ODC in exorbitant tender scandal
Okavango Diamond Company (ODC) is under scrutiny following allegations of corruption and financial mismanagement surrounding a recent accounting and payroll system tender.
Awarded at a reported excessive price, the tender for ERP system design and implementation— reference ITT/ODC/001/2023-24—is sparking questions over the necessity, cost, and transparency of this procurement.
Stakeholders, industry insiders, and financial analysts alike are calling on ODC to justify this multimillion-pula investment amid a downturn in the diamond market, raising alarms over potential corruption and malpractice in the awarding process.
According to a notice by ODC Managing Director Mmetla Masire, the contract Price of Award is P57, 320, 416. 54.
At the heart of the controversy is the tender's substantial cost—for a system intended to streamline operations for a company with fewer than 50 employees. This cost translates to more than P1 million per employee, a figure critics argue is wildly disproportionate for an ERP system.
Financial experts question the logic of such spending, given recent declines in global diamond sales, which directly impact ODC’s revenue.
'It is perplexing how ODC can justify this ostentatious expenditure on an ERP system when the diamond market is struggling,' an industry analyst familiar with the tendering process, commented.
Additionally, ODC's procurement plan for the 2024-2025 financial year did not appear to allocate funds for an ERP system of this magnitude.
Stakeholders are demanding clarity on which financial year this procurement was budgeted for and if ODC’s initial budget for the ERP system was exceeded by the awarded tender amount.
The absence of a clear explanation regarding these budgetary deviations fuels suspicion that the company may have circumvented normal budgeting practices to accommodate this tender.
Critics allege that the awarded amount significantly overshoots what would be considered reasonable for similar ERP systems on an international scale. Several industry observers argue that for an organisation of ODC’s scale, a more cost-effective ERP solution would have been both achievable and more aligned with prudent financial stewardship.
'There are ERP systems tailored for smaller operations that come at a fraction of the cost, clearly lots of cuts are being given to make up the over pricing,' noted one IT consultant familiar with Botswana's corporate landscape who did not want to be named.
The allegations point to potential corruption, with accusations that ODC may have disregarded price reasonableness checks or comparative cost analyses. Industry watchdogs are urging ODC to disclose whether an independent price-checking process was conducted prior to the tender award and, if so, how it justified the approved cost.
In addition to the concerns over cost, serious questions have been raised about the awarded company as allegations emerged that it could be fronting for a South African company.
Such 'fronting' arrangements, whereby foreign firms utilise local entities to meet citizen-ownership requirements, are now classified as a criminal offense under Botswana’s anti-corruption laws.
If true, this would mean ODC knowingly permitted a foreign company to engage in a prohibited practice. Critics assert that ODC’s lack of thorough vetting could signify complicity.
ODC has also been questioned on the measures in place to prevent undue influence and manipulation in its tendering process. The allegations surrounding ODC’s ERP tender have raised questions that demand immediate and transparent answers from the company.
Observers urge ODC to publicly release details of its decision-making processes, especially its vetting procedures, price-checking methods, and justifications for choosing the contractor.
ODC Public Relations and Communications Specialist Dennis Tlaang says the procurement process for Tender ITT/ODC/001/2023-24 was conducted in adherence to transparent and competitive standards, with checks and balances to ensure compliance with Botswana’s laws and regulations.
“As with all our procurement activities, this tender was aligned with ODC’s approved budgets and operational plans. We can confirm that the tender in question followed due process, and to date, ODC has not received any complaints regarding its outcome,” Tlaang said.