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Drax Consult SAGL could be set for a US$11 million payment from the National Pharmaceutical Company (Natpharm) after the Harare High Court reversed the cancellation of its medical supply contract over allegations it was improperly awarded.
The Switzerland-registered company, fronted by Delish Nguwaya, a close associate of President Emmerson Mnangagwa’s twin sons Sean and Collins, became the subject of an Interpol investigation in March last year after it was paid US$2 million by the Zimbabwe government to a Hungarian bank account opened just two weeks earlier.
Natpharm cancelled Drax contracts worth a total of US$20 million after a ZimLive investigation flagged possible breaches of the country’s procurement laws, specifically that the contract was not subjected to an open tender.
Drax took Natpharm to arbitration and lost, prompting the company to approach the High Court.
On Tuesday, Justice Webster Chinamora ruled that Drax Consult SALG’s contract to supply medicines and medical sundries was approved by the Procurement Regulatory Authority of Zimbabwe (PRAZ).
His ruling means Drax can now apply for the release of the US$2 million held by Hungarian authorities for goods already supplied, and sue for specific performance on the remainder of the US$11 million contract which was terminated.
Natpharm cancelled the contract with Drax signed in 2019 arguing that it was in violation of section 15 (1) and (2) of the Public Procurement and Disposal of Public Assets Act.
The act reads: “A procurement entity shall not initiate or conduct any procurement requirement proceedings in which the value of the procurement requirement is at or above the prescribed threshold, unless such procurement entity has been generally authorized by the Authority to conduct such proceedings.
“Authorisation in terms of subsection (1) shall be given in writing.”
Natpharm argued that Drax “did not seek to call any evidence nor produce any documentation to show that the procurement proceedings were initiated or conducted with the requisite authority in place.”
Chinamora ruled in favour of Drax, relying on a letter dated November 6, 2019, written by the CEO of PRAZ to the managing director of Natpharm sanctioning the “direct procurement method” through which the company sidestepped open tendering.
PRAZ CEO Nyasha Chizu wrote that this had been done as a “stop gap measure to address the current crisis at medical institutions countrywide.”
Ruled Justice Chinamora: “It seems to boggle the mind that the arbitrators found that the contract between the applicant (Drax) and the respondent (Ntapharm) was illegal and unenforceable for want of compliance with section 15 of the Procurement Act…
“My observation is that on a proper examination of the letter of November 6, 2019, the administrators could not plausibly have made a finding of illegality of the contract.”
Under the US$11 million contract, Drax was to supply medicines worth US$5,332,530 and medical sundries for US$5,705,685.
The court heard the company had already delivered supplies worth US$2,2 million – but after taking a consignment of US$2 million, Natpharm rejected the other goods which are reportedly still at the Robert Gabriel Mugabe International Airport. ZimLive
