Eighty per cent of South African companies consider political interference in the public procurement process in Zimbabwe to be a regular occurrence, according to South African executives involved in risk and ethics compliance.
Surprisingly, 60 per cent of respondents to a new survey into business ethics and compliance in SADC (South African Development Community) countries considered the same to be true of South Africa itself.
The survey, carried out by the University of Stellenbosch Business School questioned representatives of 26 companies listed on the Johannesburg Stock Exchange, mainly compliance officers, non-executive directors, risk managers or company secretaries.
Forty per cent of respondents said bribing of public officials to win tenders happened often in Zimbabwe. Even more (55 per cent) considered this was the case in South Africa.
The survey said of South Africa: “While business is generally easier and cheaper to do than in the rest of the region, bribery and corruption are perceived to be especially prevalent in the granting of government contracts and procurement tenders.”
But the survey acknowledged perceptions towards South Africa itself may have been skewed negatively by the fact all respondents lived there or were employed by South African companies. Employees were “therefore more exposed to media reports of corruption in South Africa, or are more likely to have witnessed corrupt acts, than in the other SADC countries”, the survey added.
Mauritius was the only SADC country to be perceived as having a “very or somewhat ethical” business environment. The Democratic Republic of Congo, Angola, Zimbabwe and Mozambique were considered to be the most corrupt countries.
The survey said awareness campaigns, training or policy development should be encouraged to help companies deal with tender bribery and political interference in the public procurement process. It also recommended additional care should be taken when doing business or considering investments in countries that are consistently perceived to be corrupt.
By Athan Tashobya
The parliamentary Standing Committee on Budget and Patrimony, yesterday, sent back to the drawing board a new draft law that seeks to professionalise the procurement sector.
Legislators said the Procurement Bill had “a few issues” of unclearly stipulated legal assertions that required amendments.
Further examination of the Bill could not continue until the issues were sorted, said Constance Mukayuhi Rwaka, the chairperson of the committee.
“We need efficiency and value for money in the procurement sector. To attain that, we need clearly stipulated laws that will call off all the issues that have existed, for well functioning and sustainable procurement in the country,” said Rwaka.
Her concern was echoed by MPs Jeanne d’Arc Nyinawase and Fidèle Rwigamba, who said they could not start examining the Bill when there are some issues that needed to be clarified.
“The Bill still provides for two different entities; one segment that seeks to govern the procurement profession, and another that establishes Rwanda Association of Procurement Professionals. We have to harmonise the two and come up with one legal framework,” said Nyinawase.
This was the second time legislators are sending back the Procurement Bill for further streamlining.
The Bill was drafted to streamline activities of the procurement sector following repeated anomalies and incidents of corruption-related undertakings, especially as captured by various financial year reports by the Office of the Auditor-General.
However, Augustus Seminega, the director-general of Rwanda Public Procurement Authority (RPPA), said the government wished to draft one law to avoid risks identified in drafting two separate laws; like diverting from a standard format of other laws on professional associations, as well as putting interconnected provisions in two separate documents.
It was agreed by all stakeholders, Seminaga said, that the Bill would entirely focus on the mechanisms governing procurement profession, with other provisions included in one Bill.
“We have agreed that the title reflects properly the content of the law. It will focus on procurement profession,” said Kampeta Sayinzoga, the permanent secretary at the Ministry of Finance and Economic Planning.
Scrutiny of the draft law is expected to commence in February after legal advisors from relevant institutions make the required changes.
Once enacted, the law is expected to help close the loopholes that have been prevalent in the sector, especially in public procurement, where, according to the Auditor-General, about 30 per cent of tenders awarded by public entities do not comply with procurement guidelines.
The report that covered the period between August 2012 and June 2013, said that more than Rwf23 billion was lost in poor contract management procedures, while nine contracts, worth Rwf908 million, were abandoned by contractors.
Procurement loopholes were noticed in project design and study, bidding documents as well as enforcement of contracts, among others.
In a recent interview with The New Times, Seminega blamed procurement errors on low skill levels, lack of experience and laxity among procurement officers.
“Public procurement has improved. We are coming from a time when all public procurement was done by one central entity. Now, the government has built capacities, institutions can manage to do own procurement. It is a process to achieve efficiency in the sector, that is where we are headed,” said Kampeta.
Will Bill close gaps in procurement?
Tender for more than 120 million condoms was riddled with fraud — and the goods were bad
Ghana’s Ministry of Health spent some $3.8 million of a Global Fund grant on faulty condoms procured in a tender that was riddled with fraud, the Office of the Inspector General has found. In addition to developing a plan to recover the funds, the Secretariat will be placing all purchasing for Ghana under the pooled procurement mechanism and requiring greater oversight by the local fund agent.
The investigation report published on 11 December confirmed that the procurement of 128 million male condoms purchased for the Ghana Health Service between 2010 and 2013 were “substandard, over-priced and bought through a non-competitive tender process involving forged documents”.
The tendering process was flawed from the outset, according to the report. Advertised only locally for a very short time period, the bid was whittled down to a single source with the immediate disqualification of two other bidders. An evaluation by the Ghana Central Tender Board was not reviewed, making the process decidedly untransparent.
Only a month after the bid was approved, the MoH agreed to a 35% per unit cost increase — an increase worth nearly $1 million over what had been a fixed-price contract that was ostensibly not subject to adjustments. According to the investigation, there is no evidence that the supplier, Global Unilink, provided the Ghana Health Service with documentation including market-pricing data to justify the price increase.
Moreover, the tender was predicated on the provision of falsified documents. Global Unilink provided misleading information related to where the condoms were manufactured, including a falsified manufacturer’s certificates that declared the condom manufacturer was WHO-certified.
This led to the other major problem: the condoms were of decidedly inferior quality. The investigation confirmed that the supplier did not source the product from a WHO-certified manufacturer, as it had been contracted to do. The purchased prophylactics did not meet WHO specifications or standards, even though the samples submitted during the tender for quality tests did come from a WHO-certified manufacturer. What this means is that quality condoms were provided for testing and low-quality ones supplied for use.
These quality issues came to light when end users reported that they burst too easily, did not contain enough lubricant and, according to one Ghanaian media report, were not big enough.
Why the Ghana Health Service failed to continue to carry out quality control tests on the Be Safe condoms remains to be seen; going forward, Aidspan understands from the Global Fund Secretariat: “the Secretariat will provide the Ghana Food and Drug Authority with advance notice of the dispatch of critical health products and commodities procured for Global Fund programs from whatever source. The LFA will verify the quality testing has been conducted before distribution.”
Other safeguards have been put in place, specifically related to the procurement of health products and commodities for Ghana. Since 2012, Ghana has been enrolled in the pooled procurement mechanism and global drug facility, meaning that ARVs, HIV test kits, drugs and diagnostic kits for malaria and TB drugs are all now procured by the Global Fund on Ghana’s behalf. The MoH is now only responsible for the procurement of products such as gloves and cotton swabs.
The Secretariat should pursue the recovery of the full $3.84 million spent on the faulty condoms — funds that Ghana itself has since 2013 been seeking from the supplier, Global Unilink, according to Ghanaian media reports.
A majority of the faulty condoms remain undistributed, stored in an MoH warehouse that, itself, has been subject to major scrutiny for the poor quality and conditions. In one Ghanaian media report, the facility was described as having a leaky roof and poor temperature controls — less than ideal conditions even at the best of times. The condoms are to be withdrawn and destroyed by the MoH and Ghana Health Service in line with “international procedural and environmental regulations” — whether this will happen is unclear.
Ghana has a generalized HIV prevalence rate of under 2% but within certain key populations, including commercial sex workers and men who have sex with men, the rate is considerably higher. Results from a demographic and health survey supported by the Global Fund should be published in 2015: the best way to determine whether there has been an increase in infection rates. It will not, however, be possible, to make any causatory inference that a spike in infections is due to the use of these problematic prophylactics.
September 19, 2014
Detectives in South Africa have rejected Nigerian government’s explanations of the purpose of the $9.3 million cash seized from two Nigerians and an Israeli as “flawed and riddled with discrepancies”.
The suspects told South African authorities that the money was meant for the procurement of arms for Nigerian intelligence agencies.
“… Although various explanations about the money were given to the investigating officer, these explanations were flawed and riddled with discrepancies,” the South African prosecution agency said in a statement sent to this newspaper.
The jet used to ferry the money is owned by Ayo Oritsejafor, who heads the Christian Association of Nigeria, CAN.
Mr. Oritsejafor, a cleric, said he is not aware of the arms deal. He said although he owns the aircraft, it was managed by another company, Eagle Air Company, which in turn, leased the jet to a third party, Green Coast Produce Limited.
The Nigerian government in an unsigned statement, Tuesday, said it has provided South African authorities with documents and receipts to prove that the transaction was “legitimate.”
Nigerian security officials also said that it was normal practice to procure arms with cash.
“The Federal Government has submitted relevant data and documents on the transaction to South Africa and insisted that the transaction was legitimate. It also clarified that the funds were not laundered or smuggled for any covert manoeuvres. No launderer will be audacious to fly into a country in a chartered jet with such a huge cash,” a statement by PRNigeria, an agency that regularly disseminates media statements for the military, police and other security agencies in Nigeria explained.
The statement tallies with what top security officials told PREMIUM TIMES in confidence that the money was legit as the government decided to buy the arms secretly; because the U.S. government had allegedly blocked its efforts to buy arms openly.
However, the government’s explanation does not seem to be gaining traction with South African investigators as the Asset Forfeiture Unit, AFU, of the National Prosecuting Authority of South Africa, NPA, has obtained a court order to freeze the money.
The NPA, in a statement sent to PREMIUM TIMES Wednesday said that the manner in which the money was brought into the country breached the country’s laws that deal with the transfer of foreign exchange of such proportion.
“The money was initially detained by the South African Revenue Service (SARS) as it was not disclosed or declared at customs, and was above the prescribed legal limit for the amount of cash that may be brought into the country,” it said in a statement.
Investigators also cast serious doubt on the Nigerian government’s explanation that the money was meant for the procurement of arms and that it has provided documents and receipt to back its legitimacy, raising serious concern that suspects might have been in the process of laundering the money before it was intercepted.
The NPA said its investigation shows that Tier One Services Group, the firm Nigerian government claimed it wanted to procure the arms from, is not authorised to sell or rent military hardware.
“In court papers, the NPA submitted evidence that Tier One is not registered with the National Conventional Arms Control Committee and is thus not authorised to enter into any agreements regarding the sale and/or rental of military equipment,” the statement read.
Tier One has apparently issued an invoice to a Cyprus based company, ESD International Group Ltd, ESD, in respect of the procurement of armaments and helicopters to be delivered to Nigeria. However, South African investigators said the time when the invoice was prepared and the time the money was brought in threw up some serious issues of its true intent.
The money was ferried to South Africa less than a week from the date the invoice was prepared (September 8, 2014).
The involvement of a Cyprus based company also heightens the suspicion that this may be a case of classical money laundering. Cyprus is notorious for its secretive banking system, which attracts shady characters and corrupt politicians looking to dry-clean ill-gotten funds.
The NPA added that the transaction did not follow normal procedure in the procurement of the kind of equipment it was alleged to have been meant for.
August 22, 2014
President Yoweri Museveni has directed the Permanent Secretary Ministry of Health Permanent Secretary, Asuman Lukwago, to dismiss the Head of Procurement, Frank Mugisha, for allegedly asking for a bribe from an Italian investor.
The President’s directive follows a complaint from Enrica M. Pinetti the chairman of Finasi Company that Mugisha had asked for a bribe of 20% of the total project she was handling in order to finalize the procurement processes.
Finasi, founded in the early 1970s is an Import/Export and primary goods trader in the Middle East and Africa. It has innovated and developed specific know-how in the Healthcare, Oil and Gas, Interiors and organic food fields delivering value-added services to its clients.
The company is a global turnkey provider for Healthcare facilities, projects and supplies.
Other countries where it has been carrying out similar projects includes Egypt, Sudan, Libya, Russia and Dubai.
In a meeting that took place yesterday, between President Museveni, Ministry officials and the Investors at State House Entebbe, the President directed that Mugisha be removed with immediate effect and be replaced with a devoted civil servant who cannot steal.
‘‘How can you keep a thief in the Ministry? And how are you going to counsel a thief? A thief is a thief. He should be removed,” he said.
The President pointed out that the coming of the Finasi Company to Uganda was at his request to build a first class hospital that will be dealing with complicated problems such as kidney and heart operations.
“I requested them to come to Uganda to deal with kidney and heart problems so that people stop travelling to India for treatment,” he said.
The President also directed the Ministry to iron out its differences with the investor in two weeks and pave way for the project.
According to a report from the Minister of Health Dr. Rukahana Rugunda to the President, Mugisha formerly worked with the Ministry of Agriculture before being transferred to the Health Ministry were he has been for nine months.
Ms Enrica Pinetti also behind efforts to add value to Uganda’s coffee for export as powder is pleased by President Museveni’s action.
8 April 2014 | Will Green
Government procurement regulations in Uganda have been revamped to support local businesses, speed up processes and “eliminate influence peddling”.
Under the changes bid evaluation teams will have to work to fixed time frames, and officials and ministers will not be allowed to bid for contracts with the government institution they are employed by or responsible for. A tribunal will also be established to handle complaints about the work of the Public Procurement and Disposal of Public Assets Authority (PPDA).
The new regulations include preference schemes that give advantages to local suppliers when procuring goods, services and works. Some contracts will also be set aside for young people, women and people with disabilities.
Meanwhile, officials “shall not sign a contract whose contract price is above the market price of the product being procured” to “eliminate cases of the government paying ridiculously high prices for procurements”.
Government bodies will be required to publish procurement plans, firms will be able to request information on unsuccessful bids, and in certain situations bidders will be allowed to submit a non-monetary “bid securing declaration” instead of using a costly bid security.
A PPDA spokesman said: “With 60 per cent to 70 per cent of the government budget being spent on public procurement and the public outcry against corruption and influence peddling, the law has been strengthened to limit who can provide services to government.”
The changes, which came into force in March, also include special provisions to enable faster and more efficient procurement of medicines and supplies for medical facilities.
The spokesman said: “The amendments will significantly change the way public procurement is managed in Uganda. Some of the immediate benefits are promotion of local businesses under the preference and reservation schemes, and efficiency in public procurement. The new law also demands great accountability from both public and private officials involved in procurement.”