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Covid-19 procurement scandal revealed

by Staff reporter
18 Jun 2021 at 12:06hrs | Views
ZIMBABWE was prejudiced of millions of united States dollars as a result of irregular procurement transactions around Covid-19 materials, with sharp scrutiny centred on tenders awarded to Young Health Care and Eqstra Holdings.

This has compelled the Auditor-General Mildred Chiri to institute an investigation into the murky deals following widespread reports that public procurement entities failed to submit relevant documentation to authorities.

The Zimbabwe Independent, in collaboration with the Voluntary Media Council of Zimbabwe (VMCZ), looked into how Covid-19 resources were utilised by central government and local authorities.

Official information from the Procurement Regulatory Authority (Praz) shows that Parliament and the Auditor-General were in possession of a report around Covid-19 procurement.

The report cannot be released now due to parliamentary reporting procedures.

However, Harare City Council is involved in an opaque transaction where Eqstra Holdings, failed to deliver 10 000 Tyvek Covid-19 protective overalls worth ZW$51 520 000 (uS$606 117) after it was unprocedurally awarded a tender.

Irregularities in the tender are contained in an audit report by the city's internal audit department.

The matter is now a subject of investigation by the Zimbabwe Anti-Corruption Commission (Zacc).

According to the audit report, council audit manager Archibald Nyamurova noted that prices for the equipment were inflated.

Suspended Harare Town Clerk Hosiah Chisango ordered the audit after learning that Eqstra was cherry-picked to supply the Tyvek coveralls under order number 0105212.

The initial purchase order (0105212) for Eqstra to supply council with 15 000 Tyvek suits at a price of ZW$2 997 (uS$37) per unit at a total value of ZW$44 650 000 (uS$525 294) was way cheaper, despite having more units.

The audit report reads: "Council was deprived of its right to receive ZW$25 760 000 (uS$303 000) worth of stock as result of the 5 000 units which were not delivered to council.

Eqstra was awarded an order by council to supply 15 000 suits, however, the company only supplied council with 10 000 Tyvek suits at a price of $5 152 (uS$60) per unit.

In uS dollar terms, a benefit of uS$1 030 400 was forfeited as a result of the non-delivery.

The audit report reads: "Council engaged Eqstra Hardware and electrical who had no capacity to deliver the 15 000 Tyvek suits on the initial contract. After council authorised a reduction of the 15 000 units to 10 000 units, Eqstra Hardware and electrical took four months to deliver the 10 000-unit consignment.

"However, the company had indicated on its first bid that the 15 000 units were immediately available."

The report further says council was prejudiced of uS$862 000 because of the authorised but unjustified price variation.

However, though the internal audit document was generated within the structures of council, Eqstra Hardware and electrical, through its lawyers have dismissed its contents.

"The owners (shareholders) of Eqstra Trading Private Limited hereinafter called Eqstra Trading namely Gretwin Chitauro and Samuel Kunyarimwe have never been blacklisted for any allegations by any State or private institution.

"Only the Procurement Regulatory Authority of Zimbabwe (Praz) can blacklist companies or individuals from dealing with State institutions," Wintertons Legal Practitioners, representing Eqstra Trading, said.

Subsequently, Praz ordered suppliers to submit all procurement records for Covid-19 emergency procurements in electronic and/or scanned form in line with the Public Procurement and Disposal of Public Assets Act (PPDPA).

Information obtained by the Independent shows that while the PPDPA set the procurement record adequacy level standard at 100%, an assessment of Covid-19 emergency procurements indicated an overall record adequacy level of 44% with local authorities, at 41% with ministries, at 35% with parastatals.

Excessive and fraudulent procurement of Covid–19 drugs and other issues also sucked in the government in the Drax procurement scandal.

The Independent has established that internal control weaknesses in the procurement and vendor management processes have been identified.

There are now fears that the figures reported by procurement entities (Pes) are way below the actual Covid-19 expenditure for the year 2020 as the total procurement values have been derived from a 51% Pe submission effort.

This implies that the scandals in relation to Covid-19 procurement could actually be deeper than what is in the public domain as Praz is battling high levels of non-compliance by Pes with 49% of Pes having failed to declare any Covid-19 emergency procurements as of the end of 2020.

This is coming as the authority is also battling inefficiency in procurement processes with nonprofessional people flooding the entities.

A Praz strategy document shows that there were non-professional people in practice with 50% of procurement professionals still requiring capacity building while the sector has no code of ethics and a procurement professional council.

"Twenty-five percent still need sensitisation, 60% of Pes still to apply for authorisation to conduct procurement and there are over 45% control overrides which affect effectiveness and 50% of the practitioners require capacitation on the law, while 100% require licensing," read the document.

Praz acting chief executive officer Clever Ruswa admitted the challenges in the Covid-19 procurement, as well as gross understatement of Covid-19 procurement figures by the Pes. However, he could not give figures saying they were still under investigation by Parliament and the Auditor-General's Office.

"Some of the non-companies that emerged from Praz monitoring and evaluation procurement reviews were as follows: As of end of 2020, 176 Pes (51%) although some having delayed submitting reports citing various reasons, complied with the directive to report on the Covid-19 procurements. 169 Pes, (49%) did not declare any Covid-19 emergency procurements. Given that the Covid-19 emergency procurements were subject to the framework arrangements centrally coordinated by the Ministry of Health and Child Care, the review process sought to assess the level to which the PPDPA Act, Circular
guidelines, framework agreements and catalogues were adhered to," he said.

"Based on the review of the 176 Pe submissions, the following was observed: Submission effort of Covid-19 emergency Procurements returns by Pe Category and by Industry was at 51%. Given that the total procurement values have been derived from a 51% Pe submission effort, there is a high possibility that the figures reported by Pes are way below the actual Covid-19 expenditure for this period."

Relating to Young Health Care, details show that Health and Childcare deputy minister john Mangwiro allegedly played a part in the unprocedural awarding of a uS$6 million tender to the entity, triggering investigations by Zacc.

In December 2020, Mangwiro, was summoned by Zacc. A warned and cautioned statement was recorded over the Young Health Care tender.

Mangwiro was facing charges of interfering in the bidding process for the supply of Covid19-related materials by Young Health Care to the national Pharmaceutical Company (natpharm).

Based on the Ministry of Finance and economic Development submission, the government provided a total budget of ZW$3,7 billion (uS$43,5 million) across various ministries and departments although, the actual disbursements at September 2020 to Pes against this budget is reported as a total of ZW$2,3 billion (uS$27 million).

Delays and non-submission of returns and procurement entities levels imply a significant and urgent need for the PPDPA compliance, monitoring and evaluation regulations to be gazetted to enforce compliance by procuring entities and suppliers to the PPDPA.

Red flags have also been raised around the irregular procurement deals which revealed a range of irregularities relating to price variations, fraudulent payments and duplicate payments. Other irregularities also include substandard goods and services under deliveries, inefficiencies, wastage of financial resources and high cost of procurement processes.

Transparency International Zimbabwe (TIZ) executive director Muchaneta Mundopa in a report titled Illicit Financing in the Health Sector in Zimbabwe said authorities should be accountable by publishing notices of contract awards on the Praz website within 30 days of the contract award, as required by Section 68 of the PPDPA.

"Parliament can also follow up with Praz on its recommendation that Praz only registers reputable companies and only engage reputable pre-registered suppliers for single-source public procurement contracts, unless they are unable to provide the supplies," she said.

Source - the independent