The confidential audit report by City of Harare audit manager Archibald Nyamurova, also revealed that prices for the equipment were heavily inflated, while the city’s procurement and compliance officer and buyer Abel Dzuke allegedly took delivery of a brand new Isuzu KB300 truck as a kickback for facilitating the shady deal.
Suspended Harare Town Clerk Hosiah Chisango ordered the audit after learning of the fishy deal in which the shelf company, Eqstra Hardware and Electrical, was cherry-picked to supply the Tyvek coveralls under order number 0105212.
The audit recommended that the matter be referred to the Zimbabwe Anti-Corruption Commission (Zacc) for further investigation.
The initial purchase order (0105212) for Eqstra Hardware and Electrical to supply Council with 15 000 Tyvek suits at a price of ZW$2 997 (US$37) per unit at a total value of ZW$44 650 000 was way cheaper, despite having more units.
The shelf company did not appear on the shortlist of qualified bidders published weekly by the Ministry of Health and Child Care and thus Council officials flouted Circular 1 of 2020, the 25-page internal audit report seen this week by the Zimbabwe Independent reveals.
Council was prejudiced of ZW$19 720 000 (or ZW$5 972 per unit) because of the overpricing of the Tyvek suits by Eqstra Hardware and Electrical. The auditors noted that suppliers recommended by the Ministry of Health and Child Care had significantly lower prices. Surprisingly, Council officials who entered a contract with the hardware company on May 8, 2020 also acceded to an upward price variation by the company from ZW$2 997 to ZW$5 521 per unit on June 18 despite the fact that the exchange rate remained constant at rate of US$1 to ZW$25.
Auditors further discovered that the council procurement department abused the request for quotations method to accept a request to vary and overprice the products.
As the report’s findings show, Council only received 10 000 kits, instead of the 15 000 it had procured from Eqstra Hardware and Electrical, and in the process of the controversial transaction lost US$1 030 400.
In simple terms, Eqstra Hardware and Electricals, as revealed by the audit report, lacked the financial wherewithal and capacity to meet the City’s requirements.
“Council was deprived of its right to receive ZW$25 760 000 worth of stock as result of the 5 000 units which were not delivered to Council. Eqstra Hardware and Electrical was awarded an order by Council to supply 15 000 suits, however, the company only supplied Council with 10 000 Tyvek suits at a price of $5 152 per unit. In US dollar terms, a benefit of $ 1 030 400 was forgone as a result of the non-delivery.
“Council engaged Eqstra Hardware and Electrical, who had no capacity to deliver the 15 000 Tyvek suits on the initial contract. After Council authorised a reduction of the 15 000 units to 10 000 units, Eqstra Hardware and Electrical took four months to deliver the 10 000-unit consignment. However, the company had indicated on its first bid that the 15 000 units were immediately available.”
The report further says council was prejudiced of US$862 000 because of the authorised but unjustified price variation.
The Zimbabwe Independent now understands that already, heads are rolling at Town House after authorities ordered an investigation into the deal and suspended the contract with the hardware company, pending finalisation of inquiries.
However, the city Treasurer’s Department still suspiciously hurriedly made several payments, including ZW$9 377 550 (US$114 250), to Eqstra Hardware and Electrical during the period.
Auditors also questioned why the city Treasurer’s Department authorised payments to the company in the absence of necessary supporting documentation.
Other bidders with lower prices had their costs inflated through misrepresentation by the procurement officials so that they would not land the contract, the audit also reveals.
“Allegations are that Eqstra Hardware and Electrical gave the compliance officer an Isuzu truck as a bribe to facilitate the awarding of the contract to Eqstra Hardware and Electrical. Allegations are that Eqstra Hardware and Electrical bribed Council officials to be awarded the contract in question,” the audit report further reads.
Auditors further noted during their investigation that Albert Ndabambe, owner of Eqstra Hardware, is not new to controversy at Town House. His other company, Furbank Hardware and Electrical, was blacklisted after it won a bid to supply bin liners and refuse bags at exorbitant prices through unfair competition tendencies, according to a Procurement and Creditors Payments Audit Report dated October 19, 2017. Council then suffered a prejudice of US$37 084 as a result of overpricing, according to the report.
The audit recommends that the procurement and compliance officer and buyer, Dzuke, should face disciplinary procedures for flouting of Circular 1 of 2020 as he lacked due diligence in the course of his work, adding “personal interest on part of the compliance officer cannot be ruled out and there could have been collusion to prejudice council through unjustified price variation”.
The auditors also recommended that measures should be taken against officials in the Finance department.
“The acting finance director, the principal accountant and other officials should face disciplinary hearings for authorising a payment of ZW$9 377 550, while the company was under investigation,” recommends the report.
“Dr Dzuke was given an Isuzu KB AFE 5649 as a bribe to award Eqstra Hardware and Electrical a contract of ZW$44 655 000. Audit established that the allegations are true as he is in possession of the car in question,” the report further reads.
Dzuke could not be reached for comment this week, but according to the audit report, he denied taking any bribes.
“In an interview with auditors, Dr Dzuke dismissed the allegations. He said that he sold his Mercedes Benz (AFG 1737) in a swap and top up transaction of US$7 000 in exchange for the Isuzu KB300 AFE 5649 on the 3rd of June 2020. The parties involved in the transaction were one D Chazirani 83112011R83 and Dr Dzuke 63-849626R18.
“Evidence availed to audit appears to be not tallying, as Dr Dzuke availed sale agreements in which he purchased both the Discovery Channel ADQ2832 and Isuzu KB300 AFE 5649 in separate occasions upon exchanging his Mercedes Benz AEG 1737 and topping up US$7 000. He has not availed the registration book for the Isuzu KB AFE 5649 in question. However, Central Vehicle Registration records availed to audit showed that the car is in the name of one Mubayiwa. He admitted that the transaction took place when issues were being raised on the awarding of the contract to Eqstra Hardware and Electrical on the 8th of May 2020,” the audit report reads.
The report also recommended that Council should engage the Procurement Regulatory Authority of Zimbabwe to debar Eqstra Hardware and Electrical in future procurement proceedings with council for transparency.
Efforts to get comments from Ndabambe were fruitless.
