Source: Minister Gumbo in $33m scandal – The Zimbabwe Independent December 22, 2017
Transport and Infrastructural Development minister Joram Gumbo is in the eye of a storm after it emerged this week that he ordered the Civil Aviation Authority of Zimbabwe (Caaz) board to approve the awarding of a 28 million euro (US$33,3 million) tender to Indra Sistemas and Homt Espana SA for the finance, supply and installation of an airspace management system without going to tender.
Investigations by the Zimbabwe Independent this week show that Gumbo called a special meeting of the board in August chaired by Thembinkosi Magwaliba to discuss and seek authority to engage the services of Indra Sistemas and Homt Espana SA at a cost of 28 million euro, an increase from 18 million euro (US$21,4 million) in 2013 when the tender was initially awarded.
There are concerns that the cost of the airspace management system, which includes radar surveillance equipment, could have been inflated by 64%.
This comes despite a Supreme Court judgment (number SC 45/16, Civil Appeal number SC 631/14 of January 28 and October 28, 2016) which saw the cancellation of the tender to Indra Sistemas and the job being remitted to the State Procurement Board for the invitation of a fresh tender.
The tender was never floated.
Sources familiar with the deal, who preferred anonymity, say Caaz general manager David Chawota, who reportedly has Gumbo’s backing, had already sent letters of approval to the ministry without the consent of the board, something that did not sit well with the board.
Investigations show that on August 9 2017, Gumbo told board members that he “required” a resolution on Indra, prompting a special board meeting two days later.
Information at hand shows that the board was also unhappy with how the Indra deal was handled after Gumbo dealt directly with Caaz management and then sought the board to rubber stamp the deal. The board, according to the information, noted that the Indra issue should have been referred to its finance and business development committee or the corporate strategic planning and technical committee.
Sources privy to the development say Chawota has been pushing for the direct engagement of Indra despite a board resolution that the aviation authority should obtain state security clearance given the nature of the tender involving the country’s airspace and State Procurement Board clearances as conditions precedent in the wake of pressure from Gumbo for a board resolution.
Gumbo, who controversially reinstated Chawota as Caaz general manager last year despite serious corruption charges that led to the resignation of board members, was appointed to cabinet two years ago by former president Robert Mugabe.
The Caaz board had also advocated a multi-product and source procurement approach to avoid a repeat of the Thales Group United Kingdom fiasco, which saw the British company stopping supplying spares in the wake of sanctions against Zimbabwe, a situation that resulted in the current diminished radar and surveillance capability. Instead, management was said to be “pursuing parallel process writing and recommending Indra to the Ministry of Transport and Infrastructural Development”.
“The board cannot do much when the Honourable Minister (Gumbo) requests management to perform certain tasks. The duty of management was however to inform the board when this happens. The board noted that the previous board resolution was not cast in stone, given that the administrative law provided the powers to amend a resolution,” a document seen by this paper stated.
But the board did not give in to Gumbo’s demands to approve the tender, insisting the final authorisation for the procurement should come from the SPB.
In addition, the board said there was need for a meeting with Indra Sistemas. It also called for vetting of the process by the Office of the President and Cabinet to establish the veracity of information and to ascertain the capacity of the company. Among some of the concerns raised by the board was a sharp increase of the cost of the tender from 18 million euro to 28 million euro, reflecting a 64% increase in the value of the tender.
“The board also sought clarification on the cost, given that the first submission had indicated 18 million euro but the current submission is now costing 27,9 million euro,” read the documents.
Judges Vernanda Ziyambi, Bharat Patel and Chinembiri Bhunu ruled “the 2nd respondent (Indra) had failed to comply with the mandatory requirements of tender No. CAAZ/DANTS/1/13 for the supply and installation of an air Traffic Control Radar Surveillance System.
“Accordingly, the award of the tender for the supply and installation of an Air Traffic Control Radar Surveillance System to Indra was set aside.Any contracts entered between the 2nd and 3rd respondents (Caaz) pursuant to the award of tender No. CAAZ/DANTS/1/13 to the 2nd respondent be and is hereby declared invalid and is hereby set aside. The certificate issued in terms of section 44(2) (b) of the Procurement Act [Chapter 22:14] by the 3rd respondent pursuant to the award of tender No.
CAAZ/DANTS/1/13 to the 2nd respondent be and is hereby set aside. The matter is hereby remitted to the State Procurement Board for the invitation of a fresh tender. The 1st (SPB) and 2nd respondents shall pay costs of this appeal, jointly and severally, the one paying and the other to be absolved,” the judgement reads.
Investigations show that despite the Supreme Court ruling, a letter dated November 7 2017 written by an Acting Principal Officer of the State Procurement Board Samson Mutanhaurwa to the Deputy Chief Secretary to the President and Cabinet cited “serious funding challenges” as the reason for resolving to opt for the “direct engagement of Indra Sistemas of Spain for the Supply, Delivery and Installation of Airspace Management Systems to CAAZ for Euro 27 900 OOO.”
This is also despite advice from the Ministry of Foreign Affairs and the military against a sole European purchase after the Thales Group United Kingdom incident.
“The question one needs to ask is: why are they breaking all corporate governance practices to appoint this company?” a source close to the developments said.
Approvals from the state security, OPC, SPB, Ministry of Finance and other offices have not yet come through, according to investigations.
Gumbo said all laid down procedures were followed.
“Hapana nyaya apa nekuti (There is no issue because) all laid down procedures were followed. What happened is that an Italian company appealed against the Spanish company being awarded the tender and the court cancelled the tender. The tender has since been re-tendered. This is an attempt to tarnish me. The cabinet okayed this tender yesterday. It is part of the 100-day plan,” Gumbo said.
He said concerns raised by the board had been addressed. But people close to the deal say the tender was never re-tendered. Instead, the SPB last month issued a special request for direct engagement with Indra.
Chawota said he could not comment as he was out of the country.