An internal forensic audit on the operations of the Zimbabwe National Road Administration (Zinara) has exposed massive financial abuse, including the payment of US$71 million and R31 million (US$430 000) to contractors who were cherry-picked without going to tender, among many other irregularities.
The forensic audit also revealed that Zinara has US$5,7 million which is locked in collapsed banks.
Documents show that Zinara paid US$71 million and R31 million between 2011 and 2016 to 17 contractors for special projects, although the companies were handpicked without either going to tender or conducting due diligence.
The companies that were contracted include Badon, which was paid US$8 million as well as R13 500 000 (US$189 000), Bitumen World (US$10 649 369), Drawcard (US$1 772 010), Earthset (US$3 347 068), Forit (US$7 677 844), Haingate (US$10 760 490) and Fremus (US$8 761 592).
Other companies which also benefitted include Fossil, Jepnik, Madz, Henan, Skindat, Tencraft, Transstar, Notify, Bermipools and Twalumba.
The audit reveals that most of the contracts failed to comply with the Road Act, while tender procedures were flouted during the awarding of contracts under a special projects programme.
"No tendering procedures were done in awarding most of the contracts and the contracting process was led by Zinara and letters would be sent to the Road Authority with an instruction on specific contractors to consider for the execution of special projects," reads the summary finding of the audit.
"Formal tendering procedures were not followed in respect of contracts worth more than US$1 million resulting in contravention of the requirements of the State Procurement Board (SPB)."
The audit also reveals that "some contracts on major projects do not specify the names of the roads to be rehabilitated and that the contracts did not comply with the Zimbabwe General Conditions of Contracts (ZGCC) as they did not specify, among others, performance security and timelines for commencement and completion of road works."
The audit unearthed an unaccounted for "maintenance reserve account held at NMB Bank and has a deposit of US$23 569 620."
"The maintenance reserve account is funded by income from the following ring-fenced revenue streams: Transit fees, fuel levy, overload fees, abnormal load fees and toll fees from nine toll plaza along Plumtree-Mutare Highway," reads the audit report.
"The loan agreement with the Development Bank of Southern Africa (DBSA) is silent as regards to the purpose and use of the funds held in the maintenance reserve account.
"In our discussion with Zinara's director of operations Precious Murove, it was indicated that the funds in the maintenance reserve account would be used for the rehabilitation of the Plumtree to Mutare highway at the expiration of the 10-year loan tenure.
"However, within the DBSA loan amount of US$206,6 million is embedded the value of investment in the project."
The forensic audit also unearthed Zinara's advisory agent which both DBSA and the contractor, Group Five, had no knowledge of.
"From our enquiries with DBSA and Group Five International, DBSA represented that they had no knowledge regarding the involvement of other parties in the facilitation of the loan. Asked about Santanah/Sela Holding Limited and Golden Road, DBSA said 'we wouldn't know from the DBSA side the role that Santanah and Golden Road played in the deal as there is no interaction with them."
Group Five also denied any knowledge of the two parties besides the fact that they were introduced by Zinara in 2010 as their advisory agent.
According to the audit report, Santanah/Sela Holdings and Golden Road were paid US$24 million in respect of facilitation fees by Zinara although DBSA and Group Five had no knowledge of their role in the deal.
The audit, sources said, led to the dismissal of the Zinara board chairperson Albert Mugabe amid reports of gross financial abuse bordering on corruption, although the issue has caused ructions in government.
Sources this week said despite the fact that his term of office had come to an end, the audit has exposed the former board chair's activities in the awarding of contracts.
"Most of the road works were not completed and in certain instances, contractors would be appointed without knowledge of the beneficiary road authority," an official said.
The audit states that "most of the payments would be done in the absence of payment certificates (IPCs) as evidence of work done. Payments would be done in full before completion of road works and at times overpayments were done for some contractors." -- www.zimferrets.com
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