AN investigation has revealed that government, through the Ministry of Health, last year awarded a US$17 million contract for the supply of health centre kits to a company called Honey Bee Pharmacy Limited, which did not exist.
Research at the Ministry of Health shows that Missionpharma, a Danish company with a subsidiary in Lusaka, had an active contract to supply and deliver drugs to Zambia for several years and was a key government partner for supplying health centre kits. However, owing to an US$11 million drug supply debt, the company stopped supplying in December 2018, demanding that the government first settles its debt, a move that forced the Ministry of Health to find a replacement.
According to Ministry of Health sources, tender number MoH/SP/032/19 was issued following a decision to procure 50,000 health centre kits through a limited bidding process.
Records at the ministry show that a solicitation document for the tender was issued on October 7, 2019 and the evaluation of bids was done on October 22, 2019, while the contract between Honey Bee Pharmacy Limited and Ministry of Health was signed on November 22, 2019.
But Patents and Companies Registration Agency (PACRA) records do not show any company that existed prior to 2019 registered as Honey Bee Pharmacy Limited.
Research showed that Honeybee Pharmacy had been a sole trading name for an individual named Imran Lunat, with records at PACRA indicating that it was registered as a business name on April 14, 2016.
On October 16, 2019, another company called Honeybee Pharmaceuticals Limited was incorporated, with shareholders namely Zakir Husen Motala, Abdurrauf Motala and Yousouf Jasat, but according to Ministry of Health records, this was not the name of the company that was awarded the US$17 million contract. The company that was awarded the contract is Honeybee Pharmacy Limited.
Further, a search at PACRA showed that another company now called Honey Bee Pharmacy Limited, which corresponds with the company that was awarded the contract, was incorporated on April 1, 2020, with shareholders namely Imran Lunat, who was also registered as a sole trader for Honeybee Pharmacy, Zakir Husen Motala and Abdurrauf Abdurrahim Motala.
When contacted to explain how Honey Bee Pharmacy was awarded a US$17 million contract when it was not incorporated at PACRA, Lunat said that was for the ministry to explain, adding that the tender process was followed.
He confirmed that the contract was not awarded to Honey Bee Pharmacy Limited, which ironically appears on the tender documents, but to the sole trader Honey Bee Pharmacy.
“The contract was not awarded to the Limited, it was awarded to Honey Bee pharmacy, not Limited. Honey Bee Pharmacy Limited, from what I know, was registered later on. Honey Bee Pharmacy has been running since 2015. It is the same directors, there is a group of directors who have come together, so they have created another name but the contract was not awarded to the Limited,” Lunat explained.
Asked how he won the US$17 million contract if the limited company was not registered with PACRA at the time, Lunat said he was no longer a director for the company that won the contract, as he was now working for the new owners of the company and was not responsible for decisions.
“I don’t know, you can ask them. That is something you can speak with them. I think there is a tender process that went through. I am not sitting on the board of directors. I used to be a director but I am no longer a director. So I don’t make any decisions, I don’t deal with them, I am now a worker for them,” said Lunat.
Zambia Public Procurement Authority (ZPPA) acting public relations manager Laura Hamusute said she was unable to provide a response to the press query as it needed the attention of the managing director who was unavailable at the time.
Ministry of Health officials declined to explain the circumstances under which a company that was not registered at PACRA was awarded the tender to supply and deliver health centre kits worth US$17 million.
When queried, Health Minister Dr Chitalu Chilufya referred the matter to his Spokesperson Dr Abel Kabalo.
“Write a press query and my spokesperson will handle it. He will give you an informed position,” said Dr Chilufya.
When a press query was sent to him, Dr Kabalo could not respond, saying: “I am still pursuing the officers; immediately I get the information, I will definitely share it with you. It is not me, what you can do is that, give me time to just compile, get in touch with me next week, let’s say Tuesday… I will get back to you once I get to the technocrats,” he said in January.
When contacted a few weeks later, Dr Kabalo said: “I may need to verify. What I know is that Mission Pharma has been supplying us with health center kits. So I may just need to verify with the procurement people. Where did you get that information from?”
He later said he did not have access to the “restricted” information that this reporter was asking for.
“That is restricted information, I can’t access, I haven’t accessed it yet. I am just waiting on the people that deal with that to give it to me. It is not within my control so I am just waiting. They have not given me the information up to now but we have been receiving kits and drugs we have been receiving. The way government procurement is, they procure by getting goods, that is when they pay so there is no institution that supplies goods to government that is not owed. We don’t pay upfront cash, that is how government procurement systems are. That is why even the road contractors have to provide the product, that is when they are paid. So government owes people so it has to get the product first before it pays. And before anyone is paid, we have to verify that the product received is of good quality and all that,” Dr Kabalo said.
According to tender documents, the Ministry considered the matter a crisis when Missionpharma stopped supplying.
“In the circumstances, limited bidding was the appropriate method of procurement in accordance with Regulation 14(b) of the Public Procurement Regulations of 2011. To avoid the problems of non-delivery due to delayed advance payment, the solicitation document and subsequently the contract that was to result from the tender would have no provision for advance payments. Suppliers would be paid 100 percent of the contract sum after full delivery. The Ministry Procurement Committee noted that the request to use limited bidding as the method of procurement was approved during the 30th ministry procurement committee meeting which was held on 2nd August 2019. Further, at its 31st ministry procurement committee sitting held on 9th August, the Ministry Procurement Committee approved the addition of two companies to the shortlist of suppliers,” read the evaluation report.
Records showed that 10 companies were invited to take part in the limited bidding process; among them Shalina Pharmaceuticals, NRB Pharma Limited, Kingphar Limited, Yash Pharmaceuticals Ltd, Missionpharma (Z) Limited, International Drug Company Limited, Baxy Pharmaceutical Manufacturing Company Limited, Pharmanova Zambia Limited, Artemis Pharmaceuticals Zambia Limited and Honey Bee Pharmacy Limited.
“At the time of tender closing, eight of the ten shortlisted companies submitted bids and they read as follows; (1). International Drug Company Limited Lot1. US$13,350,000. Lot 2. US$13,350,000. Lot 3. US$17,800,000. Delivery period 10-12 weeks. (2). Honey Bee Pharmacy Lot 1. US$7,600,000. Lot 3. US$10,133,333. Delivery period 6- 8 weeks (3). Baxy Pharmaceuticals Manufacturing Company Limited US$45,800,000. Delivery period 12-16 weeks. (4). Yash Pharmaceuticals Limited. Lot 1 US$13,815,000. Lot 2 US$13,815,000 Delivery period 14 weeks. (5). Pharmanova (Z) Limited Lot 1. US$10,662,300.LOT 2. US$14,216,400. Delivery period 14 to 16 weeks. (6). Kingphar Company Zambia Limited Lot 2. ZMW 94,305,000, US$2,837,700. Delivery period 12 weeks. (7). Missionpharma Zambia Limited. Lot 2 US$7,066,809. Lot 3 US$9,422,412. Delivery period 22 weeks. (8). Artemis Pharmaceuticals Limited. Lot 1 and 2 US$26,197,985. 14-18 weeks,” the report read.
In a letter dated September 18, 2019, ZPPA wrote to the Ministry of Health expressing concern with the manner in which the ministry intended to meet its contractual obligations with Missionpharma.
The ZPPA also warned that the Ministry would incur and accrue more costs by engaging another supplier for the stop gap measure as opposed to relying on the existing contract with Missionpharma.
But on 23rd October 2019, the Procurement Committee approved the award of contracts recommended by the Evaluation Committee as follows; (a) Lots 1 and 3 to Artemis Pharmaceuticals Zambia Limited at the sum of US$14,139,450,00 with a delivery period of 6 to 10 weeks. (b) Lot 2 and 4 to Honeybee Pharmacy at the sum of US$17,958,150,00 with a delivery period of 8 to 12 weeks. (c) Lot 5 to Pharmanova Zambia Limited at the sum of US$3,554,100,00 with a delivery period of 14 to 16 weeks.
Further, ZPPA noted that some of the companies that were awarded the contract did not meet the conditions specified in the tender, including the fact that “companies needed to hold a license from Zambia Medicines Regulatory Authority (ZAMRA) because kit packaging was part of manufacturing.
ZPPA noted that it was surprising that selected companies without such licenses were allowed to participate and eventually selected for award of contract.
There was a further contradiction of the statement in the bid document which required participating companies to have manufactured or marketed the product for a minimum of two years. The Authority observed that the Evaluation Committee did not fully consider the qualification requirement ITB 7.1 (a) of the SF when evaluating the bidders, which was contrary to Section 50 (2) of the Public Procurement Act (PPA).