By Mwenya Mofya,
MINISTRY of Agriculture Permanent Secretary Green Mbozi has disclosed that the Ministry must have received verbal instruction from State House during former president Edgar Lungu’s tenure to award a K839 million fertiliser tender to Rockliffe Trading FZC.
And the Public Accounts Committee (PAC) has heard that the Ministry of Agriculture did not conduct due diligence before awarding the direct bid contract to the Dubai-based company.
The Public Accounts Committee recently heard that the Ministry of Agriculture in 2017 procured 80,000 metric tonnes of urea fertiliser at a total cost of K839,366,520 from Rockliffe Trading FZC, a Dubai-based company without proper establishment in Zambia.
The Committee also heard that the Ministry debt swapped K839,366,520 worth of urea fertilizer with K160 million debt owed to three fertilizer suppliers in 2017 without the approval of the Attorney General.
And speaking during PAC, Thursday, PNUP member of parliament Imanga Wamunyima said the Ministry needed to provide evidence of the unsolicited proposal from State House.
“I know you have inherited this mess. This is one of the worst scandals this country will ever have. Your office gave authority on procurement for a company that has no presence in Zambia. Where do you think your office derived this confidence to give a company a contract worth $84 million (sic) that has got no office in Zambia? Clearly ST (secretary to Treasury), I know you were not the substantiate office bearer, but where do you think the confidence was [derived]?
This contract had political interest from Ministers, from the president. The contract came from state house and the proposal is addressed to his Excellency,” he observed.
“The submission from the Ministry of Agriculture is saying that the proposal by Rockliffe trading FCZ to supply the Zambian government with fertiliser was submitted to the Ministry of Agriculture as an unsolicited proposal. Where is this submission from Rockliffe to the Ministry of Agriculture? All the submissions here show his Excellency’s proposal to supply. Tell us when this unsolicited proposal came to you.”
In response, Mbozi said the instruction to single source Rockliffe Trading FZC probably could have been a verbal instruction.
“The honourable member is asking for proof of the submission for the proposal. From our documentation that has been presented, our first indication was that we had received this proposal. This was just a mention of where we received an instruction on paper. So it probably could have been a verbal instruction,” he said.
Nominated member of parliament Likando Mufalali wondered why the Ministry of Agriculture did not subject Rockliffe Trading FZC to competition with other suppliers.
And in response, Ministry of Agriculture acting Head of Procurement Mweene Munkombwe admitted that there was no due diligence in the procurement process.
“On the procedure to identify a supplier, there is need to do due diligence. In this case, when the request was sent to procurement, the procurement unit through the office of the PS just wrote directly to ZPPA for clearance. So in this case, the due diligence was not done. From the Rockliffe bidding document, what was there was just giving the power of attorney to Mr Dipak who was giving instructions but there was no representative in Zambia,” she said.
But Chadiza PF member of parliament Jonathan Daka and his counterpart Victor Lumayi wondered why the contract awarded Rockliffe to supply fertiliser was done in a hurry.
In response, Zambia Public Procurement Authority (ZPPA) Contracts and Procurement Audit acting manager Bobby Chimuka justified that the procurement process actually begun six months before the contract was given on December 7, 2016.
Meanwhile, Rockliffe Trading FZC representative Henry Chiyoka said since the Dubai company did not have employees in Zambia, it was assumed that the sister company Sealand Commodities would facilitate the contract operations.
“From the initial stage, it was an assumption that the environment was okay because the two companies have the same owners. The shareholders of Sealand Commodities are the same shareholders of Rockliffe Trading. Sealand being a Zambian registered company and its shareholders belonging to Rockliffe in Dubai, an assumption kicked in that in terms of operations, all is well, Rockliffe does not have staff in Zambia,” he said.
Earlier, Ministry of Finance permanent secretary for budgeting Mukuli Chikuba said the ministry received a request from the Ministry of Agriculture to allow the debt swap to take place.
“Rockliffe Trading FZC offered to supply fertilizer and receive payment later on. So after analysing the request, then Secretary to the Treasury gave a go ahead for the supplier to be engaged given the circumstances,” he said.
Meanwhile, Secretary to the Treasury Felix Nkulukusa said political interference messes up public financial management.
“Ordinarily, in the normal way of doing business, a request does not go to state house but a request goes to implementing agents. If it needs clearance from state house, then we go to state house. However, we do not go to state house but we go to cabinet for that clearance.
There could have been an error in this case and we have seen this especially when there is a new government. Everyone rushes to state house and you will start receiving instructions. As office bearers we try by all means to advise that there is a normal way of doing business,” he said.
“I did present at the previous workshop how political interference messes up public financial management. There is a study from the world bank that shows that procurement takes up 10 to 15 percent of GDP when we have interference.
In 2015 when I was PS in the Ministry of Finance I received an officer who said the President has directed that we make a payment to a road contractor. It was against the law and I rejected it. I was warned that time for refusing and I was fired. Therefore the National Assembly has the responsibility to cover that gap in the law.”
Attorney General Mulilo Kabesha on the other hand said Ministries were failing to employ contract managers which led to wasteful expenditure.
“The MPs seem to know a lot more than the staff here. Honourable Mufalali is asking about the instructions from state house and the staff seems to not have the answers or they might be hiding. However, the user Ministry must have done due diligence about the people who had been given the contract.
The Attorney General focuses on the terms and conditions of the contract if they are in line with our laws. Ministries are failing to appoint contract managers. Procurement laws allow contract management to be done. There is no contract manager to advise them that they are defaulting and interest will be called on,” he said.
In closing, PAC chairman Warren Mwambazi said the committee would make adequate recommendations based on the evidence received.