AN Investigation has revealed that the Ministry of Health duped the Zambia Public Procurement Authority (ZPPA) and fraudulently awarded a US$8.5 million (K180 million) contract to Barakatel Investment Limited to procure 1,500 Tricycle Ambulances, citing COVID-19 response emergency.
The investigation has revealed, however, that Barakatel Investment did not have the tricycles ex-stock and only delivered 1,114 units which have been abandoned and exposed to vandalism at three locations, leading to loss of public funds.
A News Diggers crew that followed the movement of the tricycles recorded that the units were brought in the country and then transported from Chipata to Petauke’s Kalindawalo hospital at night on August 29, 2020.
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The investigation also showed that Ministry of Health officials connived with the supplier to defraud the Zambians government by overpricing the units which were bought at over K120,000 each and using a false claim as justification for single sourcing.
It was also revealed that the Ministry of Health got ZPPA clearance to pay US$6.1 million for the tricycles, but went ahead to spend US$8.5 million which is over K50 million more than what was submitted to ZPPA.
A check at Kalindawalo Hospital found that some tricycles which were initially inscribed with the words: “PEOPLE’S MOBILITY – presidential initiative for accelerated maternal and neonatal mortality reduction” had been rebranded by removing the “presidential initiative” message.
And according to the interim management letter for the audit of accounts for the Ministry of Health for the financial year ended 31st December 2020 and seen by News Diggers, the Ministry of Health requested the Zambia Public Procurement Authority (ZPPA) for a no “objection” to procure Tricycle Ambulances for support towards the response to COVID-19 outbreak from Baraktel Investment Ltd.
In July, 2020, however, the Zambia Public Procurement Authority (ZPPA) rejected the request to single source Barakatel Investment, whose directors are Altaf Yusuf Patel, Maksud Umarji and Abdalla Eisaid, stating that there was no compelling justification.
But MoH later resubmitted the application to ZPPA and stated that the estimated cost of the procurement had been revised from US$ 8,100,000 to US$ 6,150,000.
“In July 2020, the Ministry of Health requested the Zambia Public Procurement Authority (ZPPA) for a no “objection” to procure Tricycle Ambulances for support towards the response to COVID-19 outbreak from Baraktel Investment Ltd. The Ministry stated that the ambulances were needed to respond to the surge in the number of COVID-19 cases compounded by an increase in the number of deaths of which an increased number were recorded as ‘Brought in Dead’ as a matter of urgency. The Ambulances were to be distributed and stationed at community health facilities around the country. In September 2020, the ZPPA rejected to grant the Ministry of Health a no objection to direct bid Barakatel Investments Limited to supply a total number of 1,500 Tricycle Ambulances at a total cost of US$ 8,100,000 in that there was no compelling justifications,” read the letter, which was signed off by Auditor General Dick Sichembe.
The report revealed that after ZPPA rejected the Covid emergency justification for single sourcing, the ministry of health changed the excuse and went back to claim that Barakatel Investment was the only company that had the tricycles available.
“In October 2020, the Ministry of Health resubmitted the application to ZPPA for a no objection to direct bid Barakatel Investment Ltd to supply and deliver a total of 1,500 Tricycle Ambulances. The Ministry stated that they had carried out a survey that showed that companies that previously stocked the Tricycle Ambulances were currently stocked out or had no adequate stocks and that Barakatel Investment Ltd had the ambulances ex-stock in Lusaka. The Ministry also stated that in view of the emergency response and in line with section 32 of the Public Procurement Act no 12 of 2008, it requested to proceed to direct bid Barakatel Investments Ltd for the supply of 1,500 Tricycle Ambulances as other methods of procurement could not be ideal as the Ministry continued to respond to the COVID-19 pandemic. The Ministry also stated that the estimated cost of the procurement had been revised from US$8,100,000 to US$6,150,000. No reasons were given by the Ministry of Health to account for the revision of estimated costs. In October 2020, ZPPA granted a no objection to the Ministry of Health’s request to directly bid Barakatel Investments Ltd for the supply of 1,500 Tricycle Ambulances considering the justification that was provided in its second request.”
Based on this justification, ZPPA granted the no objection, but asked the Ministry of Health to adhere to some other procurement procedures; including providing a report to the authority.
“However, ZPPA included certain conditions which the Ministry had to meet which included among others the following requirements; the Ministry was to conduct the procurement process in accordance with all other requirements of the Public Procurement Act No. 12 of 2008. The Ministry had to provide a detailed report to the ZPPA on the procurement proceedings,” it stated.
“In this regard, on 11th November 2020, the Ministry of Health engaged Barakatel Investments Ltd for the supply and delivery of a total number of 1,500 Tricycle Ambulances at a contract price of K180,000,000 within a delivery period of 2-8 weeks ex-stock basis (available to deliver basis) or two weeks after the contract date.”
The Auditor General also noted that the actual contract price translated to US$8,530,805.68, which was different from what ZPPA approved.
“A review correspondences revealed that in June 2020 Barakatel Investment donated a total number of 29 Tricycle Ambulances to the Ministry of Health to assist in health service provision. The donation was done prior to the commencement of the procurement of Tricycle Ambulances. The following observations were made; questionable contract price, a scrutiny of the negotiation report signed 4th November 2020 revealed that a market research showed that there was a limited number of suppliers and the supplier that responded quoted US$5,600/K118,160. However, there was no evidence to show that an enquiry was sent to other suppliers. The Report indicated that the supplier stated that the price they quoted was as low as they could go,” the letter read.
“The Report recommended that the cost be maintained at K120,000 (rate K21.10). The contract price of K180,000 translated in dollars at the rate of K21.10 used in the negotiating report translated to US$8,530,805.68 while in the second request to ZPPA Ministry of Health indicated that the cost was revised to US$ 6,150,000 equivalent to K129,765,000 at an exchange rate of US$1 to K21.10 resulting in excess of K50,235,000 when compared to what was submitted to ZPPA.”
The Auditor General also revealed that the Ministry of Health failed to submit a report on the procurement proceedings as ordered by ZPPA.
“There was no evidence that the Ministry of Health provided a detailed report on the procurement proceedings to the ZPPA prior to or after the contract to Barakatel. Failure to meet and comply with the conditions of the no objection granted by the ZPPA to MoH to use the correct bidding method of procurement. Questionable procurement process resulting in uneconomical procurements and loss of public funds,” the Auditor General stated.
The Auditor General further disclosed that Barakatel Investment Limited had an expired performance bond.
“Clause 8.1 of the contract states that “The Procurement entity shall, within 14 days of signing of the contract, provide a security for the performance which shall be an amount equal to ten percent of the contract price”. On 11th December 2020, Barakatel Investment Ltd provide a performance bond No. P-US-2020-70-7001-000044 which was covered by the Phoenix of Zambia Assurance Company (2009) Ltd in an amount of K1,8000,000 being 10 percent of the contract price. However, a scrutiny of the Performance bond revealed that it had expired on 5th March, 2021 and was not enforceable as of 11th May 2021. Failure to recover funds in an event of non-performance by the supplier resulting in loss of public funds,” read the letter.
And the Auditor General revealed that only 1,114 Tricycle Ambulances were delivered to Northern, Eastern and Luapula Provinces collectively but that they did not conform to contract specifications.
“A physical verification carried in April 2021 at Provincial Health offices in Northern, Luapula and Eastern provinces revealed that only 1,114 Tricycle Ambulances had been delivered by Barakatel between 14th December 2020 and 18th January 2021. Northern Province Provincial Health office, number of tricycle ambulances received 254, period of delivery between 25th December and 18th January 2021. Luapula Province Provincial Health office; number of tricycle ambulances received 256, period of delivery 14th December, 2020. Eastern Province Provincial Health office, number of tricycle ambulances received 604, period of delivery 14th December, 2020. As at 1st May 2021, there was no evidence that the Ministry of Health had issued an acceptance certificate after the receipt of the Tricycle Ambulances,” the letter read.
“A physical verification of the Tricycle Ambulances that were delivered revealed that they did not conform to the underlying contract specifications and the following were specifically observed; description; suspension front brakes, specifications in the contract; brake shoes with wheel drums and brake cables, specifications of Tricycle ambulances that were received; hydraulic, single disc, twin piston front brakes. Description; body-cargo box, specifications in the contract; width of the cargo box was 1.4m instead of the 2.5-3.5m and the height was 2.0m. Specifications Tricycle ambulances that were received; 1.6-1.8m.”
The Auditor General stated that there was fraud in the procurement process.
“In January 2021, Barakatel Investment Ltd issued the Ministry of Health with a tax invoice bill no. 001 dated 18th January 2021 amounting to K133,680,000 for the supply and delivery of 1,114 Tricycle Ambulances. There was no evidence that Barakatel Investments Ltd brought the non-conformance with specifications to the attention of the Ministry of Health despite submitting a tax invoice bill. Loss of public funds due to product substitution as a result of the supplier supplying non-conforming goods at a lower price and invoicing the MoH for conforming goods at a higher price,” read the letter.
“Fraud in the procurement process perpetrated by the supplier in connivance with officials from MoH. Failure to use the Tricycle Ambulances for the intended purpose. Although the 1,114 Tricycle Ambulances had been delivered by Barakatel Investment Ltd to Eastern, Northern and Luapula Provincial Health Offices, the Ambulances had not been distributed to the health facilities as of 11th May, 2021, four months after delivery. It was also observed that all the 1,114 Tricycle Ambulances that were delivered to Eastern, Northern and Luapula Provincial Health offices were being kept at Chipata Medical Stores Ltd hub (604), Northern Province Provincial Health Office and Mansa Medical Stores Ltd hub (256) were exposed to the sun and rain and other adverse conditions,” read the letter.
“As a result, the ropes attaching the ambulance tents to the cargo box base at Northern Province Provincial Health Office were rotting and weakening whilst some Tricycle Ambulances were overgrown with grass and other vegetation. Loss of public funds. Failure to achieve the objectives of the procurement of the Tricycle Ambulances to help in the fight against the COVID-19 pandemic.”