Vehicle supply syndicate exposed

A syndicate comprising vehicle suppliers and senior procurement officials in various State institutions has been milking millions of dollars from state coffers through murky and inflated vehicle supply deals.

Business Times can reveal that some motor vehicle suppliers have been dribbling the government through taking advantage of the Procurement Regulatory Authority of Zimbabwe (PRAZ) decentralised system to invoice government departments' different prices for the same product.

According to the new procurement law all ministries, State-owned enterprises and local authorities are supposed to establish Procurement Management Units (PMUs).

These units are expected to be manned by professional procurement officers who are licenced in terms of the Public Procurement and Disposal of Public Assets Act [Chapter 22:23].

The PMUs are now responsible for the whole procurement cycle in the public sector from the planning, adoption of the appropriate method of procurement, preparing bid notices and shortlisting, managing the bids and evaluation processes, preparing evaluation reports to awarding of contracts and overseeing their management and preparing procurement reports.

This according to well-placed sources at Treasury has seen motor vehicle suppliers invoicing different prices despite delivering the same product with same specifications to State departments.

This publication is reliably informed that the Treasury has since raised a red flag on this potential prejudice and has communicated to various government departments to undertake due diligence on vehicle procurement.

Information at hand showed that what is invoiced to the Zimbabwe National Army on vehicle supply is not the same as what is invoiced to the Zimbabwe Republic Police despite the two being government security arms.

There are also allegations that vehicle suppliers could have put a premium on prices due to the government's failure to meet obligations in time.

 "Treasury has since raised a red flag and ordered an urgent review on the payments being made by various government departments to vehicle suppliers.

This was after a potential prejudice was unearthed where there are unexplained variances in invoices being issued to different government departments despite getting the same product," a source said.

"Government has been losing money through this syndicate that is involving senior government officials and procurement officers.

The vehicle suppliers have been taking advantage of the existing decentralised procurement system."

This has sparked calls for the amendment of the current PRAZ procurement system so that all procurement is done under a consolidated framework agreement to be supervised by Treasury and PRAZ. PRAZ acting chief executive Clever Ruswa told Business Times that price variations were also necessitated by the fluctuation of the exchange rate and there was a directive by the Treasury to synchronise vehicle procurement.

 "The issue of price variations was necessitated by the exchange rate fluctuations and Treasury has since made a directive to halt all vehicle procurement for now until there is synchronisation on the vehicle procurement system," Ruswa said.

Finance and Economic Development Permanent Secretary George Guvamatanga was not picking calls by the time of going to print.

A car dealer who requested anonymity told Business Times: "Remember the issue of foreign currency is another factor and in this case the price variations may be due to where the dealer got the forex at the time of importing the vehicles. You will find that the price will be bound to be cheaper when the dealer has gotten the forex from the auction while the price will be on a high side if forex has been obtained from the black market. So this is usually a function of the cost of money."

A procurement expert, who requested anonymity, said the price variations by motor vehicle companies has been a factor of the government's failure to honour its obligations and therefore end up being charged a premium.

"Government doesn't have money and car dealers are ending up making various financing arrangements factoring in the cost of money. This has seen motor vehicle suppliers ending up charging different prices depending on every institution and its ability to pay in time," the procurement expert said.

Chartered Institute of Purchasing and Supply chairperson, Preston Hwena told Business Times that this was possible on the PRAZ procurement system and going forward there was a need to come up with a consolidated approach on procurement.

"There is a need to come up with a consolidated approach on procurement where state institutions come up with a framework agreement that will set uniform prices on motor vehicles. This will entail bulk procurement of vehicles and pig banking that will mean the same vehicle, same specifications and same price at the end of the day saving money" Hwena said.

He said there was also a need for procurement practitioners of various State institutions to carry out due diligence and research before making procurement decisions.

Procurement in government departments and State enterprises has become the fertile ground for corruption. The fight against corruption has scalps. Obadiah Moyo was fired as Health and Child Care minister in July following his arrest for allegedly engaging in a US$60m shady deal involving Drax International for the supply of Covid-19 materials without following proper government procedures.

He is out on bail and will stand trial on January 11. The ministry's deputy John Mangwiro is also under probe by the Zimbabwe Anti-Corruption Commission for allegedly arm twisting the National Pharmaceutical Company to award a US$5.6m tender to Youth Health Care for the supply of Covid-19 laboratory equipment, reagents and consumables.