Industrial Development Corporation (IDC) Chief Executive Officer Mateyo Kaluba on Wednesday had a tough time justifying wastage of over K670,000 by Indeni Oil Refinery on consultancy services it did not need.
According to the latest report of the Auditor General on parastatals, Indeni wasted K674,898 on consultancy services on the review of organisational structure as they did not implement any of the consultant’s findings.
“In February 2014, Indeni Refinery Limited engaged Mint Advisory Services Limited to provide consultancy services for the organisational review of the company at a contract price of K674,898 for a duration of three months from 3rd March to 23rd May, 2014 or any other period as may be subsequently agreed by the parties in writing. The consultant presented their report to management in March 2015. However, management rejected the consultant’s findings and did not implement any of their recommendations claiming they did not understand the intricacies of the refining business rendering the expenditure wasteful,” read the report.
Speaking when he and a team from Indeni Oil Refinery appeared before the Parliamentary Committee of Parastatal bodies which is chaired by Peter Daka, Kaluba said he would be speculating if he answered questions relating to the wastage but directed queries to the Ministry of Energy.
Kaluba was responding to a question from one of the committee members Anthony Kasandwe who wanted to know if the expenditure was budgeted for.
“Thank you for the observation but it puts us in a bit of an awkward position because it is an issue that is more competently responded to by the Ministry of Energy and really, in providing the response, I would probably be speculating and we handle obligation not to mislead this committee. With your indulgence chair, we would not want to give a speculative response on this matter,” Kaluba said.
But Kasandwe asked a followup question on who was engaged to do the consultancy for the company.
“According to management, the amount was paid in full and the people who were engaged to do this consultancy were simply reprimanded, there were no punitive measures taken, having lost such huge amount of money,” Kasadwe probed.
In response, Kaluba said the company had reprimanded the former management as a way of teaching them a lesson.
“Chair, unfortunately that is the action that we could take, the waste expenditure had occurred and really in reprimanding management, the hope is that such an event will not occur again and we are holding them accountable to make sure that we don not have such items appearing in the auditor generals report,” Kaluba responded.
And Acting Auditor general Roy Mwambwa advised the IDC to learn a lesson from the loss.
“They have reprimanded management. Maybe it is an issue where they can actually just learn some lessons from it going forward so that future contracts should be properly managed. From the government circles what we have been saying is that when you occasion a loss like this, you need to do something like a loss report where people are actually being surcharged. But that is purely a decision by IDC to explore what sort of action they should take,” Mwambwa said.
Meanwhile, committee member Mumbi Phiri wondered if IDC had a code of conduct of disciplining erring officers.
“I would like to find out from IDC, don’t you have a code of conduct for people who do such things? Or the way you discipline your people?” Phiri asked.
And Kaluba responded by saying “Our assessment was largely that this was due to a failure of systems within Indeni and to that extent, the institution was held accountable. Two things that I wish you should know; firstly, we were reprimanding them with respect to a matter that we had just as we were being born as an institution, so we heard about it from the auditor general’s report as a starting point. Secondly, it was a bit difficult to hold this particular Managing Director personally liable for the decision because he was not managing director at the time. So the position we took was to reprimand management in a manner that such things should not occur again. That was where we took that action.”
And Daka closed the sitting by urging the corporation to have a clean record of audits in future.
“Auditor General you were saying the IDC is government, Indeni is government. So we appreciate what the IDC CEO is saying that there was a transition, it was within the transition that things were happening but in future, IDC [and] Indeni, we need a clean sheet…we don’t want losses, this is tax payers’ money,” said Daka.