Millions vanish at NetOne

via Millions vanish at NetOne – The Zimbabwe Independent by Brian Mangwende/ Taurai Mangudhla October 4, 2013

State-owned mobile telephony operator NetOne may have been prejudiced of millions of dollars amid allegations of flouted tender procedures, outright fraud and misappropriation of income from the sale of airtime recharge cards while employees who dared speak out are allegedly victimised.

Disgruntled current and former employees allege managing director Reward Kangai, finance and administration director Godfrey Tarupuwa and marketing and sales director Memory Ndoro-Mandiya are at the centre of shady business activities that have prejudiced the mobile operator of more than US$5 million in unsecured debt for airtime supplies.

Kangai is aware of the allegations and is in possession of documents similar to those in the hands of the Zimbabwe Independent.

After being quizzed by the company’s parent ministry, Kangai is said to have blamed the sales team and instigated a forensic audit which claimed the jobs of a number of workers across the country after the audit team brought incriminating information against them.
The case is said to have been brought to the attention of the President’s Office by former employees.

The insiders claim NetOne, through its One Wallet project, was the first network to come up with the idea of mobile money now more identified with Econet’s EcoCash, before any other cellular network including Telecel’s now defunct Texta Cash, but the project allegedly failed to take off as anticipated because top officials sold this and other ideas to competitors.

The NetOne scandal comes barely two weeks after former Zimbabwe Mining Development Corporation chairperson Godwills Masimirembwa hogged headlines for allegedly taking a US$6 million bribe in a botched diamond mining deal, as President Robert Mugabe called on members of the public to come forward with evidence of corruption in any institution or involving individuals.

The scandal is also unfolding against the background of revelations last week executives at struggling national carrier Air Zimbabwe allegedly manipulated aviation insurance policies, prejudicing the national airline of millions of dollars.

The employees, through documents in the possession of the Independent, allege Kangai regularly flouted tender procedures in addition to awarding himself and other top management hefty salaries, perks and benefits while the network struggled financially, hence partly why it has been overtaken by a wide hence partly why it has been overtaken by a wide margin by its competitors.

Only a year after dollarization in 2010 Kangai is said to have awarded himself a US$40 000 monthly salary plus a monthly allocation of 1 000 litres of fuel while Mandiya received US$25 000 salary and 600 litres of fuel monthly.

“From 2005 top management including heads of departments awarded themselves housing loans, instead of obtaining these through the pension funds as per the regulations. The transactions were effected through direct instruction for direct interbank transfers from NetOne accounts to personal accounts or property sellers’ bank accounts,” read the documents.

The NetOne top three are also accused of abusing their positions to supply dealerships in which they have interests, including Firstel Cellular and Zellco.

These dealerships continued to receive airtime recharge card supplies despite failure to make remittances to NetOne timeously, the employees alleged.

An internal audit report indicates at least US$1,5 million was tied up in consignment stocks that were drawn from Kopje Plaza shop as at May 30 2012. The majority of the consignments had been outstanding for more than 30 days yet they should be collected in seven days according to company policy.

A lot of revenue was lost to overpayment of commission to vendors who were getting 15% instead of the stipulated 10% ceiling.
Consignments of US$200 000 worth of airtime recharge cards could not be accounted for while another US$130 00 of these cards remained unpaid for.

The workers also cry foul over the purchase of Kangai’s Mercedes Benz E-class through a company called Powellmate. According to the purchase agreements, Powellmate was paid in airtime vouchers and simcards, contravening company policy, but Kangai said there was “absolutely nothing of substance as everything was approved and well documented.” He added that there was nothing untoward but just a case of sour grapes.

The NetOne MD is also accused of paying university fees for his daughter abroad directly from the company account, an accusation to he replied: “I got a loan from the company for that and have since paid it all back in full. What is wrong in getting a company loan?”

He went on: “In fact, I was called by Goche (former Minister of Transport, Communications and Infrastructural Development) and he questioned me over the allegations. I explained to him and that was that.

He never got back to me again over the issues. The people (disgruntled and former employees) even went to parliament to complain. We were called but on our way there I received a call calling off the meeting. They are knocking on all doors including the President’s Office. To what end, I don’t know. They must just answer for their actions.”

The whistleblowers called for an investigation into the purchase of base stations and other equipment as Kangai is allegedly inflating figures and awarding contracts only to companies that he has strong ties.
“BTS equipment costs US$10 000, same supplier/vendor used by Econet but we pay US$30 000. We have it on good grounds that one of the companies supplying this equipment was owned by the MD himself,” reads the document.

Kangai replied: “There is nothing amiss. Everything was done above board.”

The employees say Kangai lied to the board human resources committee in 2010 that the job evaluation exercise by a South African firm would cost US$30 000 yet the actual invoices paid were in excess of US$200 000, once again evading tender procedures, an accusation Kangai dismissed.

The top level management are also said to have bought three top of the range Toyota Prado SUVs at a total cost of US$412 000 despite the fact that the State Procurement Board has approved the transaction at a price of US$201 000.

In December 2004 NetOne paid for the purchase of a four-bedroomed house to the tune of 472, 5 million Zimbabwean dollars for Kangai in the Milton Park area.

An October 2005 NetOne internal memo in the possession of the Zimbabwe Independent shows the company gave Ndoro 220 million Zimbabwean dollars which she used to purchase Firstel Cellular shares. Kangai said he got a loan from the company, documents of which are in the possession of this newspaper, and bought shares in Firstel, but all was above board.

Other managers fingered in the scandal include account manager Rudo Shopo who allegedly sold US$42 500 worth of airtime and converted the money to personal use.

“Shopo and others know what they did,” Kangai said. “I don’t know what Shopo has against me. If she is innocent, she can prove her innocence at a hearing soon. We have even said she can bring a lawyer of her choice. But the cases have been reported to the police. In some cases those found wanting have been dismissed.”

Kangai said Shopo’s hearing was held on Wednesday and the company was waiting for submissions from lawyers.

A July 2013 interim audit report from NetOne’s internal auditors indicates Shopo raised a fictitious delivery note, acknowledgment of debt and control card and dealership agreements in the name of Grape Vine (Pv)t Ltd purportedly owned by a Bindura University Student (name supplied).

The audit team’s investigations show that Shopo, a friend to the student and one Samkange of Applevine, a dealer for NetOne which has defaulted on several occasions and owed NetOne US$250 000 for unpaid airtime, jointly used the student’s name, a former student attachee, for the fraudulent transactions.

NetOne’s internal audit and loss control department concluded that Shopo and Samkange hatched a plan to defraud the company.

The audit team said Shopo raised a fictitious delivery note to Grapevive purportedly owned by the student yet the stock was received and acknowledged by one Mutimurefu of Glen Norah B who gave a cellphone number that does not belong to him but to Kumbirai Makuvise of Chiredzi.

Patrick Chari from NetOne’s loss control department said he reported the case to the police’s serious fraud squad, but was unable to give the reference number as he was in Masvingo.

Contacted for comment, Shopo said since the case was still sub judice it would be improper for her to comment as she was awaiting the outcome of her hearing.

After listening to the allegations against him by the employees, Tarupuwa requested questions in writing while efforts to get hold of Mandiya proved fruitless.