Latest News Editor's Choice

News / National

Housing Corporation Zimbabwe rejects flawed NSSA report

by FinX
05 Aug 2019 at 07:48hrs | Views
Adam Molai is one of the directors of Housing Corporation Zimbabwe, which says it is considering suing NSSA auditors
The Housing Corporation Zimbabwe (HCZ) says the final Report on the Forensic Investigation into the Affairs of the National Social Security Authority (NSSA) conducted by BDO Zimbabwe Chartered Accountants (BDO contains several falsehoods.

These untruths are attributable to the incompetent manner in which BDO conducted its forensic investigation and in arriving at its conclusions. The absence of an in-depth probe includes ignoring critical information that would have assisted the investigation with accurate facts.

Therefore, in the interest of transparency, the management of HCZ is considering, inter alia, taking the following actions;

Instituting legal proceedings to seek relief against areas of the report that are not truthful and are harmful to the reputation of HCZ and its management.

Providing the Zimbabwe Anti-Corruption Commission (ZACC) with a dossier detailing the process leading up to the signing of the housing off-take agreement between NSSA and HCZ.

Submitting grievance statements to the relevant regulatory and oversight bodies within the Chartered Accounting and Audit profession on the conduct of BDO during the investigation.

In rejecting the untested claims of impropriety in securing the NSSA off-take agreement, HCZ would like to clarify the following;

All the appropriate governance protocols were followed ahead of signing the off-take agreement as approved by the investment committee and the full board of NSSA.

At best BDO, failed to comprehend, the NSSA procurement policy provisions that clearly differentiate between off-take agreements, which are investment decisions taken differently from the procurement of services in the ordinary course of organisational operations.   

Contrary to the assertion that no investment appraisal was performed, an extensive investment memorandum was submitted as part of the proposal to NSSA which informed the negotiations and subsequent due diligence processes that were undertaken.

NSSA did not suffer any price prejudice as claimed in the report. In this regard, NSSA have in their possession an independent expert assessment from ABACUS Construction Cost Consultants (Pty) Ltd, which affirmed the appropriateness of the price charged per unit. BDO failed to appreciate the variance in specifications and project scope that totalled the costs per unit when comparing against other housing projects.

Due to the restrictive indigenous laws that were applicable at the time, as evidenced by the NSSA Board resolutions, Housing African Corporation (HAC) as a Mauritian entity was required to incorporate a local entity, in this regard, a Special Purpose Vehicle (SPV) through which the project would be managed and delivered.

Thus, HCZ was set up as an SPV with licensed franchise rights obtained from HAC, as an owner of the  intellectual property of systems and methodology for the construction of large-scale housing projects and having extensive experience in delivering  housing developments across the globe.

The Caledonia Housing Project was compromised - not because of any action or inaction by HCZ, not because alleged procurement processes were not followed - but because of NSSA's own failure and inability to manage the project. It was NSSA's repeated material breaches of the off-take agreement which entitled HCZ, to legally terminate the agreement and claim damages. In arbitration, these repudiatory breaches by NSSA justified an award to HCZ as an entitlement to damages suffered.

57 Units had been completed prior to the contract termination, while 53 were at varying levels of completion.

Source - FinX