THIS is a continuation of verbatim from the Parliamentary Accounts Committee hearing, where the Ministry of Health PS, Honeybee Pharmacy, ZAMRA, Medical Stores and other government agencies appeared for questioning over the US$17 million drug supply scandal:
Kunda: Yes Honorable Kasonso then Honorable Mukosa and then…
Tambatamba: Honorable Chair, he has not answered the questions I asked.
Kunda: Honorable vice chair, thank you very much. Yes, if you can address that then I will allow Honorable Kasonso to also ask. Yes, director Honeybee
Zakir: Can the Honorable please repeat the question, sorry.
Kunda: Honorable Tambatamba please repeat the question.
Tambatamba: I am directing this question because I would like to understand the compliance side of things for this organisation that this company that was awarded the tender, so credibility of this organisation. I asked, how many years has Honeybee, for how many years has Honeybee been in existence in Zambia, one, as a registered entity, legal entity. Secondly, when was there last audit of their books?. I thank you.
Kunda: Yes Honeybee
Zakir: Thank you very much Honorable Chair, we are in existence since 2016. Honeybee is in existence since 2016 and we have been, since it is not mandatory to do audits in our country but still, we have been doing audits every year.
Kunda: Since it’s not mandatory to do audits? Are you sure with your statement?
Zakir: Yes I am
Kunda: It’s not mandatory?
Zakir: It’s not mandatory, yes.
Tambatamba: In Zambia? And when was the last year they did their audit?
Kunda: Yes you can address that.
Zakir: I would need to revert back to the documents but 2019 was the last we did the audit.
Kunda: Okay. Yes Honorable Kasonso
Kasonso: Thank you Chair, I just want to join the Ministry of Health, in particular the director for procurement regarding the documents which the Chair is in possession [of] because the law of purchasing is that and one of the principles is that let the buyer be aware. Now, are those the sort of documents which can be presented to a government institution like yours and then you are able to give a contract to such a company? No address, no date, are those the sort of documents which the ministry could accept and award the contract?
Kunda: In fact, it would have been better the ministry answers to that question. Yes procurement.
Wilson Lungu: Thank you very much Honorable Chair, yesterday, I think a similar question was asked and it related to whether fully fledged due diligence had been undertaken and at that point, we did admit that there wasn’t fully fledged due diligence that was undertaken. However, the only form of due diligence that was undertaken was in form of a desk analysis using the submitted bids from the suppliers. Chair if you may allow me, the context in which this procurement was done was one of an emergency and because of that, we somehow were racing against time to arrive at a decision. We could not do fully fledged due diligence Chairperson.
Kunda: Yes, Honorable Kasonso, a follow up
Kasonso: Thank you Chair, you are director of procurement I believe, are…
Lungu: Head of procurement
Kasonso: Now, even in an emergency, you just award contracts anyhow, US$17 million without due diligence, is that what you are telling this committee??
Kunda: Yes head of procurement
Lungu: Chairperson, the procurement process is quite clear, there is solicitation that is done, a definite criteria is set, admittedly, it’s the same criteria that is the reason for what we are looking at now but I can confirm that for this tender, the traditional approach to evaluation was done. You may want to know Chair that the way evidence is presented by tenderers varies. Sometimes evidence will be in form of a list, it could be in form of a table and the like because what we get as submissions is taken to be true. We consider the merit of what is submitted as true.
Kunda: But you see, you are a department of government that is supposed to be satisfied with everything that is provided and I am in receipt of Zambia Medicines Regulatory Authority (ZAMRA), the recommendation as to whether the license to Honeybee should be granted or not was that “grant of license to Honeybee was not recommended”, very clear, this recommendation [shows document], and that was on the 27th. The next day, they received the licence. Surely, as a procurement entity, a procurement department of government, due diligence to see that this time that all these things have happened may be questionable and that you know, looking at those that were supplying previously, they would have done a better job than going for a company that was recommended not to be given a licence. Obviously you had all these documents including the ones without any address. Is that the way we do things at the Ministry of Health? Yes procurement.
Lungu: thank you very much Chair. Chair, even as we are looking at this, allow me to indicate that we are quite committed to the mandate that we have been given. We know that it is a privilege to serve the people of Zambia. However, as is the case now, what we are seeing is that between what we desire and what could be happening in terms of reality, there could be certain concerns that could be there and it’s through such that we believe improvement is attained Chair. We are learning of the fact that there were certain concerns raised regarding the issuance of the ZAMRA licence through these current happenings, it is information that was not available to us. What was available to us was the information that was submitted through the bidding process. In light of the current circumstances, allow me to submit chair that we are quite committed to providing the necessary effort towards service delivery. Allow me to submit.
Kunda: Yes Honorable Lumayi, a follow up? And Honorable Kasonso follow up yes.
Lumayi: Director Honeybee you didn’t answer two questions, I asked you as to why you had to source medicines from unapproved manufacturers into the Republic of Zambia. Before this committee, I have seen the condoms and gloves which were supplied to the Republic of Zambia and they are leaking, they are not safe and you know the issue of condoms in every Republic, they are such important. So why did you have to bring medicines from unapproved manufacturers in the Republic of Zambia? We are asking for value for money for the Republic of Zambia. Chair, he didn’t answer that question.
Kunda: Yes Honorable Kasonso, a follow up on the Ministry of Health procurement. Yes you can go ahead.
Kasonso: Chair, just wanting to clarify further because he has indicated that yes, this is a privilege to serve the Zambian people. Is this the sort of quality of service that the Ministry of Health is serving the people of Zambia in this manner? ZAMRA, we have got information here that ZAMRA conducted the meetings even on Saturday and on Sunday Chair, they issued the licence or the authority and you as head of procurement even with that, you went ahead to award a contract? Is that how government operates?
Kunda: Before procurement comes in, yes Honeybee director, if you can address those concerns by the Honorable member.
Abdullahim: Honorable Chair if I can come in as one of the directors of Honeybee please?
Mbulakulima: point of procedure
Kunda: Yes Honorable you are granted the opportunity to raise that point of procedure.
Mbulakulima: The information was given yesterday, Honeybee was told that they must appear physically alright and this morning, we have seen the director being introduced as a director from Honeybee. Now when you as Chairperson, you asked the controlling officer to provide authority to the director to start submitting, she said he is here, we did not receive any apology or any extension that there were people also on the platform. We are aware that provincial medical officers are on the platform. Maybe I was off the system where there was no mention that another apology, so I take it that the director who is here is competent enough to explain some of these issues. So why wasn’t it mentioned that the other director was going to participate and why has he found it fit now that he has to participate? Has he got no confidence in the director who is physically present, why didn’t he come himself? I need your serious ruling.
Kunda: My serious ruling is that maybe your system had gone off, I had asked that he introduced himself earlier and that he was free to come in to speak if need be. So looking at what I had earlier stated, I think that he is free to come in and speak. Only to the extent that if the one, the director who is here cannot answer to these questions that were posed then maybe you can, who is here request that your colleague can also come in so that we have good flow of dealing with issues here. So unless…
Mbulakulima: sorry, I raised my point, now Chairperson, I will take your ruling but as the other director comes, Honorable Lumayi’s question is not answered. I hope the other director will answer. Your wholesale licence was issued on 28th August 2019 when one of your reference letters ADRA states that you supplied health kits in 2018, how was this possible seeing your wholesale license was only issued in 2019? I hope the combination of these directors will be able to answer Honorable Lumayi’s question.
Kunda: Yes, I think that we give them chance to answer to that and I had stated that they start then we allow the Ministry of Health to also deal with follow up by Honorable Kasonso. So in that order let us hear from the director from Honeybee.
Zakir: Thank you very much Chair, with regards to unapproved drugs, we would like to state that we wrote to the Ministry to change the manufacturers that we had earlier submitted because there was a lockdown in India and the manufacturers got back to us and told us that “we will only be able to supply nine months after the lockdown is lifted” so we submitted the new manufacturers and looking at the essential drugs and the desperation that these drugs were needed in the health facilities, we wrote to the ministry with regards to that. And we would also like to state that we procured from very highly credible manufacturers. These manufacturers are all WHO certified.
Kunda: The last statement, I have not gotten, maybe you can just completely just drop it ( face mask) down, yes.
Zakir: We would also like to state that we procured from very highly credible manufacturers. All of them WHO certified and yes, we visited these facilities in India and we checked the premises and we did all the QC (quality control) and everything we did. We did the due diligence and that is when we decided to go with these manufacturers.
Kunda: Okay, what about the issue of the time that you were given the licence as compared to when you were given the contract?
Zakir: Thank you very much Chair, this is with regards to supplies in South Africa and Malawi and I would like to submit that we did not need the ZAMRA certificate or the licence for ZAMRA to supply in these countries.
Kunda: Okay. Honorable Mbulakulima maybe you can repeat that question so that he can get it clearly for us to close that matter. Yes Honorable Mbulakulima.
Mbulakulima: Thank you Chairperson. I hope I find it, yeah, the question is, your wholesale licence was issued on 28th August, 2019 when one of your reference letters, ADRA, states that you supplied health kits in 2018. How was this possible since your wholesale license was only issued in 2019?
Kunda: the issue of 2018 was an issue with a recommendation letter and that was supply to Malawi, that was done in 2018, 2019 is what we are dealing with in Zambia. I think he [Zakir] also referred to that. Honorable members, Ministry of Health procurement, if you can address these concerns by Honorable Kasonso then we will allow that Honorable vice chair can also ask and Honorable Mweetwa to also ask and Honorable Doreen Mwape. You can go ahead and address those.
Lungu: Thank you very much Chair, if I have gotten the question of Honorable Kasonso correctly, I think it has to do with the genuineness of our commitment to serving. Chair, allow me just to provide a bit more background to this procurement. The public procurement act of 2008 is quite clear in so far as what steps should be undertaken towards concluding a procurement process. There are many provisions but for purposes of this response Chair allow me to simply pick on what is necessary. The first this is that we need to confirm funds available or the availability of funds before we embark on any process. Our records do confirm that we did comply with that. From there Chair, the issues now to do with the approach to use, method of procurement and the like, in this case limited bidding which according to the Act should be subjected to committee approval were done. We have approvals authority for that. In between, there was a lot of engagement with stakeholders including with the regulator of public procurement because as the committee may already be aware there was an appeal that was linked to this tender and award of contracts Chair only followed the exhaustion of the concerns that were raised by stakeholders. Among other approvals, we also had from the Ministry of Justice, the Attorney General’s Chambers. So, just to reaffirm what I had indicated earlier Chair, we consider the tiles that we are playing currently to be some kind of privilege and we are committed to continue serving those…
Kunda: Yes, and in terms of emergency, there are provisions in the same act that you are talking about and this is section 39 of the Public Procurement Act of 2008 and the public procurement regulations of 2011. The same Act that you are referring to talks about emergency procurement, I don’t know if you have gone through but maybe I can refer to it here. This is section 39(4) subsection 4, says “where an emergency situation affects the choice of procurement” this is in reference to what we are talking about now, “procurement method. The procuring method shall not automatically exclude competitive methods of procurements but shall obtain competition to the maximum extent practical in the circumstances.” Was this followed?
Lungu: Yes Chair, that was followed, that is why even when limited bidding is the method of procurement to comply with that provision, you see that we shortlisted a total of 10 bidders for purposes of achieving controlled competition to the maximum extent possible. Chair, just to add, the shortlisted companies, it should be noted was a combination of long standing companies and new ones because with the circumstances we were faced, we were looking for a solution and that’s why we had this mix of participants, a total of 10 of them.
Kunda: Honorable Tambatamba then Honourable Mweetwa and Honorable Doreen Mwape in that order.
Tambatamba: Thank you very much Chair, mine is a follow up to Honorable Kasonso’s question earlier asked that this is to do with looking at the whole scenario where the ministry decides to award seemingly an unqualified company versus those with a longer track record, I would like to find out what, I have got two questions, what were the compelling competences that were identified in Honeybee that were not found in the long standing suppliers of the Ministry, one, so that we understand why you thought these were the best in the circumstances and not all the ones that have been supplying the Ministry, give us three or four. Number two, I would like to find out from the procurement director if he would have supplied, given your contracted company that could not provide a track record that is auditable in the sense that there were no addresses of these companies that have recommendation. Gauteng is a province, if you don’t mention the district, the location and whatever, how do you get to audit that this company exists that has supplied the reference point? So would you have contracted Honeybee if this was your money? I thank you.
Kunda: Yes Honorable Mweetwa
Mweetwa: Thank you very much Chair and I must state that the deputy chair has taken out the question from my mouth. Thank you Honorable Tambatamba but I will proceed to add to that question to find out from the director of this particular company, what was the stimulus to have now compelled you to get a ZAMRA license which was given six days prior to the advertisement of this particular procurement when in fact you have indicated that you have been a going concern, a company operating in Zambia since 2016 and you have not encountered, from 2016 the requirement to get a ZAMRA license so that you could be in a position to supply to government but this particular time around, six days before the advertisement of this particular contract for which you were successful, notwithstanding the various highlighted irregularities, for some good reason managed now to apply for this license. Could you help me understand what was the stimulus this time or did you have in mind or were you told there is this particular contract coming, for you to qualify, you need a licence so we can help you?
Kunda: Yes procurement, then we can move to the director of Honeybee.
Lungu: Thank you very much Chair, allow me to begin by relating to seemingly more credible companies that were not awarded. Chair, the procurement process in terms of evaluation treats everyone as equals that is in line with the fundamental principle of fairness. Chair, just to provide information again which may lie outside the Honeybee matter but still influencing the matter, when the controlling officer started presenting yesterday, she did allude to the fact that a number of challenges that constitute the reason for appearing here today have had to do with financial challenges that we have been experiencing as a ministry. We did admit yesterday that we had a running contract, for example for health centre kits which on account of non-payment could no longer perform.
There were interventions in a bid to give life to that contract but we could not just secure any health centre kits under that contract. A number of companies that we have on that shortlist have been dealing with us as Ministry of Health for quite some time Honorable Chairperson. There are companies which we owe substantial sums of money and there is evidence on the ground which clearly points to the challenges we have had to endure over time on account of lack of finances. Chair, allow me to resubmit that in arriving at the decisions we made, we did take a lot of care towards resolving the problem that we were faced with. Allow me Chair to move on to the next question regarding whether, if in my individual capacity, I would have considered what was submitted as acceptable. Chair, as an individual, I have been endowed by nature with a natural desire to only go for what is excellent and so even when I do encounter some failures in my own life, those failures Chair are not a true definition of what I desire but I still do undergo them. It is regrettable that we are looking at things in this manner but that does not subtract Chair from our commitment to providing the best possible service, allow me to submit.
Kunda: Yes, Honorable Doreen Mwale
Mwape: Thank you Chair, I just want the director to qualify on the issue of the licence issuance. There are procedures to follow when applying for pharmaceutical license, however, I want to find out according to the records, application for pharmaceutical licence is dated 26th August 2019, received by ZAMRA on 27th August, 2019 following day. Honeybee paid up application fee for inspection on 27th August, 2019 receipt number 2987 was issued. Your inspection team did the inspection on 27th August, 2019 and an inspection report was issued on the same date, 27th August, 2019. On 28th August, 2019, a pharmaceutical licence number PL-50091/19 was issued to Honeybee for selling and dealing in medicines and allied substances. The period, the duration is from 26th to 28th, it’s only two days. I am wondering, is this how efficient all applications are handled; or this was a special application? Can you clarify on that, the period is too short for their procedures and process to follow when you are dealing with issuance of pharmaceuticals license. I thank you Chairman.
Kunda: Yes, Honorable Doreen Mwale, that is good, it is for ZAMRA. So as ZAMRA is coming to take a seat, director Honeybee, there was a question by Honorable member for Choma who asked some questions, I don’t know if you took note, if you can address those concerns. Honorable Simbao you can go ahead and ask.
Simbao: First I must state that I don’t know if the head of procurement believes that I am following what he is saying, I am completely lost with what you are explaining and I don’t know if the people that are listening are actually agreeing with you, I don’t know. So the question I want to ask I think concerns you and concerns him. These letters to confirm that you have supplied, which addresses did you use to obtain these letters? I mean, it’s difficult to say how you got these letters and I must say this Mr Chairman, I am very disappointed with the director, I am sure he was aware that he was appearing before this committee and he knew the issues that he was going to handle so he can’t be saying that if this had been told to us, we would have probably gotten more information. Can he supply us now with the addresses where they got this information from and that’s why your explanation is not being heard. Thank you Mr Chair.
Kunda: Yes director from Honeybee.
Zakir: thank you very much Honorable Chair, with regards to the letters, I would like to state that we were invited yesterday at about 16:00 hours that we should appear before the PAC committee and we complied. With regards to the process that was followed for ZAMRA, would you like me to answer that?
Kunda: No, I think ZAMRA will. Yes Honorable [Simbao]
Simbao: Honorable Chair, this director is taking us for granted, can you answer the question, can you give us the addresses where you obtained these letters from, don’t say that you complied and all that, that’s not the question. Can you give us the addresses now, where you got these letters from?
Kunda: Are you able to provide those addresses.
Zakir: Yes Honorable Chair, we can revert to our agents and we can get more information.
Kunda: When can you do that?
Zakir: We can do that within next week Honorable Chair.
Kunda: within next week?
Zakir: Yes Honorable Chair
Kunda: An address, why next week? You cant do it tomorrow?
Zakir: We can do it tomorrow but looking at the lockdown in South Africa and…
Kunda: So you are not in communication with the agents that you are referring to? Is that what you saying?
Zakir: We will communicate to the agents, we are not in communication every single day Honorable Chair.
Kunda: Okay, so I think now, we are demanding because we have been asking but the time that is being given I think is rather too long so we are demanding that we give you two days in which to provide the addresses because if you deal with those agents that you are saying you deal with, you should have their addresses. So, we should have those addresses. Ministry of Health, the PS, let us have the address in two days’ time. Yes AG, would you like to come in, if you can just switch off your microphone.
Auditor General: Thank you Chair, just for clarity, so that the director Honeybee understands where we are coming from, from the point of audit. When we were auditing, these letters are identifying Honeybee situated or located in Chinika, it didn’t go through any agency so it means the people who supplied, those purported companies in South Africa and in Malawi are Honeybee situated in Chinika. So that is the issue. There is no agency like there is an agency in Malawi which supplied those companies but linked to Honeybee in Zambia, the recommendation is being directed to Honeybee in Zambia which means Honeybee in Zambia must have supplied to those companies, thank you Chair.
Kunda: the companies that you supplied to, those are the recommendations that we expect that you will give us the addresses for because they are the ones who provided those letters. So we would like you to provide that information, the addresses for those companies where you supplied and I am sure if you supplied like you are saying, you would have addressed to where those items went. So, we should have that in two days. Yes, Honorable Anthony Mumba.
Mumba: Chairperson, just an addition to the observation that has been made by the AG and yourself, that is why in my earlier submission I was saying, these agents that you have, then you must be a very big multinational company because those agents, even if you want a letter from them, those agents should get a letter from where they supplied, to themselves then to you but I think the AG has been able to simplify what I was talking about. Additionally, why I was calling for Honeybee before it leaves, I think there was an issue on the power of attorney, I think again Honeybee like it was observed yesterday, that seal which was put on the letter head for Honeybee by the law firm, obviously that is erroneous because the power of attorney should be clear in terms of how Honeybee actually did the letter itself when it gave authority to one of the directors to be signing off these contracts. But again there is a misunderstanding, that seal is for Makebi Zulu and Company then they themselves are saying their lawyers are Thandiwe and associates, can we have a clarification on that and just as a word of caution to Honeybee, they can imagine the sort of situation they have put the Ministry of Health into especially that the Ministry has been trying to support local businesses. So can they explain clearly who their lawyers are thank you.
Kunda: Yes director Honeybee
Zakir: Thank you very much Chair, I would like the other director to answer that question…
To be continued in the Monday edition.