18 May 2018

Uganda: Auditor General Accuses KCCA of Fraud in Roadworks

Kampala — Although Kampala Capital City Authority (KCCA) is striving to revamp the city road network, a new Auditor General's report has unearthed anomalies that cited financial loss.

The report for the financial year ending 2017, indicates double payments in the procurement of some road equipment, defective works on some roads and incurring avoidable expenditure.

According to the report, a copy of which Daily Monitor has seen, Mr John Muwanga also questioned KCCA's unjustifiable lump sum payments, lack of accurate engineers' estimates and accumulated interest on delayed contract payments.

KCCA is also blamed on negligent loss of key assets in some contracts and undocumented changes in priced activity schedule and designs where more than Shs600m was lost.

"The prices are built up from quantities that cannot be practically executed on some of the roads... payments were made on percentage completion of the lump sum items without any breakdowns," reads the report in part.

A total of Shs4.4b was paid in lump sum prices "arising out of impractical/unjustifiable quantities," according to the report.

It was established that payment of Shs101m had been remitted to a construction company to prepare a final survey report yet "these activities are part of a contractor's routine works, and more so for a design and build contract."

"This payment is, therefore, considered a double payment, considering the fact that the contractor was paid design fees, and the consultant paid design review fees. There was no record of the authorisation to use the provisional sum availed to audit to justify the double payment," Mr Muwanga said.

Audit

Mr Muwanga undertook the audit to ascertain if the constructed roads were done in accordance with sound engineering principles.

A sample of five roads and drainage contracts valued at Shs206b were examined. These include Bwaise Junction, designs at Namirembe Road as well as other selected roads and drainage systems in the Central, Kawempe, Rubaga and Makindye Divisions.

According to the findings, lump sum payments occurred on design contracts for the Kibuye-Police-Hollywood in Makindye Division and Jakaana Road in Kawempe Division. According to AG, assets worth Shs3.7b, including surveying equipment and laboratory equipment for the engineer and fully furnished and equipped offices for the engineer worth Shs3.6b, were also left behind by China Railways Seventh Group, the contractors.

"KCCA stated in the contract that these items will revert to the contractor after the project. This is inconsistent with the contract provisions. These items do not fall under items listed as contractor's equipment and are categorically excluded," Mr Muwanga noted.

When contacted, Mr Andrew Kitaka, the KCCA director of engineering and technical services, explained that the survey fees paid to the contractor were for only activities carried out to produce the design.

"The survey activities during construction of the works include establishment of horizontal and vertical control measured as heights above sea level. The surveys conducted as part of the design are different from the surveys that are performed during construction," Mr Kitaka said.

Delayed pay

For most of the contracts, payments were delayed and KCCA incurred huge interest costs due to challenges with cash flow on the part of the employer occasioned by a higher than expected work rate by the contractors which is not matched with the cash flow.

But Mr Kitaka said by the audit time, the construction works that AG considered defective, were still ongoing and upon completion, such defects had been corrected.

Responding to interest on delayed payments and delayed completion of contracts, Mr Kitaka explained that this is caused by the Ministry of Finance which sometimes remits funds later than scheduled.

"At KCCA, we value timely deliveries, but we get challenged by late remittances from Finance [Ministry] which lead to interests and delays in contract completion," Mr Kitaka said.

The head of KCCA engineering and physical planning committee, Mr Kennedy Okello, said although there were mistakes made in the road works, a number of steps are being taken to ensure proper use of funds and quality work.

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