Drax SAGL International has challenged the cancellation of its medical supplies contract by Government and plans to seek arbitration in London on the basis that there might be a small typographical error in the cancellation letter.
Represented by Mr Delish Nguwaya in Zimbabwe, Drax had entered into an agreement with Government for the supply and delivery of medicines and consumables at a cost of US$20 million. But when it became apparant to the Ministry of Finance and Economic Development, which by law acts as the procurement backstop by looking at value for money in contracts, that the supplies were priced well above alternatives, the Minsitry of Health and Child Welfare was ordered to cancel the deal.
The contract and its cancellation has already seen the then Health Minister Dr Obidiah Moyo and four officials arrested and charged, and Dr Moyo fired from his post.
But in a letter written to the National Pharmaceutical Company from Drax’s legal representatives, Samukange Hungwe Attorneys, the company said it did not recognise the cancellation of the contract.
“The purported cancellation appears founded on a directive from the Ministry of Health and Child Care which clearly is outside the contractual parameters that govern the parties’ relationship,” reads the letter in part.
“The purported termination is allegedly in terms of Section 89(b) of the Public Procurement and Disposal of Public Acts Act (Chapter 22:23). This Act does not exist.”
The Act referred to is the Public Procurement and Disposal of Public Assets Act, and the lawyers appear to be relying on a possible typographical error if “Acts” was written instead of “Assets” in the original cancellation notice. The chapter number, 22:23, is the correct chapter number.
“Against the above background and in line with the general conditions of contract and the contract between our parties, our client hereby gives notice of its intention to commence arbitration under the London Court of International Arbitration.”
While Drax said the Act does not exist it is listed in all the lists of Zimbabwean legislation as is readily available in print and on the internet.
Drax said the route was being pursued on the basis that the cancellation was not only unlawful but also done without following procedure.
Nguwaya has since appeared in court after his arrest on allegations that Drax misrepresented to Government that it manufactures medicines and is remanded out of custody on $50 000 bail.
Natpharm acknowledged receiving the letter from Drax on July 13.