GOVERNMENT law enforcement agencies are investigating an incident of alleged fraud of K150 billion relating to the rehabilitation of the Mbala-Nakonde Road in a contract sealed last year with a Chinese firm.

Northern Province Permanent Secretary, Emmanuel Mwamba said yesterday that China CAMC Engineering was allegedly paid K150 billion in August last year as advance payment to mobilise equipment and buy materials.

The money was also meant for expenses relating to the execution of the road works.

Anti-Corruption Commission (ACC) spokesperson Timothy Moono confirmed separately that investigations in the matter were underway.

Mr Moono said the ACC received a complaint from Mr Mwamba and forwarded it to the Government Joint Investigations Team.

Mr Mwamba stated said the contractor had presented an Equipment Sales Agreement to Government dated August 26, 2011 that purported that the contractor had bought 16 tippers, front-end loaders, bulldozers, excavators and compactors.

The permanent secretary said the equipment listed on the Equipment Sales Agreement has not been brought to the site to date.

"The contractor has only mobilised by bringing seven pieces of equipment. This raises concerns about how the advance payment could have been utilised," he said.

Mr Mwamba explained that China CAMC Engineering committed to obtain a loan of US$180 million contract sum for the road if the Government released 15 per cent of the amount.

He expressed concern that it has been one year after the contractor was paid but the loan from China has never been obtained.

Mr Mwamba said the advance payment made to the contractor was to enable him mobilise plant and equipment, purchase material and meet expected expenses related to the execution of the road works.

"The Ministry of Finance paid the contractor advance payment of $27 million (K150 billion) in August 2011, which payment should only have been done upon receipt of this loan from China and advance payment guarantee from Exim Bank of China.

"The Anti-Corruption Commission is investigating a case of fraud and theft of K150 billion relating to the Mbala-Nakonde Road," he said.

Mr Mwamba said the 257 kilometre Mbala-Nakonde Road was critical as it was a Southern African Development Community initiative and was expected to offer effective trade links for Malawi and Tanzania to the Port of Mpulungu in the Northern Zambia.

The suspected fraud, he said, was a matter of serious national concern because the road was also part of the Nacala Development and Mtwara Corridors.