ZIMBABWE— A controversial US$60 million drug supply contract between Drax Consult SALG, and the National Pharmaceutical Company (NatPharm), has been upheld as being above board by the Zimbabwe Supreme Court.
The Supreme Court dismissed an appeal by the NatPharm contesting a High Court ruling reversing the cancellation of a drugs supply contract with Drax owned by Zimbabwe businessman Delish Nguwaya.
In December 2021, the High Court ruled that the deal was above board and that Drax could proceed to supply medicines and medical sundries entered in 2019, between Drax and Natpharm.
The deal was stalled after public outcry alleging corruption involving Nguwaya and then Health Minister Obadiah Moyo who were arrested but later cleared of graft charges.
Moyo lost his ministerial job following the damning allegations.
In July 2020 seven NatPharm managers were fired for allegedly awarding the US$60M tender to Drax International – a company that was less than two weeks old.
Aggrieved by the High Court ruling, NatPharm mounted an appeal at the Supreme Court arguing that the lower court had erred.
The Supreme Court however threw out the appeal but did not give full reasons for the ruling.
Drax lawyer Everson Samkange told journalists the ruling cleared his clients whose image was tarnished over the alleged bogus deal.
“Quite clearly the contract had an uproar in terms of publicity some people, several sections of the media had their various interpretations of the contract but what this judgment then means is that all those negative allegations that were being leveled against the contractors were without basis and without foundation and were just being made to smear their good standing,” said Samkange.
He added, “In my view once the highest court in the land has pronounced that the contract is valid…it means that all those statements were to the contrary and cannot be taken seriously.”
The high court decision
In his judgment, High Court judge Justice Webster Chinamhora granted relief to Drax setting aside a March 1, 2021, arbitral award nullifying the tender, which had passed through necessary processes by the Procurement Regulatory Authority of Zimbabwe (PRAZ).
Drax had argued that PRAZ had given its authority as required by section 15 (1) and (2) of the Procurement Act, when the contract was penned by the two parties.
The company wanted the agreement entered between the parties to be found illegal and unenforceable for want of compliance with section 15 of the Public Procurement and Disposal Act.
In his judgment, Justice Chinamhora said it is not disputed that on December 11, 2019, the parties entered into an agreement for the supply of medicines and medical sundries by the former to the latter under Tender NAT DP19/2019.
“Pursuant to this agreement, the applicant delivered medical supplies worth US$2,733,480 to the respondent. However, the respondent refused to take delivery of medicines with a value of US$210, 000, which the applicant avers are sitting at Robert Mugabe International Airport,” Justice Chinamora added.
The judgment also read in part that the respondent argued, inter alia, that the contract was concluded in contravention of section 15 (1) and (2) of the Public Procurement and Disposal of Public Assets Act (Chapter 22:23), in this instance referred to as the Public Procurement Act.
This provision says 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 in writing by PRAZ to conduct such proceedings.
For that reason, Natpharm declined to pay for the medicines and medical sundries supplied to it by Drax, arguing because of the arbitral award, which was quashed.
Resultantly, on June 2, 2020, Natpharm immediately canceled the tender NAT DP19/2019.
Drax submitted that the cancellation was unlawful.
The arbitrators found, inter alia, that the contract of 11 December 2019 was illegal on the basis that it was concluded without the authority interpreted in the Procurement Act.
In its arguments, Drax drew the court’s attention to a letter dated November 6, 2019, written by PRAZ chief executive officer, Nyasha Chizu to the managing director of Natpharm.
Chinamhora ruled that the net effect of so doing is that PRAZ gave authority to Natpharm to act in accordance with that resolution in procuring the required medicines and surgical sundries.
“Given the straightforwardness of its language, it is inevitable to remark that the contention that authority was given by SPOC and not PRAZ is an untenable mirage not supported by facts,” Justice Chinamhora’s judgment read.
“Consequently, I find no conceivable reason for ascribing to SPOC the authority to procure medical supplies from the applicant. Quite clearly, the said letter satisfies the requirements of section 15 (1) and (2) of the Procurement Act,” said the judge.
PRAZ was accused of approaching the court in bad faith and ordered to pay the costs of the suit on the legal practitioner and client scale.
In the present case, Natpharm was also slapped with costs.