SA company, govt in faulty E6m fuel contract
MBABANE – Government, through the Ministry of 1at ural Resources and Energy, entered into a defective agreement with a South African (SA) company that provided consultancy services at a cost of E million.
The company, known as McGregor Blue Investments, was engaged for the review of the basic fuel pricing meth odology in the .ingdom of Eswatini.
Two different copies of the contract have been unearthed by Auditor Gen eral (AG) Timothy Matsebula, who has discovered anomalies with these documents.
The first copy, according to the AG, has the following defects Two pages (2 and 2 were missing) the con trolling officer (principal secretary) did not endorse her signature on Page 2 of the contract, yet this page contains the contract sum section . (lump sum payment) of the contract indicated that the total payment to the consultant shall not exceed the contract price, which is an all inclusive fixed lump sum covering all costs required to carry out the services described in Appendix A, however, the cited appendix was not attached some totals on Appendix C were not arithmetically correct. This includes the totals for the remuneration of the financial analyst and petroleum supply expert, travelling expenses and training and capacity building and there were witnesses’ signatures.
“:hen the above anomalies were raised to the director energy, a second copy of the contract was provided,´ said the AG.
Matsebula then noted the following anomalies on the second contract The contract date was not stated pages 2,
, 2 and 2 were not numbered some totals on Appendix C were not arithmetically correct. This includes the totals of the remuneration of the financial analyst specialist and petroleum supply expert, travelling expenses and training and capacity building the consultant’s signature is different from the signature on the first contract, furthermore the signa ture is not consistent throughout the endorsed pages and there were no witnesses’ signatures.
“I informed the controlling officer that the above cited anomalies on both contract copies called into question their authenticity. )urthermore, there was no evidence that the contract between the ministry and the consult ant was duly vetted by the AG,´ said Matsebula.
CONSOLIDATED
This is contained in the AG’s )inan cial Audit Report on the Consolidated Government Accounts of the .ingdom of Eswatini for the financial year ended March , 2022.
The report was tabled in Parliament on )riday as part of the documents accompanying the Appropriation Bill of 202 during the Budget Speech that was delivered by Minister of )inance 1eal RiMkenberg.
After being tabled, the AG’s report will now be scrutinised by the public accounts committee where all those implicated and seen as having a case to answer will be called to account for their actions.
The AG has pointed out that ac cording to Section 2(2) of the Public )inance Management Act of 20 , controlling officers are supposed to put in place procedures consistent with the Act, the Procurement Act of 20 , or any other law verifying the receipt of goods and services prior to payment for the goods and services or that the payment otherwise meets the terms of the contract between the public entity and the supplier.
He said further, according to Sec tion (b) of the Constitution of the .ingdom of Eswatini, one of the functions of the AG is to draw or peruse agreements, contracts, trea ties, conventions and documents, by whatever name called, to which the government is a party or in respect of which the government has an interest.
“I raised my concern that the gov ernment may incur financial losses as result of error, negligence or fraudu lent practices by responsible officials. I advised the controlling officer to submit their contracts to the AG for vetting and ensure that contracts are complete and free from errors prior to endorsement. )urther, I advised her to investigate the cause of the reported anomalies pertaining to the engagement of the consultant and take necessary corrective measures,´ Matsebula said.
In response, the controlling officer is said to have submitted that the contract was vetted by the ministry’s legal advisor and also stated that the submission of the two copies of the contract were a result of the ministry’s filing system.
She is also said to have explained that the first contract was a wrong contract, which should have been discarded as it was replaced by the second, unfor tunately it was kept in the ministry’s records.
“She submitted that the second con tract was the one applicable to the consultant. She further noted clerical omissions in the contract being the contract signing date and numbering and stated that they had no bearing on validity of the contract. She also submitted that the consultant signa tures were consistent,´ the AG stated in his report.
CONTRACT VETTED
Though noting the controlling of ficer’s response, Matsebula said, how ever, evidence that the contract was vetted by the legal advisor was not provided and also concerning was that a contract vetted by a legal advisor would be littered with such significant defects.
He said the response did not address the issues he had raised.
“Under normal circumstances, a signed contract cannot merely be dis carded without an instrument cancel ling it as provided for in that contract. If changes to the first contract were necessary, an addendum to the contract could have been made,´ said the AG.
)urther, regarding the second con tract that the controlling officer said was applicable, the AG said it was worrying that the controlling officer seemingly downplayed the signif icance of page numbering and the effective contract date.
“Also, the response did not address the issues relating to arithmetically in correct totals and absence of witnesses to the contract. )urthermore, based on evidence in the submitted second contract, I maintain that the consult ant’s signature in the second contract is different from the one appearing in the initial contract and not consistent throughout the endorsed pages,´ Mat sebula noted.
Besides the defective contract, the AG also uncovered overpayments made to the consultant in respect to travelling expenses, training and ca pacity building costs.
In total, the AG said the overpay ment amounted to E 00 00 these being E 0 000 for travelling ex penses instead of E 00, which resulted to an overpayment of E 2
00 E 0 000 for training and ca pacity building expenses instead of E 2 000, resulting to an overpayment of E2 0 000.
“The main cause of the overpayments appeared to be negligence and lack of due care by responsible ministry offi cials, which led to the endorsement of a defective contract,´ he said.
The AG also said according to a breakdown of the contract price, re imbursable travelling expenses were supposed to cater for five people at a unit cost of E 00, however, the total cost was erroneously stated as E 0 000 instead of E 00.
Similarly, the reimbursed training and capacity building costs were supposed to cater for three weeks training at a unit cost of E2 000, however, the total cost was erroneously stated as E 0 000 instead of E 2 00.
RAISED CONCERN
“I raised my concern that the contract may have not been submitted to the AG prior to its endorsement. )urther, the overpayment resulted to value for mon ey not being attained and furthermore, financial losses could be incurred if the funds were not recovered or recovered at additional costs. I also highlighted the possibility that the totals may have been intentionally inflated in order to fraudulently embe]]le government funds,´ the AG said.
Matsebula said he advised the con trolling officer to always ensure that money spent matched the value derived from the service provided.
He said he further advised her that contracts should be vetted before endorsement to ensure that errors were duly corrected and that the over paid amount should be recovered and necessary action taken against those responsible.
The controlling officer, in her re sponse, is said to have stated that the consultant was paid as per the contract total cost of E 0 000 (E 0 000) for travelling to and from Eswatini for the consultations and E 0 000 for the training of the nominated person nel from the ministry, as per the total costs reflected in the contract for these activities.
“The controlling officer also directed me to financial proposal (Annexure C) of the consultant which was the basis for awarding the tender,´ Matsebula said.
He also said the controlling officer’s response was noted, however, it did not address the defect in the contract whereby the totals were not a product of the unit cost and quantity.
He said also, the contract was the binding document and not the consult ant’s financial proposal.
“The matter, therefore, remains re portable,´ Matsebula added.