The DA will be writing to the chairperson of the Standing Committee on Public Accounts (SCOPA) requesting him to urgently lead an investigation into all Hitachi Power Africa and government contracts and deals in the last five years.
The recent revelation that Chancellor House – the ANC’s business wing which partially owns Hitachi – has opted to sell its shares in Hitachi Power Africa for an “undisclosed amount”, has made this a matter of urgency and is very questionable.
This is because Hitachi is the company that was not only awarded the contracts of R38 billion to install boilers at the Medupi and Kusile power stations. But those projects have been delayed because of many mistakes and bungles by contractors, including Hitachi itself. Medupi is not yet even close to being complete, and Kusile has only just begun.
In the wake of the delays at Medupi, the DA made efforts to establish the cause for the delays. All efforts to obtain such information however have subsequently been shut down at every turn.
For years the DA has been saying that there is a clear conflict of interest and corruption for President Jacob Zuma’s ANC to be making money off government contracts. That is corruption, plain and simple.
It is simply unacceptable that the ANC is allowed to dubiously award itself a R38 billion contract, make a mess of the project at Medupi – putting South Africa’s energy supply at risk – and then deciding to cash in whenever it pleases, all at the cost of millions of people.
If Parliament is determined to represent its people and ensure transparency in public contracts, Chairperson Godi must urgently call on Minister Gigaba to bring all contracts between Hitachi and the government in the last five years before the committee. SCOPA must ensure this happens without delay.
I will, alongside the DA representative on SCOPA, Dion George ensure that Chairperson Godi does not ignore our calls for Hitachi to be brought to account without fail.
This is not a good story for the people of South Africa, and the truth must be made known.
Statement issued by Natasha Michael MP, DA Shadow Minister of Public Enterprises, March 3 2014
20 December 2013 | Gurjit Degun
At least 156 companies have forged tax certificates to bid for government contracts in Nigeria, according to the Independent Corrupt Practices And Other Related Offences Commission (ICPC).
It follows a preliminary investigation by the ICPC and trebles the number of firms initially suspected of fraudulent activity. Last month, the Bureau of Public Procurement reported 50 companies to the ICPC and the Economic and Financial Crimes Commission.
Folu Olamiti, spokesman for the ICPC, said: “Preliminary investigations indicate about 156 of these companies may face prosecution for using fake tax clearance certificates.”
The ICPC advised tax authorities to learn good practices from states that have tamper-proof tax certificates.
“They should create electronic platforms to synchronise with the Integrated Personnel Payroll Information System and automate the issuance of tax clearance certificates annually to public service employees so as to reduce the incidence of illegally acquiring certificates from easier sources,” the commission said.
The ICPC has not revealed the names of firms involved.
- Customs’ recruitment scam: ICPC arrests more suspects (vanguardngr.com)
- ICPC arrests 13 officials over fresh pension scam (policingdpolice.wordpress.com)
- ICPC arrests 17 ‘fake’ corps members. (kaykayjabari.wordpress.com)
- Visa Scam : ICPC beams searchlight on travel agencies (vanguardngr.com)
- ICPC arrests 41 officials with forged certificate at NIMC (vanguardngr.com)
- ICPC Seizes 100 Houses Owned by Corrupt Nigerians (wetopup.wordpress.com)
- ICPC seizes 94 houses from top civil servants. (niajablogger.wordpress.com)
By Gareth van Zyl
Cars, smartphones and solar powered cell towers were among items that inflated an initial price tag of Chinese telecommunications equipment firm Huawei’s controversial network upgrade deal for Zimbabwean state-owned mobile operator NetOne.
This is according to documents a source has provided to ITWeb Africa regarding the network upgrade deal, which is facing a court case in Harare amid allegations that the over $200 million contract was awarded illegally.
Zimbabwean-born Tafadzwa Muguti, who lives in South Africa, has taken NetOne, Zimbabwe’s State Procurement Board (SPB), Huawei and the Anti-Corruption Commission of Zimbabwe to Harare’s administrative court over the awarding of the $200 million contract.
The businessman, who is the chief executive officer of investment group Africapaciti, wants to find out how Huawei won the NetOne contract, even though the Chinese company did not go through an official tender process.
Because NetOne is a state-owned entity, it is obliged to adhere to Zimbabwe’s procurement laws with regard to the awarding of contracts, Muguti has argued.
Muguti also alleges the contract was awarded to Huawei despite Zimbabwe’s SPB having expressed concerns over an inflated price for the project. The SPB is the first respondent in Muguti’s court case.
And documents detailing the record of proceedings regarding the awarding of the deal, which are in the hands of ITWeb Africa, illustrate the SPB’s initial concerns about the Huawei deal.
In a July 2013 letter from NetOne to the SPB, in which the mobile operator addresses concerns about the Huawei deal to the SPB, an amount of $298.6 million is quoted for the upgrade, which hinged on a loan from China’s Exim Bank.
That figure was then dropped to $251 million, according to the documents, and ultimately — as the documents later reveal — this figure was cut to $218 million.
NetOne officials, in the document, argued that only Huawei could carry out the upgrade deal as the mobile network’s infrastructure is from the Chinese telecommunications firm.
But the State Procurement Board then raised the following issues, which are summarised below:
- “Members noted with concern that the Secretariat had failed to properly analyse the matter for logical presentation to the board.”
- “The presentation was jumbled up and comprised of disparate requirements including Upgrades, New Equipment and Construction of a Building.”
- “The matter was also hastily presented as an urgent item without adequate background and factual information.”
- “Background was inadequate and lazy.”
- “There was no clear justification why the current requirements should not go to tender, in light of the unclear relationships between the projects.”
The documents reveal that on 27 June 2013, the State Procurement Board deferred the pending of the contract to await further input.
The board also raised concerns about “the procurement of smartphones and tablets for resale to the public, which are not part of the network upgrade.”
Furthermore, the documents also highlight concerns that Huawei had quoted inflated prices for equipment that may not help with a widespread upgrade to next generation LTE.
Items that the deal was initially planned to include were as follows, according to the record of proceedings:
- Purchase of 1336 2.75G base stations
- Purchase of 600 3G base stations
- Purchase of 400 4G base station
- Supply of 500 diesel generators to serve as stand-by power at base station sites
NetOne in the documentation does argue that Huawei has quoted it at a lower price for base stations at $170,000 rather than the market price of $180,000.
In the documents, the Zimbabwe’s ministry for transport, communications and infrastructure development, did write to the SPB calling for the upgrade to be given to Huawei.
The ministry argued the deal could help NetOne boost its services, subscriber base and contribute to Zimbabwe’s ICT development.
But a letter from the Transport department then outlines how the project had been scaled down.
“Some of the key components that have either been scaled down or removed as a result, include Base station Towers that have been reduced by half, removal of four wheel drive vehicles for project implementation and maintenance, solar powered Base Stations that were meant to serve as coverage gap fillers, the online charge system, where NetOne will later have to expand the existing system to meet the increased subscribers to be connected,” says the letter.
The response goes on to allay fears regarding the number of 4G stations, as the Transport department said that these would be deployed in highly dense urban areas to cater for demand.
The Huawei-NetOne contract, though, was publicly announced in July while deliberations continued in the background.
And in that same month, concerns about the deal were communicated from the State Procurement Board in a record of proceedings.
Among these included:
- “Members noted that there were allegations of overpricing some aspects of the project components.”
- “Members noted with concern that according to the minute from the Secretary for Transport, Communications and Infrastructure Development to Treasury dated June 19, 2013, NetOne and Huawei Technologies of China had already signed a contract for the Works without authority.”
A board resolution on the 18th of July then further deferred the matter.
Further reading into the documents also reveals that the Post & Telecommunications Regulatory Authority of Zimbabwe but that concerns existed that the watchdog had not consulted the relevant industry experts.
The contract price in the documents goes down then to $218 million, while reports in July talk of a deal that was just over $200 million
Court case postponed
Subsequently, on 19 November, Tafadzwa Muguti’s court case against the relevant parties was postponed.
However, in court documents, the SPB has outline that it did finally approve the Huawei deal, despite its concerns outlined in the record of proceedings.
The board then further highlights how it consulted advice from three government ministries and telecommunication and IT engineers.
The board goes on to say in court papers that the urgency of the upgrade drove its decision.
As a result, the board asked that the court reject Muguti’s appeal as “frivolous and vexatious.”
The board also then asks that the court finds that its decision was “prudent and feasible.”
Finally, the board asks that the court throws out the appeal with costs for a lack of merit.
Chinese telecommunications equipment firm, Huawei, meanwhile has also denied alleged corruption regarding the deal.
“For the project with NetOne, we strictly abide by all procurement laws and regulations in Zimbabwe, our target is to help Zimbabwe people enjoy their life through communication at affordable price,” Jacky Zhang, who works with Huawei Technologies Zambia but manages communications for Zimbabwe, told ITWeb Africa.
“The allegation for over-inflated is not base on the truth,” Zhang told ITWeb Africa.
ITWeb Africa also asked NetOne for comment, but the company has not responded to emails.
28 November 2013 | Will Green
The Public Procurement and Disposal of Public Assets Authority (PPDA) has suspended the firms for a range of reasons including submitting forged bid securities, works not completed on time and invoicing for work not carried out.
The suspensions range in duration from one to five years.
Among the firms is Amman Industrial Tools & Equipment Ltd, which has been suspended indefinitely for causing a $1.7 million loss to the government in connection with a contract to provide 70,000 bicycles.
In a statement the PPDA said: “The firms and their directors will no longer be allowed to participate in any public procurement process during the duration of their suspension.
“Some firms like Amman Industrial Tools & Equipment Ltd and their directors have been suspended indefinitely for causing $1.7 million financial loss to the Government of Uganda.”
The presidency of the southern African state said in a statement that Banda, who came to office in April 2012, “will announce a new cabinet in due course.” It did not elaborate.
The presidency had said on Wednesday that Banda would meet her cabinet the following day to discuss the financial scandal and who was responsible.
It did not disclose details of Thursday’s meeting, but a senior government official, who asked not to be named, said Banda told the cabinet that she had “lost faith” in them.
The scandal, known locally as “cash-gate”, forced the government to shut down its payment system last week so that it could investigate over $4 million that went missing, delaying the payment of salaries to teachers, nurses and doctors.
Banda, who faces an election next year, has won acclaim in the West for austerity measures and moves to bolster the economy of the aid-dependent, impoverished country.
But steps such as an IMF-backed devaluation of the kwacha currency have stoked inflation, raised the price of food for the rural poor and eroded Banda’s domestic support.
The police said that about 10 junior government officials had been arrested so far for suspected graft, and that they had recovered tens of thousands of dollars in cash from their car boots and homes.
A small group of protesters marched in the capital Lilongwe on Thursday and delivered a petition calling for the sacking of top officials, including Finance Minister Ken Lipenga, over the scandal. Lipenga has denied any wrongdoing. He was not immediately available for comment on Thursday.
Last week, envoys from eight Western donor nations, whose aid traditionally has accounted for about 40 percent of the state budget, asked Banda to deal with the alleged corruption at the treasury and investigate an attack on the budget director.
“These are worrying developments that potentially risk Malawi’s stability, rule of law and reputation,” the envoys said in a statement.
Budget director Paul Mphwiyo was shot last month, but survived the attack.
After the shooting, the government’s Anti-Corruption Bureau and police launched an investigation into the budget director and unnamed ministers over suspected graft, indicating the scandal extended beyond just a few junior officials.
“People have lost confidence in (Banda’s) leadership and the best thing she can do is to order the arrest of senior officials involved and ask her finance minister to resign,” Lazarus Chakwera, leader of the opposition MCP, said at a public rally over the weekend.
Malawi’s troubled economy has shown signs of improvement in the past few months with inflation that was once running over 30 percent easing slightly, while earnings from its main export tobacco are expected to double this year from 2012.
By Oscar Nkala
October 2, 2013
India’s Central Bureau of Investigations (CBI) has closed its eight-year long corruption probe into South African arms manufacturer Denel following allegations that it paid kickbacks to Vara Associates, a company based in the Isle of Man, to help secure five deals between July 1999 and April 2005, to supply the Indian Army with 1 000 anti-material rifles and over 300 000 rounds of ammunition.
Indian defence procurement rules and the country’s Prevention of Corruption Act expressly forbid original equipment manufacturers who bid for contracts with the army from hiring any middlemen or intermediaries to influence or ‘swing’ the adjudication of the contracting process.
According to reports from the Indian capital New Delhi, the CBI dropped the case on Monday after eight of years of trans-national investigations in South Africa, the Isle of Man, Switzerland and the UK failed to prove the allegations levelled against Denel.
The probe started in June 2005, two months after the Indian government stopped all dealings with Denel amid allegations that the South African company had paid ‘commission’ to the value of 12.75 per cent of the total worth of the arms deals secured with the Indian Army to Vara Associates, based in the tax-haven Isle of Man, to ‘swing’ the five contracts in its favour.
The contracts involved the supply of 700 NTW-20 anti-material rifles (bunker-busting and light armour penetrating), knocked-down kits for another 300 rifles of the same make and 398 000 rounds of ammunition. According the CBI case opened in June 2005, allegations against Denel were that it had made the pay-offs to Vara Associates, accused by investigators of acting as an intermediary, disguised as technical assistance and consultancy fees.
In the course of its eight-year probe, the CBI sent requests for information to judicial and investigative authorities in the UK, South Africa, the Isle of Man and Switzerland which all reported that they could not find any evidence to support the charges against Denel.
Several employees of Vara Associates and the Indian Ministry of Defence were being probed alongside Denel on allegations of conniving with Vara Associates to swing the five contracts in question in favour of the South African company.
After the Denel deal fell through, India’s Ordnance Factory Tiruchirappalli began manufacturing the locally developed Vidhwansak multi-calibre anti-materiel rifle, which bears many similarities to the NTW-20. Available in 14.5 mm, 12.7 mm and 20 mm calibres, it has an effective range of approximately 2 000 metres.
29 February 2012 | Angeline Albert
As well as overseeing public purchasing, the agency will provide an independent forum to assess suppliers’ complaints. In addition, a code of conduct for public sector procurement officials will also be adopted.
The changes come as a result of the country’s Procurement Act of 2010, which gained assent from His Majesty King Mswati III last year. The act also disqualifies public sector workers and politicians from supplying government with goods and services.
In his budget speech, Sithole said: “Government understands that improving public procurement can generate savings without compromising services to the public. It is also an area prone to corruption. That is why we have a new procurement act. In 2012, the government will apply the changes required.”
The minister emphasized the need for stronger fiscal discipline in government by investing in cost-saving policies, improving procurement and public finance management and fighting corruption.
Johnson-Sirleaf, a Nobel peace laureate, has pledged to fight graft as the West African country strives to recover from a sporadic 14-year civil conflict that ended in 2003 and left its once-prosperous economy in tatters.
A presidency statement said Auditor-General Robert Kilby, who took office last year, was being dismissed for a clear conflict of interest due to his private business dealings.
Pearine Davis-Parkinson, director-general of the General Services Agency (GSA), was dismissed for approving contracts involving Kilby in violation of Liberian law.
Davis-Parkinson told a parliamentary committee last week the GSA had employed an accounting firm owned by Kilby to set up an asset tracking system for the government.
“Join me in our continued fight against corruption,” Johnson-Sirleaf said in a statement announcing the dismissals.
A recent audit of resource contracts by the accounting firm Moore Stephens showed that almost all the $8bn worth of resource contracts signed since 2009 violated Liberia’s laws and showed irregularities.
Johnson-Sirleaf told Reuters that the audit had been designed to highlight problems so that they could be addressed, and her government was taking action to do so.
She has forecast that economic growth, which has averaged 6.5% over the past four years, will hit double digits within two years as foreign investment starts to have an impact.
2 July 2013 | Adam Leach
Lack of attention to detail and poor market research by buyers are to blame for more than 99 out of every 100 public sector contracts in Uganda last year running over budget, according to the Inspector General of Government.
In its third annual report into corruption within government, the IGG found that the number of procurements that kept to budget had dropped to just 0.7 per cent of those let over the past year. It blamed purchasers for leading to unrealistic estimates of overall costs. The situation also appears to be deteriorating as in 2009, only half of contracts were found to have gone over their original budget.
The report said: “Price increase during execution, through change orders in specifications or cost, may be grounds for corruption. This is a significant red flag of a possible entry point of corruption and calls for integration of risk management into public procurement.”
The report, which covered contracts in 2012, also criticised public sector buyers for taking too long. It found that less than a third of procurements – 29 per cent – were completed when they were supposed to.