26 January 2018

Zimbabwe: U.S.$200 Million Intratek Scandal Deepens

Photo: Sir Wicknell/Facebook
Controversial businessman Wicknell Chivayo (file photo).

The chairperson of the Zimbabwe Power Company (ZPC), Engineer Stanley Kazhanje, has been caught in a conflict of interest storm after he was accused of preparing tender documents for Wicknell Chivayo's Intratek, which was awarded the US$200 million Gwanda solar project.

Allegations are that Kazhanje, through his company Terminal Engineers (Pvt) Ltd, prepared tender documents for Intratek, but did not declare his interest to the board during several meetings that deliberated on the project. The latest scandal comes at a time ZPC officials are struggling to justify why the controversial tycoon and convicted fraudster Chivayo was unprocedurally paid US$5 million without a bank guarantee. Intratek was paid without doing any tangible work.

Kazhanje, through a letter dated December 12, 2017, suspended ZPC managing director Noah Gwariro for three months, to pave way for investigations into how the company was paid without a guarantee. Gwariro had informed the board the payment was made under undue pressure from former Energy minister Samuel Undenge, who has since been arrested by the Zimbabwe Anti-Corruption Commission over another matter involving alleged abuse of office.

Gwariro, through his lawyers Hogwe, Dzimirai and Partners, has however written to Kazhanje challenging his suspension and involvement in the investigation, citing the alleged conflict of interest.

"We address you at the instance of our above-mentioned client and refer to your letter dated 12 December 2017. From the instructions we have, it is apparent that you have a massive conflict of interest on account of the following factors," the lawyers wrote.

"Prior to your appointment a(s) ZPC Board chairman, you were contracted to Intratek through your company called Terminal Engineers (Pvt) Ltd. You even prepared the tender documents for the Gwanda Project on behalf of Intratek.

"Notwithstanding the foregoing, you never declared your conflict of interest to the Board at several meetings that deliberated on the Gwanda project."

The lawyers said Gwariro's suspension was therefore a nullity.

"In the premises, it would be wholly inappropriate for you to be involved with 'investigations' into allegations of irregularities in the management of the 100MW Gwanda Solar Power Station Project. For that reason, we have advised our client that your purported suspension of him is a nullity and he will accordingly be reporting for duty," the lawyers stated.

Kazhanje could not be reached for comment as he kept cutting off calls on his mobile phone. He did not respond to a WhatsApp message sent to his phone, although he read it. A check with the company registry revealed that he was indeed a director of Terminal Engineers alongside Florence Kazhanje, Tanaka Nyasha Kazhanje, Nyaradzo Tafadzwa Tavengwa and Ngoni Kudenga. The company is housed at 12 Snipe Avenue in Mount Pleasant. A tax invoice seen by the Zimbabwe Independent has Kazhanje's Econet mobile number as one of the company's contact details.

Sources at ZPC say Kazhanje participated in five contract negotiation meetings at Pandhari Lodge in Harare, according to registers of attendance. Gwariro was suspended following a board meeting held on December 8, last year.

In his suspension letter, Kazhanje highlighted that the board was particularly concerned about the payments made to Intratrek.

"From the reports and the information provided by you in the said Board meeting two issues stood out being: a) the payments were made to the contractor of the project without the requisite advance payment guarantee as provided or in the contract itself; b) the said payments were made at the back of certified payments certificates from contractor with full knowledge that no work to support the certificates had been done on the project and:

"The above was not in terms of the contract entered into with the contractor and the variation was without the authority of the State Procurement Board or the Zimbabwe Power Company Board of directors resulting in the payment of sums in excess of US$ 4 890 963,13," Kazhanje wrote.

Although Gwariro cited pressure from Undenge, Kazhanje argued that "the pressure was never communicated to the board or the group chief executive officer".

The corruption-ridden Zesa is entangled in several tender scandals, including the Gwanda project.

Chivayo was in 2015 awarded the US$113 million tender to refurbish Munyati Power Station even though neither his company nor his Indian partners, Jaguar Overseas Ltd (JOL), had the capacity and resources to undertake the power development scheme. The Independent has reported extensively on the Dema Emergency Power Plant in which government was prejudiced through inflated cost structures. The cost of the Dema project escalated alarmingly, doubling from US$249 million to US$498 million over three years, after government directed the controversial project's managers to double its output to 200MW at US$166 million per year.

Zesa deals were as of 2016 inflated by more than US$500 million, raising suspicions Zesa executives and senior government officials, including ministers, are benefitting from the shady contracts.

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