Dubious govt tenders worry auditor general

Source: Dubious govt tenders worry auditor general | The Financial Gazette July 20, 2017

By Andrew Kunambura, Political Reporter

GOVERNMENT is awarding multi-million dollar tenders to companies without entering into contractual agreements, raising fears of looting by top government officials associated with some of the firms.

A number of the businesses have no traceable files at the company registry, suggesting the existence of phantom firms, secretive companies or trusts typically used by corrupt officials and their associates to hide money, rip off governments and siphon cash that would otherwise be used to pay for health care, education or vital infrastructure investment, according to experts.

Auditor general, Mildred Chiri, has expressed concern over this development, highlighting that government institutions were engaging contractors for multi-million dollar jobs without contractual agreements.
In most cases, Chiri noted, the companies were given the contracts without going to tender.
Chiri raised grave concern with contracts given to these companies by the District Development Fund (DDF), the Mining Loan Fund and the Department of Roads Fund, which paid a total of $30 million to these companies between 2015 and 2016.

“Some fund accounts were processing payments which were inadequately supported. Without supporting documents, it was difficult to determine the nature of the payments and whether they were being done in accordance with regulations and in line with the mandate of the funds,” Chiri stated in an audit report for the financial year to December 31, 2016.

She said the DDF had engaged a number of contractors to repair roads around the country without any supporting documentation.

“The Fund could not avail the contracts/agreement documents pertaining to the contracts entered into between the fund and contractors, even though contracts were of considerable amounts. Requisition vouchers were used as basis for hiring equipment without entering into formal agreement,” said the report.

This was in violation of section 32 (1) of the Procurement Act which states that terms and conditions of the procurement contract should be specified.
Chiri said the contractors were not effectively supervised in the absence of written agreements.
“It was difficult to ascertain if the Fund was getting value for money in the absence of the contract documents.”

DDF extended at least $160 000 to five companies namely Haingate, Cevils, Steps and Paths, Fuel Africa and Shogun which were hired verbally to repair roads in Umguza, Makoni, Mutare, Chikomba, and Mbire districts.

Chiri said these were only a few of the many that were hired in the same manner.
The DDF and the State Procurement Board (SPB), which processes government tenders, fall directly under the Office of the President and Cabinet.
Haingate’s directors are listed as Danny Kasukuwere, Local Government Minister, Saviour Kasukuwere’s brother; Farai Mutamangira, a lawyer who has done a lot of legal work for the government and Juliet Mapurisa.

Details of the other companies could not be immediately obtained.
Chiri’s report also states that financial statements produced by the Department of Roads Fund did not disclose construction and rehabilitation costs that were incurred on different projects, resulting Zimbabwe National Roads Authority funded projects amounting to $15 950 000 being undertaken without following proper accounting procedures.

The risk of this is that cost overruns and fraud may occur.
Chiri also noted that a company called Tencraft was controversially paid $30 000 last year to repair roads in Harare under the fund.

The Department of Roads’ principal director, Eric Gumbi, has interests in Tencraft.
Economist, Kingston Kanyile, said government should always be given full details of companies that get tenders, including their shareholders and directors.

“We want information about who owns companies and trusts to be made public. Armed with this information, citizens will be able to root out corruption and help to ensure that resources are used to fight extreme poverty rather than lost to dodgy deals,” he said.

Another economist, Elliot Lumbe, said: “These companies are holding the country back from real economic growth and threaten to throw the economy into a painful lost decade. If this continues, it will result in government being grossly strained.”