Tshireletso Motlogelwa
28 July 2006
The award of an P80 million contract for the construction of the Maitengwe Water Supply Project has raised eyebrows and attracted the attention of the Directorate on Corruption and Economic Crimes (DCEC).
Director of DCEC, Tymon Katholo told Mmegi that they are currently conducting preliminary investigations on the project and that might lead to a full-scale probe. "We are treating this like any other report. We are currently doing our preliminary investigations, conducting interviews and exploring other avenues of investigation. Once we have enough to convince us that the allegations are worth a full investigation, we will proceed to do so," he said.
Mmegi has learnt that there are allegations of irregularities against the supervising engineering firm, M3 Consulting, the contractor Unik and the principal water engineer in the Department of Water Affairs Ephraim Kelaeng.
The tender for the project was initially recommended for award to ASA Enterprises before being re-directed to Unik. The invitation for contractors to tender was published in the Government Gazette mid-2004. The tender was awarded later the same year. Local engineering consultancy M3 was tasked with the supervision of the project.
However questions regarding the tendering procedures have raised suspicions about favouritism and corruption. There is an allegation that when M3 Consulting realised that ASA was one of the top two companies best placed to get the job, it approached the contractor to offer a deal at the time of writing the report of recommendations for the Department of Local Government and Development, which is the client.
According to the consultant report ASA Enterprises was recommended for the project. But under curious circumstances the project was ultimately awarded to Unik, raising a furore in the industry and attracting the attention of DCEC. It has emerged that Kalaeng nullified a generally positive reference letter written for ASA by Water Affairs Department senior engineer Joseph Mark Nyandiko. It is normal for a company to seek references from past clients when tendering for another project. ASA had previously worked on the Serowe Emergency Water Supply for the Water Affairs Department and had asked for a reference based on their work there that was supervised by Nyandiko. It is not clear why Kelaeng, Nyandiko's superior, wrote a reference nullifying the one written by his junior, particularly because he was not directly responsible for the project in question. Conspiracy theories have been thrown about to explain this turn of events. One thing is clear though. Kelaeng's reference se ems to have ultimately won the day since ASA did not get the job. When asked about his involvement in this matter, Kelaeng said he could not comment because DCEC is currently investigating it. However he promised that everything has been checked internally and the issue has been put to rest.
While Kelaeng maintains the issue has been put to rest, inconsistencies in his report and the one given by his junior has sent tongues wagging. The general thrust of Nyandiko's reference coincides with another one from Geoflux, which maintains that ASA had some problems in the Serowe project but ultimately did well. Kelaeng's negative reference shows some major flaws. He explains that ASA had been charged "liquidated damages" in the previous project and so it could not be recommended for the Maitengwe job.
Liquidated damages in engineering terms means that a company had shown an extreme inability to handle its finances causing major delays and costs to the client. Records show that the charge against ASA by Kalaeng was ultimately dropped by the consultant of the project, Geoflux, in conjunction with the client. This charge was nullified after ASA showed good cause for the delays in the project. On the July 26 2004, Geoflux wrote to Nyandiko, explaining the nullification of the original charge. The date on Kelaeng's reference does not seem to match the events as they apparently unfolded step by step. Although his letter is dated September 30 2004, indicating that it was written about nine days after Nyandiko's, the recommendation report by M3, dated much later on October 2004, does not reflect the new input from the reference.
This may indicate, critics argue, that Kelaeng's reference was written when the report was already with Public Procurement and Asset Disposal Board (PPADB), or at a stage where it could not be accessed by the consultant to add the correction which would take the latest reference into consideration. In that case, goes the allegation, it is likely that the reference was written around November or December but was backdated so that it should be accepted by the PPADB's.
However, even if the reference from Kelaeng was correct and taken to be valid, the recommendation report submitted by M3 to the client and forwarded to PPADB indicates that Unik was not even second on the list of the most suited firm to deliver the project. An independent engineer maintains that, from the report, the most suited company based on experience and expertise would be another contractor, Zhong Gan. In the report, ASA is rated first, followed by Zhong Gan and Unik. "After rejecting the first choice, if indeed that happened, why didn't the consultant choose the next," an expert asked.
In M3's report, Unik appears to be the least experienced of the three companies. It had never done work of that nature or technical magnitude. The experience it possesses is in construction rather than water reticulation and, "the curriculum vitae of the key personnel indicate that they have no experience in water but have experience in building works," M3 wrote originally.
"From the above information, Zhong Gan portrays the technical capability to execute the work based on the availability of qualified and experienced key personnel, available plant required for the works, past experience of the company and the available financial backup, including the credit facilities from suppliers of materials," the report says. Further, Zhong Gan had quoted less than Unik. M3 refused to comment on why the consultant ignored these factors and instead recommended Unik. M3 cited contractual obligation to client confidentiality.
The company referred Mmegi's enquiries to the Department of Local Government and Development. ASA, Geoflux and Unik also declined to comment because of client-contractor confidentiality and Unik referred all enquiries to the Department of Local Government and Development. Questioned on how Unik came to win the tender, PPADB said the criteria include the contractor's past performance. "It should be noted that government ministries do audit risk assessment on the performance of contractors and recommend to the Board on the basis of past performance," said Mosimolodi Lefhoko, PPADB's acting chief executive. The Maitengwe water supply project is currently in the final stages of construction. It is part of the North East Region Villages Water Transfer Project (NERVWTP), which is part of the National Development Plan Nine's national water master plan.
It is intended to provide a long-term solution to water problems in the North East District and Tutume sub-district. The P375 million NDP project includes the construction of dams, drilling of boreholes, and an elaborate pipe network to connect about 50 villages in the region that has a population of about 100 000.
According to the brief for the Maitengwe section, also known as the Western Section of the NERVWTP, the project includes laying transmission pipelines, equipping an existing pump station and construction of a new pump station and reservoir.
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