Inflation is spiralling out of control, health care workers have recently gone on strike, the Zimbabwe Congress of Trade Unions is also announcing strikes. An ill-fated currency is going through a torrid time.
Yet, despite all this, at the instigation of the executive, parliament has decided to rush through the public hearing process, which excludes the majority of the people. Why has Parliament felt compelled to be in such a hurry?
I posit a theory that the rush can be explained by the executive’s desire to give President Mnangagwa an opportunity to have a greater role in the appointment of judges of the Constitutional Court and the Supreme Court. This is despte the fact that the process for appointing judges of the Constitutional Court has started. The plan is to have the new amendment in place before the completion of that process. I will explain how this will happen.
One of the amendments seeks to change the way judges of the Supreme Court and Constitutional Court are appointed. The President will be able to appoint judges who are currently serving to the Supreme Court and the Constitutional Court without going through the current process which requires public interviews. Currently, all candidates for judicial appointment must be publicly nominated before they are publicly interviewed by the Judicial Services Commission. The JSC will then make recommendations to the President who is ultimately required to make appointments from those recommendations.
The current process for appointing judges is open and transparent and has checks and balances, ensuring that the power to appoint is not abused. This is because the President’s power to appoint judges is counterbalanced by the role of the JSC and the public, who are participants in the process, both as nominators and observers in the public process. The proposed amendment will fundamentally alter this open and transparent process into an opaque and secretive process in the hands of the President. This opaqueness used to characterise the process before the 2013 Constitution and it it to that dark era that the amendment seeks to take us.
The current process promotes meritocracy, which means those who are not only competent but are seen by the public to be competent are appointed into office. The proposed process is a return to the old days, which promotes bias, favouritism and nepotism in the appointments process. Mediocre candidates who enjoy the President’s favour will go through at the expense of more competent candidates under the cover of darkness. This is why the amendment ought to be resisted. It is retrogressive. Even serving judges deserve equal opportunities, which are best served by the public process, not by an opaque process of handpicking by the President.
Currently, there are 5 vacancies at the Constitutional Court. This will also open some vacancies at the Supreme Court if current judges are promoted to the Constitutional Court. Ideally, the vacancies at the Constitutional Court should have been filled by 22 May 2020, when the Supreme Court and Constitutional Court were separated by operation of law. The 2013 Constitution had provided that judges of the Supreme Court would serve as judges of the Constitutional Court for the first 7 years, after which the Constitutional Court would have its own judges.
Therefore, the JSC should have started the process of recruiting and appointing judges of the Constitutional Court well before and in anticipation of 22 May 2020. The JSC neglected its constitutional duty and this never happened. This means when the first 7 years of the Constitution expired, there were no candidates to take up their places at the Constitutional Court. The Chief Justice filled that gap in a crude manner. He used a provision of the Constitution which allows him to appoint acting judges to the Constitutional Court.
This is why at present, the highest court in the country has 5 acting judges. This awkward situation was easily avoidable. I have previously explained how we got to this ridiculous situation but it’s important to repeat it because it helps us to understand the rush concerning the Constitutional Amendment Bill No. 2.
We have observed that is passed, Amendment No. 2 will give the President a greater role and more powers to appoint judges of the Constitutional Court and the Supreme Court. When the executive gazetted Amendment No. 2 Bill on 31 December 2019, the idea was that it would be passed into law by the time the 7 year anniversary of the Constitution arrived on 22 May 2020, the date of commencement of the Constitutional Court with its own judges. This means President Mnangagwa would have been able to appoint his preferred candidates from among the current set of judges without them having to go through public interviews. However, this plan hit a brick wall.
The brickwall was the COVID19 pandemic. The public hearings were interrupted by the national lockdown in response to the pandemic. Parliament suspended its activities and the process could not continue. The result was that Amendment No. 2 Bill stalled. Meanwhile, the deadline for the commencement of the Constitutional Court arrived on 22 May 2020. This is why they scrambled and put together a Constitutional Court with 5 acting judges, an unseemly situation. This was a stop gap measure pending full-time appointments.
Nevertheless, the JSC gave the impression that everything was according to plan. It made an announcement calling for public nominations for candidates to fill the vacancies at the Constitutional Court. The reality is that it really had no choice. Inaction would have made it obvious that they were waiting for Amendment No. 2 Bill, but there was no way of knowing when the process would resume. This means the process of filling vacancies is now in motion. Meanwhile, the executive decided to hurry the constitutional amendment process, ignoring the pandemic. Why? The executive wants Amendment No. 2 to be passed into law before the end of the current appointments process.
The country faces a scenario where the a new judicial appointments process will be in place at a time when the JSC will be carrying out a process under the old provision. Will the JSC continue with the process when the Constitution has been amended, giving the President greater powers of appointment? One argument will be that the process which started must be allowed to continue until the end. Another argument will be that the old process should be abandoned restricted in favour of the new one. Under the new procedure, serving judges won't have to go through public interviews.
My view is that, going by the approach of this regime, the latter argument will hold sway. The strategy of putting a tortoise on a lamp post might even be used: a litigant will be sponsored to argue that the process under the old provision must stop or be limited to non-serving judges, allowing the President the freedom to appoint serving judges under the new provision.
This is why we are witnessing this unseemly hurry concerning Amendment No. 2 Bill is designed to facilitate this power for the President. The ability to control the composition of the Constitutional Court and the Supreme Court will give the current President influence over this key arm of the State long after his departure from office.
Why there are objections to Constitutional Amendment No. 2
I have already explained the problem with the Constitutional Amendment No. 2 concerning the appointment of judges. The primary concern is that it centralises power in the hands of the Executive President and therefore, takes us back to the old era of an all too powerful presidency, without checks and balances.
This is also evident in the change to the provisions concerning the retirement of judges. The amendment changes the automatic age of retirement from 70 to 75 years. However, a judge who wants to serve after the age of 70 must submit a medical certificate and get approval of the President. This means such a judge will be on a rolling contract, determined by the President. This gives the President excessive control over judges, even before they reach the age of 70. To remain in office, they must keep the President happy. This affects judicial independence.
There are similar objections to changes to the appointment of the Prosecutor General. Currently, the pg is appointed in the same open, transparent and accountable way as judges. The amendment seeks to change this so that the President will have exclusive powers of appointment. While the President is required to consult the JSC in making the appointment, there is no obligation to follow the advice of the JSC. This is different from the current position where the JSC’s recommendations ought to be followed. This procedure has been mutilated concerning the appointment of the current PG but one can only imagine how worse it will be when there are no checks and balances at all.
Women and youths are also not happy with proposed amendments that directly affect them. The government’s proposition to extend the women’s quota seats in Parliament is seen as both political tokenism and deception when the government should be implementing the principle of equal representation. Women argue that the government is simply postponing the problem for another decade, instead of dealing with it once and for all. Youths are also arguing that the proposed 10 seats in the amendment are also an act of political tokenism giving a misleading impression that young people are catered for.
Another objection is that the amendments remove parliamentary oversight concerning debts that are incurred by the executive with foreign lenders. Presently, all international agreements with foreign organisations that impose fiscal responsibilities on the country must be approved by Parliament. This is to ensure that there is transparency, accountability and checks and balances over the executive. The proposed change will remove this parliamentary control, leaving excessive powers in the hands of the President and the executive. This is a retrogressive step.
There is also an objection to the proposed changes concerning the delimitation of electoral boundaries. The proposed change is that the process of marking electoral boundaries will be delinked from the population census. This is a drastic change which will impact the electoral process. Census data has always been the scientific benchmark for marking electoral boundaries. Removing it as a requirement leaves ZEC to be both the counting and boundaries marking authority. This centralisation of power in the hands of the electoral body can lead to biases. The fact that the census is done by a separate authority and for different purposes means that opportunities for manipulating data for electoral purposes are limited. The change has potential for retrogressive consequences on the credibility of the electoral process.
Another reason for the objections is that the government is rushing to change a young Constitution which it has been reluctant to implement. Zimbabweans are wondering why the government is in a hurry to change a constitution that was approved by more than 90% of the people at the 2013 referendum before they have even implemented it. The changes to the devolution model are being proposed when the government has not even implemented Chapter 14 of the Constitution which provides for devolution of power.
Likewise, while the government proposes a new office of a Public Protector, people are asking why the government has not established the Independent Complaints Mechanism under section 210 of the Constitution. This independent body would handle complaints by members of the public concerning the conduct of members of the security services and remedies for harm resulting from such misconduct. People are concerned that the government is focussing on form over substance, creating new offices when it has no appetite to implement and operationalise existing offices. If the ICM existed, it would have dealt with the conduct of members of the security services in August 2018 and January 2019, which led to the deaths of more than 20 people.
Overall, many people do not think the government is sincere. As I have pointed out, the unseemly rush has more to do with a desire to hand more powers to President Mnngagwa to pack the higher courts at a time when there are existing vacancies both in the Constitutional Court and the Supreme Court.
DraxGate - the timeline of events
To understand this part, you will have to read the BSR entitled “Draxgate - a case that’s built to fail”. In brief, an obscure company called Drax Consult SAGL and sometimes referred to as Drax International was awarded two contracts worth US$60 million by the Zimbabwean government through its pharmaceutical entity, NatPharm. The representative of Drax is one Delish Nguwaya, a man with criminal credentials.
It's also important to note that President Mnangagwa told the nation that he made a “personal appeal” to Drax for assistance at the start of the COVID19 pandemic. President Mnangagwa also told the nation that Drax had donated US$60 million in response to that appeal. This was false because it was actually the government that had awarded Drax contracts worth US$60 million.
How the President could have packaged commercial contracts in favour of Drax as a donation to the government is a mystery that is yet to be solved.
I have carefully looked at the available documents in order to develop a timeline of events. Once upon a time I was a financial regulator and connecting the dots in complex fraud cases was always a fascinating exercise. I had prepared a table, but the format wasn't suitable for this blog, so I have had to do it the old-fashioned way.
The idea is to showcase what really happened in this case, which now has a Minister of Health in police custody. He shouldn't be the only high-profile casualty. There must be some bigger fish, although the law enforcement system might be reluctant to wade into deeper waters. I also raise questions that I would ask if I were investigating this case. Maybe the investigators might find them useful.
So here we go:
Before 22 August 2019
Papi Pharma, a company owned by Ilir Dedga, an Albanian former meat trader, represented by Delish Nguwaya, a Zimbabwean, presented an expression of interest to the Ministry of Health to supply medical goods and equipment worth US$20 million. This expression of interest was rejected.
Issues and Questions
What were the reasons for the rejection of this expression of interest from Papi Pharma?
22 August 2019
Ilir Dedga and his Zimbabwean agent, Delish Nguwaya return to the Ministry of Health with another expression of interest in similar terms to Papi Pharma’s but this time using a company called Drax Consult SAGL
Issues and Questions
The Ministry of Health knew or should have known that these were the same persons whose expression of interest had been rejected. They had simply returned through a different corporate vehicle. Instead of Papi Pharma they had Drax Consult. If the Ministry initially rejected the expression of interest from Papi Pharma, why did it find the expression of the same people through Drax Consult acceptable? What was the material difference?
30 September 2019
Letter from the Finance Secretary, George Guvamatanga to the Health Secretary, Dr Agnes Mahomva stating that Treasury had received "additional information" indicating that Drax had "no adverse record". This was a follow up to a letter of 25 September 2019 (not seen so far). The letter authorised the Ministry of Health to go ahead and engage Drax.
Issues and Questions
If this was "additional information", it suggests that the Treasury had initial doubts about Drax. If so, what were these doubts?
What was this “additional information” that showed "no adverse record"? Who supplied this “additional information”? Why were Treasury officials convinced that their initial doubts were no longer relevant? Was there any undue influence on Treasury officials to accept the "no adverse record" position?
How could this “additional information” be true when Delish Nguwaya, Drax’s representative, was facing multiple criminal charges in Zimbabwean courts?
4 October 2019
Letter from the Secretary for Health, Dr Mahomva to Ilir Dedga of Drax confirming that NatPharm was being advised to start the public procurement processes since the offer had been approved by the Ministry of Finance
She says she wrote to the Finance Secretary asking for confirmation of availability of funds
This means the US$20 million agreement between the government (through NatPharm) and Drax was concluded without going to tender.
Issues and Questions
There is no indication that this deal went to tender.
Why did the deal not go through the tender process? Was it exempt from the tender process? If so, why? Did the government consider other offers to judge whether it was the best use of public funds?
10 October 2019
Letter from the Finance Secretary to the Health Secretary committing to avail funds for the deal. The letter contained a qualification of the need for compliance with public procurement rules “However, your ministry should ensure that the procurement process is done in line with the requirements of the Public Procurement and Disposal of Public Assets Act”
Issues and Questions
The Finance Secretary did a good job of covering himself and his Ministry by highlighting the duty to comply with the rules of public procurement and placing it on the Ministry of Health’s doorstep.
The question therefore is, did the Ministry of Health comply with the rules of public procurement?
11 October 2019
Letter from the Acting Secretary for Health Dr R. Mudyiradima to Mrs Sifeku, the MD of NatPharm advising that the Treasury had agreed to avail funds for the Drax deal. NatPharm is advised to go ahead and engage Drax “while ensuring that the procurement process is done in line with the requirements of the Public Procurement and Disposal of Public Assets Act”
Issues and Questions
Just like his counterpart at Finance, the Health Secretary was covering himself and the Ministry regarding the issue of compliance with public procurements rules. He was placing it on NatPharm’s doorstep.
The question therefore is, did NatPharm comply with the rules of public procurement?
End of November 2019 (date unknown)
Delish Nguwaya, country representative of Drax attended a meeting with NatPharm MDC Mrs Flora Sifeku, along with his boss, Ilir Dedga
6 December 2019
Drax opened 2 bank accounts at MagNET bank in Budapest, Hungary
These accounts would later be the subject of a money laundering investigation after a deposit of money by the government of Zimbabwe
17 December 2019
Letter from NatPharm concerning a Performance Guarantee which was proposed by Drax. The performance Guarantee would be the delivery of medical goods and equipment worth US$2 million
Issues and Questions
Was this a proper Performance Guarantee in compliance with public procurement rules?
18 December 2019
Letter from Health Secretary to NatPharm accepting the Performance Guarantee proposed by Drax
Was this a proper acceptance of a valid Performance Guarantee according to public procurement rules?
19 December 2019
A written contract between NatPharm and Drax is signed by both parties with Nguwaya signing on behalf of Drax.
This confirms a written agreement between the parties on the US$20 million contract
Date not stated
The police charge sheet in the case of State v Nguwaya (2020) says goods worth US$2 million were delivered to Natpharm. The date when this happened is not stated in the charge sheet.
Were these goods ever delivered?
If they were delivered, were they really worth $2 million?
Date not stated
The police charge sheet in the case of State v Nguwaya says afterwards, another expression of interest was presented to the Ministry of Health, but this time by Drax International LLC. The government agreed to a US$40 million, “based on trust from the previous engagement”. A story in News of the South, a website says this contract was signed on 6 March 2020.
On what basis did NatPharm agree to a new and larger deal before the completion and fulfilment of the first deal?
Did NatPharm follow the rules of public procurement for this deal?
20 February 2020
Drax established a branch in Budapest, Hungary
5 March 2020
A total amount of US$2 million was paid by the Government of Zimbabwe into the Drax account at MagNET Bank in Budapest Hungary.
8 April 2020
Nguwaya appeared at State House in Harare where he was pictured with President Mnangagwa, allegedly donating US$200,000 worth of goods to fight the COVID19 pandemic.
At the same function, he also announced the US$60 million deal with NatPharm for the supply of goods.
It was at this function that President Mnangagwa claimed to have made a “personal appeal” for assistance to Drax and that Drax had donated US$60 million in response.
It is important to investigate whether the government actually received a donation worth US$200,000. It is quite possible that it was a gimmick or at best, the donation was part of the consignment for which Drax was already being paid.
More significantly, President Mnangagwa’s claim that Drax had donated US$60 million was false and misleading because the opposite had happened: it was the government which was required to pay Drax US$60 million as the fee for the 2 contracts. Drax did not donate US$60 million as claimed by the President.
It is important for investigators to establish just how the President ended up presenting commercial contracts worth $60 million as a donation to the government. Was the President part of the scam? Or was he a victim of the scam? If so, who misled him into making a patently false statement to the nation?
21 April 2020
ZimLive.com a news website first reported that the Zimbabwean government was “funnelling US$60 million to a company linked to President Emmerson Mnangagwa’s son, Collins, in a murky coronavirus deal”
The company was Drax Consult SAGL which was described as a “little-known company” whose representative was Nguwaya described as “a business partner of Mnangagwa’s son, Collins” and as having “a colourful past - including multiple arrests for armed robbery, cocaine possession and extortion”.
Nguwaya is described as having described Collins as his “brother” whom he had known for a long time although he denied a business relationship.
When ZimLive.com asked him about the murky character of Drax’s deals with Natpharm, he told the news site, “This is the work of my enemies. They see you succeed, and they want to bring you down. My dealings with NatPharm are above board”. He said Drax was actually lending money to NatPharm which did not have foreign currency to import drugs.
This story did not attract much publicity at the time but it sheds some light into the character of Delish Nguwaya and his relationship with Collins Mnangagwa. How a character with such a rich history of criminality wormed his way into getting multi-million dollar public contracts through an obscure company is nothing short of astonishing. It is impossible that he could have done it alone, without assistance from high places.
His claim that his company was actually loaning money to NatPharm is inconsistent with the document trail pertaining to the deal. The deal was approved on the basis that the Finance Ministry had funds to finance it. Indeed, it was on this basis that NatPharm got the go-ahead to engage Drax. Drax’s Performance Guarantee was a supply of goods.
22 April 2020
On 22 April, another website, News of the South wrote a long article which was intended to be a rebuttal of the ZimLive.com story. It was a defence of Mnangagwa but it was all over the place and lacked coherence.
Issues and Quetions
Interestingly, that article says Drax delivered medical drugs to the Ministry of Health “on the strength of 20 million dollars which was loaned to them by the Ministry of Finance on 2 October 2019” and claims to have the “letter of approval in its possession. It also claims that Drax requested “a top up of 40 million dollars which was approved on March 6 2020 …”
This article had the hallmarks of a PR job on behalf of Nguwaya and/or the Mnangagwas. However, in trying to put up a defence, it revealed details that contracted Nguwaya’s narrative. While Nguwaya had claimed that Drax had loaned money from the government of Zimbabwe, the article stated that the government had given loan facilities to Drax, not once but twice, amounting to US$60 million. It was not a good PR job and it contains some incriminating details which provide leads to investigators.
28 April 2020
Finance Secretary writes to the Health Secretary advising her to terminate agreements with Drax citing Vis Major/Act of God/Supervening Impossibility as a result of the COVID19 pandemic, “to mitigate against escalation in the amount of debt to the said suppliers which Treasury is clearly now not going to be able to meet”
Issues and Questions
The government was now trying to cancel the agreements with Drax. Citing the pandemic as an Act of God preventing it from fulfilling the contract is convenient but this may not be sufficient in a court of law. The courts have previously said inconvenience is not good enough.
It’s clear the government was trying to get out of these contracts with Drax. What really gave rise to the government’s new position in relation to the Drax contracts? What had they discovered in April that they had not known when the agreement was concluded?
29 April 2020
Interpol in Hungary wrote to the Zimbabwe Republic Police requesting assistance in its money laundering investigation concerning the payments into the Drax account in Hungary
The fact that Drax became a subject of money laundering investigations in Hungary raises questions about the due diligence carried out by the authorities in Zimbabwe when they engaged the company in a multi-million dollar contract.
8 May 2020
Letter from the Finance Secretary to the Health Secretary granting exceptional authorisation to take a consignment from Drax apparently to meet “urgent need” towards the COVID19 pandemic.
This was a somersault by the Treasury after the letter of 28 April which advised the Health Ministry to terminate the contracts.
Who influenced the change in position?
14 May 2020
The ZRP Commercial Crimes division wrote to the Finance Secretary requesting information on the transactions with Drax
Same as above. It would be interesting to read the response of the Finance Secretary to the ZRP and ZRP’s response to the Hungarian authorities now that there is a criminal investigation. The offence of money laundering is based on proceeds of crime. If corruption or other offences are proven in this case, the money would qualify as proceeds of crime.
27 May 2020
Zim Morning Post has a story concerning improprieties in the payments to Drax regarding COVID19-related goods. It alleged that the goods had been overpriced by more than 200%, Drax quoting a price of US$987,000 for goods worth US$500,000 less.
Later, investigations by journalist Hopewell Chin’ono showed Drax wanted payment to be made to Paymaster LLC with an account in Mauritius. (It is reasonable to assume that this was because payments to MagNET bank had hit a brick wall with Hungarian authorities raising questions. When money laundering investigations commcence, the funds are frozen, so Drax may have struggled to get its money from the Hungarian bank. Mauritius was another channel)
Chin’ono also revealed that Drax’s purported address in Dubai was fake. Afetr these revelations, the story took a new life and attracted greater attention. Drax was was essentially swindling the government by overpricing its goods.
Further investigations by Chin’ono and ZimLive.com demonstrated that the problem was deeper and far worse than the over-pricing.
30 May 2020
Press statement by Drax International denying any links to the Mnangagwa family and threatening to take legal action
Press statement by Collins Mnangagwa, son of President Mnangagwa denying any links to Drax and Delish Nguwaya. However, investigations by Chin’ono and other journalists revealed that Nguwaya had featured in multiple photographs which showed a relationship of close familiarity with the Mnangagwas, including the President.
ZANU PF spokesperson also issued a press statement protecting the family of President Mnangagwa, suggesting they had no links with Drax or Nguwaya. He also threatened journalist, Chin’ono whom he described as an “unscrupulous character”
It was soon shown that the denials were without foundation. Nguwaya was no stranger to the President’s family as had been suggested. Why did they withhold information about their relationship? The denials brought more questions and attention to their relationship. Investigators would do more digging to establish the true nature of the relationship and their business dealings.
Draxgate has attracted a great deal of attention and rightly so. Corruption is the disease at the heart of Zimbabwe's demise. It's a high-profile case that is teetering perilously close to the highest office in the country.
Apart from the alleged links between Nguwaya and the President's son of which there's much circumstantial evidence of personal proximity, the President's wife also carries the dubious title of ambassador for health at the Ministry of Health, the centre of the scandal. She has had her run-ins with the entity at the centre of this scandal, NatPharm.
More significantly, the mystery over the President's public claim that he made a "personal appeal" for assistance to Drax, an obscure entity which is fronted by a man with a rich resume of criminal credentials needs to be resolved. His claim that Drax had donated US$60 million when nothing of that sort ever happened adds fuel to the raging fire. Why, it must be asked again and for the third time in this article, did President Mnangagwa present commercial contracts in which the government was liable to pay US$60 million to Drax as a donation of US$60 million by Drax to the government, the complete opposite?
The Minister of Health may be in police custody, but this saga looks and sounds bigger than one man and a habitual criminal.
But who will bell the cat? That, indeed, is the big question.