THE Auditor General’s Report has revealed that the Ministry of Defence paid US$56,480.20 to a South African Company to install an oxygen plant at Maina Soko Hospital, but it was not delivered.
The Report also disclosed that the Ministry of Defence failed to avail information for auditing purposes on the rehabilitation and upgrading of Maina Soko Medical Centre.
According to the Report of the Auditor General on the accounts of the Republic for the financial year ended 31st December 2019, a review of the situation conducted in February 2020 revealed that the Oxygen Plant had still not been delivered and the Ministry had not claimed a refund while the slab where the plant was to be installed had been demolished.
“In Paragraph 34 of the Report of the Auditor General for the financial year ended 31st December 2018, mention was made of the failure to supply, deliver, install and commission an Oxygen Plant at Maina Soko Military Hospital at a contract sum of K1,450,400 (US$148,000), by On Site Gas Systems International (PTY) Limited of the Republic of South Africa. As at 31st March 2016, a total amount of K501,892 (US$56,480.20) had been paid to the supplier representing 38% of the contract sum, leaving a balance of K813,265 (US$91,250). A review of the situation conducted in February 2020 revealed that the Oxygen Plant had still not been delivered and the Ministry had not claimed a refund while the slab where the plant was to be installed had been demolished,” read the Report.
The Report disclosed that amounts totalling K126,366 were issued to various officers to carry out activities but no activity reports were availed for audit.
“Imprest in amounts totalling K126,366 was issued to several officers to carry out activities such as monitoring, inspection of projects and assessments. However, no activity reports were availed for audit,” it stated.
The Report further disclosed that the ministry failed to avail repayment documentations.
“On 10th May, 2017, the Ministry engaged Ashtrom B.V of the Netherlands to finance, design, upgrade and rehabilitate Maina Soko Medical Centre in Lusaka at a contract price of US$140,000,000 exclusive of VAT. The contract period was for 782 days with an expected completion date of 27th February 2021. The contractor took possession of the site on 5th February 2018. A review of the minutes of the 24th site meeting held on 7th January 2020 revealed that the project was 74.2% complete. The following were observed: failure to provide information for audit Section 73 (1) of the Public Finance Management Act requires that the Auditor General and an office holder, agent or specialist consultant authorised by the Auditor-General, shall in the performance of duties under the Constitution, or any other law; have access to all the books, records, returns, reports, other documents and financial management systems, in electronic or any other form, relating to the accounts of public bodies as the Auditor-General considers necessary,” the Report revealed.
“Contrary to the Act, the under listed information that was required for the purpose of the audit was not availed as at 31st August 2020. The expenditure records and interim payment certificates, documentation of the selection process of Investec Bank Plc and repayment details, the procurement plan and bank guarantee against the advance payment.”
The Report disclosed that questionable waiver of advance payment guarantee was paid to a contractor constructing the Buffalo Development Project.
“On 30th December 2016, the Ministry engaged Zhongmei Engineering Group Ltd to finance, design and build the 6th Construction Engineer Regiment (also referred to as Buffalo Development Project – Chalala) at a contract sum of US$201,391,650.69 exclusive of VAT. The contractor took possession of the site on 1st August 2019. The contract duration was three years with a completion date of September 2022. The physical progress towards completion was at 35% as of May 2020. A scrutiny of documentation revealed the following: Section 127 (1) of the Public Procurement Regulations states that ‘A procuring entity shall request a performance security for all contracts for goods, works and non-consulting services with a value greater than K500,000, to secure the supplier’s obligation to fulfil the contract.’ Contrary to the regulation, the contract did not provide for the performance security,” the Report read.
“On 3rd July 2019, the contractor applied for a waiver of the advance payment guarantee that was required as per Clause 41.2.1 of the General Condition and the special conditions of the contract. This was granted by the Permanent Secretary Defence on 5th July 2020. However, it was questionable as to why the contractor was granted a waiver on advance payment guarantee as this was a condition in the signed contract which was meant to safeguard the funds.”
It further reported that there was failure to provide information for audit.
“Section 73(1) of the Public Finance Management Act No. 1 of 2018 requires that the Auditor General and an office holder, agent or specialist consultant authorised by the Auditor-General, shall in the performance of duties under the Constitution, or any other law, have access to all the books, records, returns, reports, other documents and financial management systems, in electronic or any other form, relating to the accounts of public bodies as the Auditor-General considers necessary. Contrary to the Act, the under listed information that was required for audit was not availed as at 31st August 2020: Ministerial Procurement Committee Minutes and Evaluation Report, and Payment details.” stated the Report.