Drax US$60m Drugs Deal Above Board: High Court

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By James Muonwa

THE High Court has ruled as above board the deal for the supply of medicines and medical sundries entered into in 2019, between Drax Consult SALG (Drax) and the National Pharmaceutical Company (Natpharm).

The US$60 million deal was stalled after a massive public outcry alleging corruption involving Drax local representative, Delish 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 the judgement delivered Tuesday, Justice Webster Chinamhora granted relief to Drax following an application to set 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 application was filed at the High Court on June 1 this year.

In the application, the order sought was that the arbitral award be set aside in its entirety.

On the date of hearing, the applicant  applied to amend the draft order to no  longer ask for the setting aside of the entire award, but rather, only paragraph 84 (A) of the award which reads: “The agreement entered into between the parties is found to be 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.

“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 authorised in writing by PRAZ to conduct such proceedings.

For that reason, the respondent declined paying for the medicines and medical sundries supplied to it by Drax, arguing on the basis of the arbitral award, which was Tuesday quashed

Resultantly, on June  2 last year, Natpharm immediately cancelled tender  NAT DP19/2019.

The applicant’s view was 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.

Ruled Justice Chinamhora:”The net effect of so doing is that PRAZ gave authority to the respondent to act in accordance with that resolution in procuring the required medicines and surgical sundries. There is nothing  ambiguous about the letter of 6  November 2019. That letter requires no elaborate interpretational aids to decipher its meaning.

“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 supportable by facts.

“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.”

He added: “It seems to boggle the minds that the arbitrators found that the contract between the applicant and the respondent was illegal and unenforceable for want of compliance with section 15 of the Procurement Act.”

PRAZ was accused of approaching the court in bad faith and ordered to pay costs of the suit on the legal practitioner and client scale.