Auditor General narrates how Kabwe council director defrauded the local authority

The Auditor General has revealed that the Kabwe Municipal Council Director Engineering defrauded the local authority by awarding his company a tender to put up street lights and failing to deliver on his obligations.

This is contained in the Report of the Auditor General on the accounts of Local Authorities for the financial years ended 31st December 2015, 2016 and 2017.

The Auditor General narrated that the Kabwe Municipal received equilisation funds in amounts totaling K15,999,404 during the financial year ended 31st December 2017.

“According to the Local Government (Amendment) Act No. 12 of 2014, a Council shall use at least twenty (20) percent of the equalisation funds received in any financial year, to finance capital expenditure while 80% is to be spent on personal emoluments. During the financial year ended 31st December 2017, equalisation funds in amounts totalling K15,999,404 were received from the Central Government.
An examination of records pertaining to the utilisation of the funds revealed the following: i. Installation of Street Lighting
On 10th April 2017, the Council contracted Garmortech General Dealers for the supply of electrical equipment and accessories for street lighting along Independence Avenue at a contract sum of K341,782 (VAT Inclusive) and Munkoyo Street at an amount of K156,570,” read the report.

The Auditor General stated that a PACRA search revealed that this company belonged to the director engineering.

“However, the following were observed: Failure to Declare Interest – Director Engineering. According to Section 18, subsections (2) and (3) of the Public Procurement Act No. 12 of 2008, which states that ‘a member or person who is present at a meeting of a procurement committee or a subcommittee of a procurement committee at which any matter, in which that person or indirectly interested in a private capacity, is the subject of consideration, shall, as soon as is practicable after the commencement of the meeting, disclose the interest and shall not, unless the Procurement Committee or the sub-committee otherwise directs, take part in any consideration or discussion of, or vote on any question relating to that matter. A disclosure of interest made under this section, shall be recorded in the minutes of the meeting at which it is made’,” the report read.

“A search at the Patents and Companies Registration Agency (PACRA) on the ownership of Garmortech General Dealers revealed that the company was owned by the Director of Engineering at the Council. A review of the tender procurement committee minutes for the installation of street lights for Independence Avenue and Munkoyo street revealed that the Director of Engineering participated in the proceedings to award contracts to Garmortec General Dealers without declaring interest contrary to the provisions of the Act.”

The Auditor General stated that among other irregularities, the company delivered less street lights than it was contracted to erect, without accounting for the rest of the funds.

“Irregular Payment of VAT to a Non – Registered Supplier. Contrary to the VAT Act Chapter 331 of the Laws of Zambia, which states that only companies that are registered for VAT can charge VAT, it was observed that although the contractor charged VAT at 16% amounting to K47,142, inquiries made with the Zambia Revenue Authority revealed that the supplier was not registered for VAT. Independence Avenue. The Council procured electrical components for the installation of street lights along Independence Avenue from Garmotech General Dealers at a total cost of K341,782 made on bank transfer dated 11th April, 2017 for the erection of twenty five (25) nine meters double arm steel poles. However, a physical verification revealed that only sixteen (16) steel poles were erected leaving nine (9) poles costing K123,042 unaccounted for including associated fittings, lamps and other accessories,” read the report.

“Munkoyo Street. The Council spent K179,162 on installation of eighteen (18) streetlights on Munkoyo Street of which K156,570 was paid to Garmotech General Dealers on 6th February 2017 for the supply of electrical components. A physical inspection carried out in September 2018 revealed that although the streetlights had been erected they were not functioning.”




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