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Thursday, 3 September 2009

Corruption Watch (Local Government)

An important contribution in the Times of Zambia raises some important questions over the hearse saga that remain to be answered. The early political mantras are distracting, but well worth a full read.

The hearsegate scandal, unveiling the shroud, David Mataka, Times of Zambia, Commentary :

In our dynamic Zambian society, the demand by the people to see the Government deliver on its social, cultural and economic responsibilities has become a prerequisite for the ultimate and full democratisation of the nation. Institutions such as Parliament have also come of age conducting ferocious debates, not in the protected privileged confines of the House but also through live debates in the cyber- space broadcasting live to the nation.

In its pursuit to deliver quality goods and services to the people that it serves, the Zambian Government has evolved in the manner it conducts business, from the centralised and authoritarian era of the one party regime to the more open, liberal and democratic way of governance.

With this, come more pronounced occurrences and revelations of vices such as corruption, bribery, nepotism and white collar crime involving some Government officials and those in private insitutions.

Billions of Kwacha have been lost in such scams and while some monies have been recovered, much more remains to be done to have a water tight seal on the wanton destruction of Government infrastructure and the plunder of resources through well organised syndicates prowling Government departments.

It is not surprising today to see mere directors in Government, accounts clerks or accountants rolling the highways in super luxury vehicles nowhere near or commensurate to their status in society or the public service salaries they earn.
Institutions such as the Anti-Corruption Commission (ACC), the Drug Enforcement Commission (DEC), and the regular police whose offices are constitutionally mandated to counter some of these excesses in society have recently been strengthened to deal more effectively with such and yet so much still needs to be done.

Not so long ago, the nation awoke to the agonising revelation about a multi-billion Kwacha scam at the Ministry of Health.
Government and donor funds may have been lost prompting some of the development partners to withhold support in the sector.It is such openness that has ensured that scandals are exposed.

More recently, the media again unwittingly unearthed what has now come to be known as the hearsegate scandal in which more than US$2 million it is now feared, could have been cleverly siphoned from Government coffers before the very eyes of watchdog institutionalised audit systems.

At face value, the decision to purchase one hundred hearses to ease the burden of grief during funerals of those who can ill afford is a perfect decision appealing to the very heart of society at grassroots level.

This decision highlights the fact that indeed, the MMD Government is a listening one, whose interest and efforts are tailored to alleviating the negative economic and social impact on the country amidst the harsh realities of a global economic downturn.

Away from the media sensational hype over the hearsegate, after a national daily broke the story and the ensuing exchange of accusations and counter accusations flared between Local Government Minister Bennie Tetamashimba and his predecessor Chongwe Member of Parliament Sylvia Masebo, the nation was engulfed in a smoke screen which covered the real issues surrounding the matter.
The whole nation was swayed into believing that the concern was whether Mr Tetamashimba was indeed privy to the purchase and details of the deal, when it is the finer details of the purchase that should have been put under scrutiny.

The Background

The aftermath of the State House Press Conference decision by President Rupiah Banda to allow Ms Masebo to go ahead and divulge information about her knowledge of the hearsgate saga swirled the matter further into contortion.

At the same Press briefing, the Head of State directed that the hearses be distributed to their intended beneficiaries. And following soon after was a number of blistering attacks on Mr Tetamashimba in different television and radio interviews .
An emotionally charged Ms Masebo reacted angrily and bared all to the nation, her version of the hearses purchase for all the 72 councils in Zambia flashing all sorts and kinds of official documents and insisting that Mr Tetamashimba had all along been privy to the deal.
This was in apparent reaction to Mr Tetamashimba’s letter in response to a media story in which he was accused of corruption in the transaction. He, in the same correspondence, invited the former minister to help clear the air.

Ms Masebo contended that the decision to buy the hearses was arrived at through a collective decision in meetings chaired by herself and attended by senior officers in the ministry including her deputy then, Mr Tetamashimba.

Mr Tetamashimba however, vehemently denied having attended any of the meetings contending that at no point did Ms Masebo involve him as her deputy in the purchase procedure.

The Contract

On Friday, December 28, 2008, the Ministry of Local Government and Housing, Top Motors and the Tender Board completed a tender document in which 100 hearses were requested for at a staggering cost of K14 billion.

On December 29 of the same year, an initial K6 billion was transferred electronically to Top Motors. According to the details of the contract, 40 per cent of the total cost was to be paid to the importing firm while 60 per cent or K8 billion was to be paid after delivery of the vehicles.

However, on January 5th, 2009, against the dictates of the contract, Top Motors management wrote to the Ministry of Local Government, demanding that they be paid the remaining 60 per cent promising that a bank guarantee would be issued by the Bank of China and if the vehicles were not delivered in 21 days, the money could be claimed back.

By January 7th, 2009, the Kbillion had been transferred and on the same day the guarantee from the bank issued. What this development meant was that the vehicles would not be delivered in the contract stipulated time which said the vehicles would be delivered in eight weeks.

On the 21st, the last day of the bank guarantee, officers in charge of the purchases at the ministry were aware that the hearses would not be delivered on time but did not bother to cash the bank guarantee or at least there is no indication that anybody protested the delay.
The hearses were only reported received in the country several weeks after the stipulated contract time and only when the newspapers wrote about the issue.

Why then, did officers at the ministry look the other way and outside the contract and decide to pay Top Motors the full amount against the provisions of the duly signed contract?

Also critical was the failure by officers of the ministry who staked public resources through a bank guarantee which they failed to dutifully follow up even when the delivery of the vehicles was delayed.

Another question that begs to be answered is that according to sources, the importation receipts obtained from the China Automobile Company and the ZRA, each hearse was pegged at $9,300. With freight and insurance charges, the figure rose to US$9,800 per hearse.

Another questionable matter is the fact that the receipts from the purchase of the hearses also seemed to indicate that the vehicles were imported by the Ministry of Local Government itself and not Top Motors. Does that then suggest that the hearses having been imported (going by the documents), the ministry itself, the purchase deal did not attract tax? What does the law on tax indicate when the Government is the importer?
If it is so established in that view that Zambia Revenue Authority (ZRA) collected tax on the 100 vehicles, how much of these tax funds go into the coffers of the authority.

Overall, the moral question arises. While the deal may be presented as a clean business transaction in which all parties agreed on the prices and mechanisms of importation, does it not ring bells of concern as to why each vehicle landed in Lusaka would cost the Government $29,000 each from about $10,000?

Granted that there were profit considerations to be made, isn’t it a normal Government practice that a minimum of 10 per cent and maximum 20 per cent profit margin is allowed. Who shared the $20,000 per vehicle of the 100 hearses?

As if not enough, the facts are still murky about the origins of the funding used to buy the hearses.
Was there any parliamentary approval for the disbursement of the monies to specifically buy the hearses? or was there any specific request from any of the 72 or more councils countrywide for the purchase of such.
And unless concrete and elaborate answers are provided to the public over the use of tax-payers money and its disbursement, it becomes increasingly difficult for the Government to justify spending even in areas which are needy.

Does this saga remain in the history books as one whose lid was opened only to offer political entertainment originated by two foes or is there any matter for further investigation?

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