SADC lose millions in unauthorised contracts
The delay by SADC secretariat to finalise a financial manual, which includes processes and responsibilities regarding dealings with bank guarantees at all stages, has cost the organisation dearly.
The latest from the headquarters of the regional economic bloc in Gaborone has it that the organisation lost over P487million being un unfulfilled portion of the advance payment paid through an Italian Bank, Fidiroma for the procurement of bio-security laboratory equipment to upgrade the existing facilities in Tanzania which is financed under the African Development Bank (AfDB).
The said equipment which is still to be delivered is for the Trans- Boundary Animal Diseases Project. Insiders and observers say, this is just but one of the many examples on how SADC has lost huge sums as some of the senior officers allegedly often commit SADC in contracts without authority exploiting the lack of guiding manuals.
The amount in question is among the many shortfalls exposed by the forensic audit conducted by Ernst & Young following complaints of alleged rampant corruption at SADC. The Midweek Sun has reliably learnt that SADC secretariat has gone all out to recover its money, but a stumbling block could be the fact that the Italian bank used for the transaction has been sold.
SADC has further learnt that the Project Coordinator of the Trans-Boundary Animal Diseases Project (name witheld) is the one that had authorised the bank guarantee, contrary to the rules and procedures and not the Executive Secretary. In the past SADC did not have financial manual.
Amongst others, the proposed manual includes processes and responsibilities covered, finalisation of standard bidding documents for services, goods and works requiring advance payment in the form of a financial bank guarantee. The manual which has now been put in place states that a financial bank guarantee shall only be issued, directly and or via a swift instruction, by a bank or financial institution registered under the laws of the host country being Botswana for the Secretariat and legally authorised to issue such financial instruments.
Further, that there must be verification, authentication, custody and security of financial/bank guarantee; and conditions and authority for the release of financial bank guarantee.
Documents passed to this publication which also formed part of the August SADC council of ministers agenda state that Council noted that the Secretariat continued to follow-up on a refund of US$487,008.72, being an unfulfilled portion of the advance payment made under the grant. The Council also noted that the efforts of the Secretariat to recover the advance payment guarantee.
Unresolved issues
The Council noted that although the issue remains unresolved the Secretariat had written a letter to central bank of Italy seeking intervention of state structures on liquidation of the bank guarantee on 31 March 2015.
The Secretariat has also written to the Italian public prosecution through the Italian Embassy in Zambia, seeking intervention of state structures on liquidation of the bank guarantee on 8 April-2015. The Secretariat has also written a final demand legal letter to Fidiroma that is the Bank, which issued the bank guarantee on 25 May 2015.
There is also a planned visit to the Embassy of Italy in Lusaka, Zambia to obtain facilitation in dealing with Central Bank of Italy and Italy Public Prosecutions. This is yet to be done.
The advance payment
The Council further noted that the internal investigation has been carried out and looked into all aspects of the supply contract relating to bank guarantee advance payment of USD 487,008.72, and it has been established that SADC signed a contract with AGMIN worth US$1,999,132.14 in 2012 for the procurement of bio-security laboratory equipment to upgrade the existing facilities.
This procurement followed AfDB procurement rules for international bidding which stipulates a payment of 50 percent of the value of goods at the signature of the procurement contract.
To this effect, a total of USD 999,566.07 was paid to AGMIN in June 2012 for which a bank guarantee from Fidiroma Bank in Italy was obtained in line with ADB rules.
By June 2014 equipment worth USD 512, 557.57 had been supplied and installed while equipment worth US$487, 008.72 has been delivered and yet to be installed. The Secretariat is following up with the supplier to ensure that the equipment is installed.
