Con­trac­tors swin­dle govt of M14m

Lesotho Times - - Front Page - Lekhetho Nt­sukun­yane

An in­ves­ti­ga­tion by south Africa’s nexus Foren­sic ser­vices Pro­pri­etary Limited has re­vealed how six lo­cal con­struc­tion com­pa­nies al­legedly fleeced gov­ern­ment of over M14 mil­lion be­tween 2010 and 2014.

Ac­cord­ing to the au­dit, tren­con, Build­ing World Belela Joint ven­ture (TBWB Jv), Aure­con-le­sotho, Car­rick CC, Moosa Group of Com­pa­nies, in­de­pen­dent Plumb­ing sup­pli­ers and KPM So­lar En­ergy al­legedly “mis­rep­re­sented” con­trac­tual in­for­ma­tion re­lat­ing to the con­struc­tion of health­care in­fra­struc­ture re­sult­ing in gov­ern­ment los­ing M14 110 508. 92.

the con­struc­tion project was cour­tesy of the Mil­len­nium Chal­lenge Ac­count (MCA)-LE­SOtho’s $362.5 mil­lion (about M4 bil­lion) fund­ing. The MCA is a prod­uct of the Mil­len­nium Chal­lenge Cor­po­ra­tion ( MCC)—A bi­lat­eral Amer­i­can for­eign aid agency es­tab­lished in 2004.

Ac­cord­ing to the nexus au­dit re­port is­sued on 1 Septem­ber 2014 and ad­dressed to Le­sotho Mil­len­nium Devel­op­ment Agency (LMDA) Chief Ex­ec­u­tive Of­fi­cer Sophia Mo­hapi, civil and crim­i­nal law­suits are rec­om­mended against the six com­pa­nies to re­cover the money.

LMDA re­placed Mca-le­sotho af­ter the lat­ter’s com­pact ended in Septem­ber 2013.

Ms Mo­hapi yes­ter­day con­firmed re­ceiv­ing nexus’ damn­ing re­port and fur­ther told the Le­sotho Times the is­sue had since been re­ferred to the po­lice and Di­rec­torate on Cor­rup­tion and Eco­nomic Of­fences (DCEO) for fur­ther ac­tion, while there was no im­me­di­ate com­ment from the com­pa­nies fin­gered in the al­leged scam.

Ms Mo­hapi said: “The LMDA re­ceived the fi­nal foren­sic in­ves­ti­ga­tion re­port on 1 Septem­ber 2014, and we have since noted it con­tains al­le­ga­tions of crim­i­nal ac­tiv­ity lev­elled against cer­tain com­pa­nies.

“We have copied the re­port to the po­lice fraud depart­ment and DCEO (Di­rec­torate on Cor­rup­tion and eco­nomic of­fences) for fur­ther ac­tion. We also sub­mit­ted a copy of the re­port to the LMDA Board of Di­rec­tors. That was all we could do as an or­gan­i­sa­tion be­cause we are not a law-en­force­ment agency.”

Ac­cord­ing to the re­port, Mca-le­sotho awarded TBWB Jv a con­tract to de­sign, ren­o­vate and con­struct 102 health-cen­tres through­out the coun­try on 30 septem­ber 2010.

Ma­te­rial was to be sourced from in­de­pen­dent sup­pli­ers, and kept at “mu­tu­ally agreed” de­pots and then dis­trib­uted as and when re­quired, the au­dit noted.

“Pay­ment by Mca-le­sotho to TBWB JV was to be based upon the sub­mis­sion of an In­terim Pay­ment Cer­tifi­cate cer­ti­fied by the En­gi­neer (Aure­con).

“How­ever, on 31 May 2013, the High Court pro­vi­sion­ally se­ques­trated TBWB Jv as a re­sult of an ap­pli­ca­tion brought by Anju Civils (Pty) Ltd,” the au­dit notes.

Fol­low­ing the pro­vi­sional se­ques­tra­tion or­der, the Nexus re­port shows how IPS—A sup­plier to plumb­ing firm Car­rick that had been con­tracted by TBWB JV in the project—re­pos­sessed ma­te­rial the com­pany claimed had not been paid for.

“TBWB JV ap­point­eded Car­rick to as­sist with the plumb­ing, andnd the lat­ter bought stock from IPS to the value of M20 393 537. 27. On 23 April 2013, a stock-take by Car­rick and Aure­con in­di­cated stock to the value of M6 002 055. 91 was still ll avail­able at the Maseru de­pot.

“IPS state­ments re­vealedealed that Car­rick still owed IPS M2 579 835.. 62 for the stock and as a re­sult IPS “quar­an­tined” M4 575 578. 05 worth of the stock. This was much more than the amount owed but ips in­di­cated that it was the only way to en­sure pay­ment of the out­stand­ing debt.

“In or­der not to de­layay the con­struc­tion of the health cen­tres anyny fur­ther and get ips to re­lease the quar­an­tined stock, Mca-le­sotho on 28 Novem­ber ovem­ber 2013 paid M2 544 716. 79 to o IPS. All the quar­an­tined ma­te­rial was then re­turned to Aure­con on 10 De­cem­ber 2013.”

it was fur­ther noted ed by Nexus that IPS “con­tin­u­ously in­quired from TBWB WB Jv about the pay­ment t to Car­rick” as the plumb­ingng firm owed it a sub­stan­tial amount of money.

Mean­while, the re­por­tort also noted that on 7 May 2013, Car­rick in­formed med TBWB Jv through a let­ter, that all sub-con­trac­tors had been paid in full.

“Based on this let­ter, Aure­con cer­ti­fied the In­terim Pay­ment Cer­tifi­cate. The In­terim Pay­ment Cer­tifi­cate was then pre­sented to Mca-le­sotho’s Fis­cal Agent who pro­cessed the pay­ment to TBWB JV,” noted Nexus.

But the au­di­tors found out Car­rick’s state­ment had been “fac­tu­ally in­cor­rect”, and pre­sented to TBWB JV “un­der false pre­tence”. TBWB Jv, in turn, had also pre­sented its fact “un­der false pre­tence” to Aure­con.

“Based on this let­ter and other sup­port­ing doc­u­men­ta­tion, Aure­con cer­ti­fied the In­terim Pay­ment Cer­tifi­cate in favour of TBWB JV. This was pre­sented to Mca-le­sotho’s Fis­cal Agent who pro­cessed the pay­ment to TBWB JV,” Nexus noted.

nexus, there­fore, rec­om­mends that civil ac­tion be in­sti­tuted against TBWB JV, “its Jv part­ners and Car­rick for the re­cov­ery of M2 544 716. 79 paid to IPS for the re­lease of quar­an­tined stock since Mca-le­sotho had al­ready paid for it.”

the au­di­tors fur­ther rec­om­mend that “crim­i­nal ac­tion be con­sid­ered against TBWB Jv and Car­rick for the pre­sen­ta­tion of a false/fraud­u­lent let­ter to Aure­con. This mis­rep­re­sen­ta­tion re­sulted in the Mca-le­sotho pay­ment”.

nexus also ob­served that af­ter a mu­tual agree­ment be­tween Mca-le­sotho and TBWB JV, the con­tract of TBWB JV was “de-scoped” and 20 health cen­tres again put out to public ten­der. Le­sotho Steel Prod­ucts (LSP) sub­se­quently won the bid.

The au­di­tors noted: “A timeline of events in­di­cated that a stock-take was done on 25 April 2013, TBWB JV was pro­vi­sion­ally liq­ui­dated on 31 May 2013 and Pro­vi­sional Trustees ap­pointed on 4 June 2013 and stock handed to var­i­ous new con­trac­tors on 30 oc­to­ber 2013.

“A rec­on­cil­i­a­tion of ma­te­rial paid up to 25 April 2013 by MCA-L re­vealed it to be worth M8 816 644.12 for Lot 1 and M12 473 259.69 for Lot 3 and 4. On 31 May 2013, TBWB JV was pro­vi­sion­ally se­ques­trated and the re­spon­dents in this mat­ter (TBWB Jv, tren­con Con­struc­tion, Build­ing World Belela Con­struc­tion) and all other per­sons were in­ter­dicted from re­mov­ing any con­trac­tors’ equip­ment and ma­te­rial and plant from all sites and de­pots. The High Court di­rected that the busi­ness of the Joint ven­ture should be com­pleted and ap­pointed pro­vi­sional trustees for the task.

The au­di­tors add: “How­ever, when Mca-le­sotho ent en­tered into a con­sul­tancy agree­ment with A Aure­con on 22 septem­ber 2009, one of the obligations of the con­sul­tant was t to al­ways act as faith­ful ad­vi­sor to the M MCA en­tity.

“No stock-tak stock-take was per­formed af­ter pro­vi­sional sequ se­ques­tra­tion of TBWB Jv on 31 May 201 2013. Pro­vi­sional trustees were also appo ap­pointed by the High Court of Le­sotho. Th There were var­i­ous stages where cus­tody and con­trol over stock changed witho with­out a stock-tak­ing be­ing done. On 30 O Oc­to­ber 2013, the Pro­vi­sional trusteestruste and Aure­con started to hand out ma­te­ri­als to the newly ap­pointed con­trac­torsc in or­der to com­plete th the works. At this stage, once again again, no stock-tak­ing was done.”

nexus, there­fore, rec­om­mends that LMD LMDA con­sid­ers in­sti­tut­ing a claim­cla for M8 484 106.45 against A Aure­con for the un­ac­counted s stock.

Al­tern Al­ter­na­tively, nexus rec­om­mends t that “LMDA in­sti­tutes a claim in the amount of M8 484 106 106.45 against the es­tate of TBW TBWB Jv for dam­ages suf­fered b by Mca-le­sotho as a re­sult of the Jv’s short­fall in per­for­mance, breach of con­tract and sub­se­quent se­ques­tra­tion.”

Nexus fur­ther rec­om­mends LMDA re­cov­ers 112 of the 130 so­lar pan­els “which were lo­cated at the Moosa Group of Com­pa­nies in or­der to re­cover the costs for the un­ac­counted items.”

A fur­ther M2 620 150. 36 is rec­om­mended for claim by LMDA against Aure­con for “805 of the un­ac­counted stock as well as a claim in the same amount against KPM So­lar En­ergy. We rec­om­mend that the LMDA con­sider in­sti­tut­ing a claim of M320 758. 08 for the un­ac­counted so­lar com­po­nents against Aure­con as they failed to “sup­port and safe­guard the MCA-L En­tity’s le­git­i­mate in­ter­ests in any deal­ings with sub-con­trac­tors or third par­ties, and al­ways act, in re­spect of any mat­ter re­lat­ing to this con­tract or to the ser­vices, as faith­ful ad­vi­sor to the MCA En­tity.”

The au­di­tors con­tin­ued: “We rec­om­mend that LMDA also con­sid­ers in­sti­tut­ing a claim of M160 030. 08 for un­ac­counted bat­ter­ies against Aure­con. We fur­ther rec­om­mend that LMDA con­sid­ers claim­ing M78 223. 22 for the un­ac­counted units from Aure­con since they failed to carry out their obligations un­der this con­tract with all due dili­gence, ef­fi­ciency and econ­omy, in ac­cor­dance with gen­er­ally ac­cepted pro­fes­sional stan­dards and prac­tices, and al­ways act as faith­ful ad­vi­sor to the MCA En­tity.

“We also rec­om­mend that the LMDA con­sid­ers claim­ing M2 266 016. 56 from Aure­con for un­ac­counted plumb­ing ma­te­ri­als, and M181 234. 17 from IPS for un­ac­counted plumb­ing ma­te­ri­als.”

We have copied the re­port to the po­lice fraud depart­ment and DCEO (Di­rec­torate on Cor­rup­tion and Eco­nomic Of­fences) for fur­ther ac­tion.

LMDA Chief Ex­ec­u­tive Of­fi­cer Sophia Mo­hapi.

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