On Govt payment to Sattar and Gregory Gondwe’s naivety: We explore collateral contract law
In this article, legal scholar LORD DENNING shows the legal gap that misled some journalist to assume that MDF’s payment amounted to corruption.
On 19th January 2024, the MDF letter to the supplier, Malachitte FZE, informing of pre-shipment inspection in which it was stated that: “The Malawi Defence Force entourage will come for pre-shipment inspection exercise from 2nd to 26th January 2024”.
Among other elements, the MDF delegation was dispatched to inspect the following aspects in relation to the APCs before their being loaded for shipment: (1) the items specifications; (2) tools and accessories; (3) tes driving up to 10 km; (4) driving in rugged terrain; (5) driving in mud; (6) driving in sandy terrain; and (7) hill climbing among other attributes and capabilities.
This timeline of events is, to some journalists, evoking a thought that Government has entered a new contract with Sattar company, Malachitte FZE. Nothing can be more misleading.
It must be acknowledged that in order to understand matters of contract, one must have sufficient understanding of matter Contract Law. From Contract Law, you will understand something called COLLATERAL CONTRACT.
While by the time Government was terminating all contracts with Sattar companies in line with section 46(b) of the PPDA Act the Malachitte FZE had already delivered some equipment to the Malawi Police Service and some to the MDF, it is understood that some equipment were yet to be delivered to the MDF. Superficial understanding then would be that all other equipment that was not yet delivered faced the effect of the termination. This is where the issue of collateral contract is coming in.
In basic terms, a collateral contract is a subsidiary contract which depends on another (a main) contract for it to exist. The collateral contract may also induce a party to enter into a main contract. In the circumstances, Malachitte FZE, upon entering a contract with the Malawi Government (and I refer to this contract as the main contract) proceeded to enter into an agreement/contract with producers of the equipment that the MDF was seeking to procure.
The contract that was entered between Malachitte FZE (Sattar’s company) and the production company is what we can refer to as collateral contract since it had to rely on another contract (the one between Malawi Government and Malachitte FZE which outlined the specifics of the APCs that the producing company could produce). It is no exaggeration to state that Malachitte FZE had to present the contract that it had signed with the Malawi Government in order for the producers of the equipment to embark on producing the exact equipment with the exact specifics that were outlined.
Despite the fact that the Government terminated the contract after some items were delivered, we consequently learn that a collateral contract involving production of these 32 APCs was already in place. This means that as much as the producing company had already incurred expenses in the production of the ordered equipment, the Government Malachitte FZE was obliged to make the payment, in which Malachitte FZE itself was entitled to claim the said payment from the Malawi Government.
The Malawi Government, therefore, had a two-way choice: (1) either to pay for the expenses incurred and stop the production process thereby simply paying and receiving no consignment (2) or to make such payment that would allow the producers to complete the production and deliver the equipment to Malawi. Both options were in line with the contract law which the PPDA Act has competently envisaged.
Given these two options, would it be prudent for the Government to choose paying and not receiving the equipment? Of what economic sense would that serve? In the alternative, was it be prudent for the government to opt for paying and receiving the consignment before the contract could be disposed of? You make the judgement. As for mine, I commend the Government for opting the second choice given our miserable economic situation in which we don’t have enough money to sacrifice at the altar of political expediency.
In the circumstances, I find it extremely laughable that a journalist chose to be sensational before reasonable care was taken to firstly understand the law around the said events (the payments and inspections of equipment) in the contract. I believe it is now evident that whilst the journalist was pre-dominated with the spirit to “break” the news and/or “expose” the events, his misunderstanding that the same constituted corruption was mind boggling. Unfortunately for him, his misinformation is collapsing heavily when faced side by side with the facts and the law.
If the rumors that the American Embassy rejected his negotiation for asylum and he instead dispatched himself to Tanzania are anything to go by, it simply demonstrates that the American Embassy fully understood the misalignment of his published story with the reality.
I am further suspecting that opting to run away while the MDF allegedly asked him over for a chat was simply an act of naivety. It could be that, and it seems plausible, that perhaps the MDF officials simply wanted to orientate him to the law and to why the Government opted the decision it made.
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