Raises red f lags
2020, NDMA awarded a company known as Elcor Industries the tender to supply 600 units of 25 litre sanitisers at a cost of E875 a unit; and this was E75 cheaper per unit price. Had NDMA opted for this supplier, the agency would have bought the 400 sanitisers at E30 000 less.
The procurement officer said for the 400 sanitisers tender, they focused strictly on the suppliers who were not in the approved list and they also considered that the E950 unit price quoted by SVK Investments was within the market price range. “If you look at the previous tender, you might find that most of those that responded were above this quoted price and only one was below this one. If we went this route then we would have found ourselves awarding the tender to one company continuously, which is something we are trying to avoid,” he said.
Asked if it was best practice to opt to pay more rather than keep on giving the tender to the same company for a far lesser price, Dlamini said what must be taken into consideration was that they had to allow competition to determine the price and also allow other companies to participate.
The third question that has come into play is with regard to whether SVK Investments charged Value Added Tax ( VAT) for the supplies. It was confirmed that the company is not registered with the Eswatini Revenue Authority ( SRA) for purposes of VAT.
Kunene, the company’s director, said they were not registered because they did not qualify for VAT since the company’s turnover for profit is below E500 000. What is peculiar though is that in SVK Investments’ invoice, it is stipulated that the price for the supply of the sanitisers was ‘ VAT inclusive’. Kunene has defended this by saying it was a mistake they committed when editing the invoice. “We don’t qualify to charge VAT even though we have the TIN number,” he said, stating that even their quotation was without the VAT.
TAX EXEMPTION RAISED
On the other hand, NDMA’s Dlamini, while saying the SRA was best placed to respond on this, gave two possibilities of SVK not being registered for VAT. “The company could be exempt from VAT by having talked with SRA and agreed that this is sanitiser for COVID- 19 so it should be exempt. Secondly, you can find that the company is not supposed to pay tax,” he said.
He said the ‘ VAT Inclusive’ reflected in the invoice would have to be addressed by the company and SRA. “Otherwise to our knowledge, the quotation was exclusive of taxes. The invoice is aligning to the quotation and for us it’s okay because there was no increase in the price which was quoted. What is key is that even though the invoice is VAT inclusive but the quote is exclusive of taxes; actually it doesn’t say anything on taxes; so for us it is aligning to the quotation price,” Dlamini said.
The purchase order indeed has no figure in the space provided for VAT and the amount reflected is the same as the one shown in the invoice, even though the latter shows ‘ VAT Inclusive’. The Public Accounts Committee ( PAC) has called for the suspension of National Disaster Management Agency ( NDMA) CEO Russell Dlamini for flouting government procurement procedures in purchasing hand sanitisers worth over E3 million.
Chief Executive Officer Russell Dlamini, Chief Finance Officer Nonkanyiso Ntshangase and Procurement Officer Phesheya Dlamini admitted to flouting procurement procedure, which prompted the PAC to recommend for a more detailed audit of the agency as they feared this could be the tip of the iceberg.