CMED ignored tender procedures in $3 million fuel scam

via CMED ignored tender procedures in $3 million fuel scam, Parly told | The Source on May 12, 2014

Government transport operator, the Central Mechanical Equipment Department (CMED) did not follow tender procedures when it awarded a $3 million fuel tender to a local company in a botched deal last year, Parliament heard on Monday.

CMED on March 1 last year paid $2,7 million upfront to First Oil, a local company for the supply of four million litres of diesel through an offshore account belonging to a Hong Kong-based shadowy company Micro-Petroleum on the recommendation of two state-owned companies, Petrotrade and the National Oil Infrastructure Company.

First Oil told CMED that it had secured the fuel on behalf of the company and pledged to deliver after receiving payment.

But First Oil failed to deliver the fuel on time, and CMED reported the matter to police last June. Government then instituted  a commission of enquiry chaired by former attorney general, Sobuza Gula-Ndebele.

Presenting oral evidence before a parliamentary portfolio committee on transport and infrastructure development  CMED stores support manager, Kipinai Chigogo said proper procedures were not followed when the deal was sealed.

“We were supposed to be advised that we are about to do business with this company and after that we would have gone to see the physical buildings of that company, do a deeds search with a view to understand the scope of the directors of that company which we were never told,” he said.

“When we tried to understand First Oil, we were not allowed to proceed. It should be noted that  the First Oil deal was $3 million, which means the procurement was supposed to be referred to the tender board.”

Chigogo said the procedures were such that the managing director could only adjudicate for tender processes valued up to $50 000.

“When we tried to find out after the procurement the details of the company, we were told that don’t worry because the board was now handling it,” he said.

Chigogo, who claims to have since been stripped of his powers, said he tried to get information from the managing director, Davison Mhaka on four occasions but to no avail.

He also implicated CMED’s fuels manager, Brian Manjengwa whom he said was evasive when he sought further information on the deal.

Chigogo who has served the company for 40 years in various capacities, said he and other employees were now being victimised by Mhaka after unearthing the anomalies and for ‘challenging his authority.’

“There are no responsibilities and there is no manpower except myself. The stores are being managed by their respective managers and so I am just seated there,” he  said.

He said he noticed from an audit report that the operating licence for First Oil had expired in December 2012 but it was awarded the contract in March 2013.

He said CMED has a valid fuel import licence which allowed the company to buy fuel directly from abroad.

Responding to why he had not reported the matter to state security agencies, Chigogo said the MD was a very influential person who was in good books with most of the “chefs” (govt officials) and would be informed about it.

To date no action has been taken on the matter, said Chigogo.

He urged Parliament to carry out an independent investigation into the matter to get answers to most of the questions they were asking him.

Mhaka who appeared before the committee earlier this year implicated Petrotrade and its sister company National Oil Infrastructure Company who he said recommended First Oil.