K7.5 billion medical supplies case stalls

Mediation in the K7.5 billion payment dispute between Central Medical Stores Trust (CMST) and SADM Pharmaceuticals has come under scrutiny with stakeholders lamenting that it is taking long. The dispute stems from a Malawi Supreme Court of Appeal order for SADM to refund CMST $4.3 million (about K7.5 billion) for a botched procurement contract. In an interview yesterday, Human Rights Defenders Coalition chairperson Michael Kaiyatsa said the delays in resolving cases involving public resources affect service delivery and public trust.

“This case also involves the health sector, so any delay has wider implications because it can affect the delivery of essential medicines and public confidence in how public resources are managed,” he said. Private practice lawyer-cum-activist Benedicto Kondowe said that while mediation is a lawful process, prolonged resolution of final court decisions can have fiscal implications. “Once the Supreme Court of Appeal has made a determination, the expectation is that the judgement is respected and implemented unless there are lawful grounds for further action.

If mediation does not resolve the matter, the parties may consider returning to judicial enforcement processes available under the law,” he said. The K7.5 billion represents about 7.7 percent of the K97.47 billion that government proposes to manage through CMST in the 2026/27 budget for drug procurement. A further K10.8 billion is proposed for devolution to councils.

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Minister of Finance, Economic Planning and Decentralisation Joseph Mwanamvekha announced a K20 billion allocation to CMST as part payment of arrears owed by central and district hospitals. Following the 2023 ruling on the CMST-SADM matter, The Nation understands that CMST in October last year took steps that included placing SADM Pharmaceuticals’ assets under seizure with a view to auction them. However, the process was halted after the Attorney General’s office initiated mediation, according to parties to the dispute.

Other court processes are also said to be ongoing. AG Frank Mbeta had not responded to The Nation’s questions sent last Wednesday about the status and expected timeframe for the mediation. SADM Pharmaceuticals owner David Bisnowaty said the ongoing process is affecting operations amid foreign exchange constraints and medicine shortages.

“My sincere hope is that, once the legal process has run its course, all stakeholders will be able to find a constructive path forward that prioritises the interests of the people of Malawi,” he said. CMST is financially-crippled with public hospitals already owing it billions, affecting its operations in the process.

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