Thats not really a malfunction. Thats how you remove the safety is to rotate it like that. Sounds like arsenal fixed it more or less right. Normally you have to push the disconnector a little to get it to rotate up and out.
I have converted like five saigas one vepr and two milled rifles to sidefolder and one stamped rifle. Ive messed with an ak or two. In fact one time I put a standard trigger in a saiga 308 without changing the safety which allowed me to fire the rifle with the safety lever still up. All it did was bend the lever.