AFTER the High Court this week ruled that the controversial US$20 million Drax Consult SAGL deal on medical supplies and sundries that cost former Health minister Obadiah Moyo his job was valid, Drax executives are smiling all the way to the bank.
They stand to collect a cool US$2.9 million. A lawyer involved in the deal said the ruling means Drax, whose contested deal was buffeted by corruption allegations, now has to get its money.
“The judgment effectively means that the contract between National Pharmaceutical Company of Zimbabwe (NatPharm) and Drax Consult Sagl is valid and complied with the procurement laws of Zimbabwe,” the lawyer said.
“What this entails is that the contract is standing and has the force of law. The purported cancellation of the contract by NatPharm is effectively of no force and effect. “The purchase price for all the delivered medicines and medical sundries is due and payable and ought to be paid. Drax Consult SAGL has to deliver the remainder of the medicines and medical sundries and NatPharm ensures that it pays in terms of the contract.”
The total amount due is US$2 943 000. The Finance ministry and police have been stalling the unblocking of the red-flagged and frozen US$2 million paid for medical supplies by Drax Consult SAGL, associated with President Emmerson Mnangagwa’s controversial family friend and local business dealer Delish Nguwaya.
A stash of previously unpublished documents with fresh details obtained recently by The NewsHawks shows Nguwaya and his associates at Drax, also sometimes known as Drax International following its later Dubai registration, including its founder Ilir Dedja, have been frantically demanding that Treasury and police answer questions posed by the International Criminal Police Organisation (Interpol), which is investigating the issue, to unblock the transaction.
The Finance ministry and police have kept Drax at bay over the issue. Drax, through its lawyers, Samukange Hungwe Attorneys, had since early last year been writing a flurry of letters to police, Interpol Zimbabwe, Treasury, ministry of Health, Natpharm and the Office of the President and Cabinet demanding the US$2 million — but to no avail.
The NewsHawks followed the money trail in a new investigation of the widely covered saga. Current information indicates the funds — specifically stated in the transaction record as payment for “medicines and medical supplies”, Invoice No. 26 — are still frozen at Drax’s MagNet Bank account in Budapest, Hungary.
The financial trail further shows the money went from the Reserve Bank of Zimbabwe (RBZ), government’s banker, to local commercial bank BancABC, Deutsche Bank Trust Company Americas in New York, United States, and Erste Group Bank AG in Vienna, Austria, before landing into Drax’s Hungary account.
But the funds will not be released until the Interpol investigation is finalised. The money was paid by Zimbabwe’s Finance ministry on 2 March 2020 and it got into Drax’s new account three days later — on 5 March. Drax had an office in Budapest before it hastily retreated amid a subsequent Interpol investigation. Drax, which also had offices in Switzerland, opened the Hungary account to receive the money to avoid scrutiny, particularly the spectre of United States targeted sanctions on Zimbabwe.
Dedja is the only shareholder in the Swiss-registered Drax and another company called 3-DD Swiss Trading. He registered Drax in the Italian-speaking town of Lugano in March 2017, but the company has done little trading in Switzerland.
Documents show Dedja opened two bank accounts for Drax with MagNet Bank in Budapest on 6 December 2019. He registered the Drax Hungary branch on 20 February 2020. This was five days after Drax had signed a deal with Natpharm — Contract No. International NAT DP 19/2019 and 20/2019 — for the supply of medicines and medical sundries worth US$20 million.
Drax later signed a US$40 million deal with Natpharm, bringing the total to US$60 million. Within 10 days of registering its Hungary branch, Drax was paid US$2 million by the government. However, the funds were red-flagged by banks involved in the relevant financial integration system chain for suspected money laundering.
Then Interpol moved in. In its contract with Natpharm, Drax gave No. 6900, Lugano, Switzerland, as its address, while Natpharm put its 14 Lobengula Road, Southerton, Harare — headquarters — as its location.
The deal, which sailed through the Health ministry, Treasury and the Procurement Regulatory Authority of Zimbabwe with ease due to political pressure despite lingering questions and suspicions, was structured as a loan facility. Suspicions were raised due to Nguwaya’s close association with the Mnangagwa family and his numerous public appearances with the President, his wife Auxillia and their twin sons, Collins and Sean.
Nguwaya is particularly close to Sean, a captain in the Zimbabwe National National Army attached to the Presidential Guard, and works with him.
Nguwaya and his partners say the deal was above board. The agreement followed an expression of interest by Drax to the government through Natpharm, which is a state-owned enterprise, in 2019.
Through the loan facility, Drax supplied goods in advance and was paid later at agreed prices and margins. Documents obtained by The NewsHawks show new details of the money trail.
The funds were paid by the Finance ministry located at the New Government Complex (now officially known as Mgandane Dlodlo Building) on Central Avenue or Samora Machel Avenue and 4th Street (now Simon Muzenda) in Harare through the RBZ, into BancANC. The transaction was initiated in Harare on 2 March 2020 at 16:43pm.
The money would go through German bank Deutsche Bank Trust Company Americas’ New York subsidiary, a leading provider of financial services in the Americas. It then went to Erste Group Bank AG before landing into Drax’s MagNet Bank account, where it was frozen. Documents show Nguwaya and his business partners have been piling pressure on the government and police to complete the transaction, so they get the money.
After the contract between Natpharm and Drax was signed on 11 December 2019, the latter quickly moved to bring in supplies. In the first two months of last year, Drax had delivered goods worth US$2 733 480.
This is contained in a letter dated 10 April 2020, written by Dedja to Natpharm. The letter says Drax had prepared goods worth US$4 million which were ready for delivery and more payment. Ever since the US$2 million was paid, investigations had been ongoing. However, progress has been stalled by the authorities until the latest High Court judgment.