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Shanghala wants fuel storage tender probed

Fri, 3 March 2017 22:16
by Villager reporters
News Flash

More than five months after Attorney General Sacky Shanghala asked the Secretary to Cabinet George Simataa to charge and suspend the National Planning Commission permanent secretary Andries Leevi Hungamo for the way he handled the bulk fuel storage tender, nothing has been done.

Shanghala also recommended that the Anti-Corruption Commission should probe Vaino Nghipondoka and his company Babyface Civils; his joint venture partner, the China Harbour Engineering Company; and Hungamo for their suspicious roles in the same tender.

The tender for the construction of the bulk fuel storage depot underway at Wavis Bay was given to CRB, a joint venture of China Harbour Engineering, the Roads Contractor Company and Babyface Civils in 2013. Initially, the government had budgeted N$3,699 billion for the project but the cost has since ballooned to N$5, 4 billion because the bid was quoted in US dollars contrary to an express order that whoever wins the tender should quote in Namibia dollars.

Hungamo chaired the Cabinet Technical Committee whose members were the then works permanent secretary Peter Mwatile, fi nance permanent secretary Erica Shafudah; the then mines permanent secretary Kahijoro Kahuure; the Attorney General’s Offi ce and the National Planning Commission.

Hungamo, in his capacity as the chairperson of the technical committee that foresaw the selection of the winning bid, also faces misconduct charges for disobeying, disregarding or wilfully defaulting in carrying out a lawful order given by a ministerial committee appointed by former president Hifi kepunye Pohamba in 2011. The technical committee was instructed to put out a tender through the tender board and then recommend to the government on the progress.

Instead of following the orders, Shanghala said Hungamo went ahead to recommend CRB whose quote was in US dollars and that even after the ministerial committee had instructed them to renegotiate after realising the foreign currency trap, they still ignored the order. Shanghala argues that Hungamo’s actions as the chairperson has cost the government and the taxpayers N$500 million and raised the cost of building the fuel storage depot to N$5,4 billion. Therefore, Shanghala advised Simataa, in his letter dated 20 September 2016, that he should consult the Prime Minister regarding charging and suspending Hungamo once he has reasons to believe that he is guilty of misconduct according to the Public Service Act.

He told Simataa that Hungamo committed misconduct as defined in the Public Service Act in that they:

• Approved and/or recommended of CRB’s tender bid contrary to the tender specifi cations which dictated that the contract should be sounding to the N$; and/ or

• Failed to engage the ministerial committee before recommending for the approval of the tender by the tender board as aforesaid; and/or;

• Did not obtain approval to recommend such an award on such terms and conditions as it has been awarded; and/or

• Withheld the knowledge that the tender exposed the government to the US$-N$ currency fluctuations notwithstanding and contrary to the express intentions of the ministerial committee and the treasury in particular Shanghala said he would seek advice on waht civil action to take against those involved in the tender and are about to retire.

He also told Simataa that he would consult the ACC director general Paulus Noa and the prosecutor general Martha Imalwa “so that they are aware of the impending” action and “are in a position to exercise their powers”. On 5 December 2016, Shanghala wrote to Noa requesting him to open investigations into the “potentially corrupt practices in respect of the National Oil Storage Facilities Project”.

Shanghala said those to be probed are the China Harbour Engineering Company; Babyface Civils; Nghipondoka and Hungamo. He said China Harbour Engineering should be probed for quoting in US dollars despite clear directives from the fi nance ministry at the time that the contract should not contain a US dollar component to avoid exposing the government to foreign exchange risks.

According to Shanghala, Hungamo as a public servant oversaw the signature to an agreement that “exposes the government to foreign currency exchange risk without at the very least and at a bare minimum, making any provision for hedging or the management and/ or mitigation of that risk”. “Suffice to say that because of this, there are runaway costs to the project. In my view, the allegations that this constituted a dereliction of duty on the part of Hungamo, can easily be sustained and proven,” Shanghala wrote.

Shanghala said Nghipondoka, whom he said is a known associate of Hungamo, has an agreement with China Harbour for a total ‘commission’ of 5% of the value of the contract. “What was initially meant to be a project budgeted at N$3 699 billion is now ballooning to over N$5,4 billion [thereby] increasing Babyface’s net income,” he said, adding that Hungamo’s lifestyle and farming activities are far beyond the means of an ordinary civil servant or permanent secretary.

Shanghala suggested that the ACC should request for:

• A copy of the contract between Babyface and China Harbour

• A copy of the register of all transport permits, farming implements, assets, game and cattle held at Hungamo and Vaino’s farms either from the two parties or the veterinary services or the environment ministry

• Copies of all receipts and proof of payments from the game and cattle

• Copies of all receipts and proof of payments made to contractors and sub-contractors who built Hungamo’s house at Finkenstein Estate

• Hungamo’s asset register

• Babyface, Nghipondoka and Hungamo’s banking records as well as those of their immediate relations and associates

• Communication between Nghipondoka and Hungamo or evidence thereof from cellphone activity and physical meetings

• Cabinet directed Shanghala to draft charges against the culpable civil servants responsible for the fuel storage’s price hike. No action from Simataa, Noa Although Shanghala made these recommendations in a letter he sent to Simataa on 20 September 2016, no action has been taken against Hungamo - more than fi ve months later.

In a memo dated 30 January 2017 that he submitted to Cabinet, Shanghala said that Simataa does not seem keen to act on Hungamo despite the available evidence and instead said he would seek further legal opinion on the matter. This is despite the fact that Shanghala said he had sought legal opinion from Jurie Badenhurst and Karin Klazen of ESI law fi rm and spent N$100 000 to put together a memorandum detailing the culpable conduct.

The charges, he said, were drafted in consultation with Simataa, Prime Minister Saara Kuungogelwa-Amadhila, finance minister Calle Schlettwein and the cabinet committee on treasury. Noa and the prosecutor general Martha Imalwa, according to Shanghala, were also contacted on the drafting of the charges.

“Having spoken to the Secretary to Cabinet myself, it is clear he does not have all the facts before him or alternatively, he does not appreciate same. “It is further submitted that the Secretary to Cabinet is misconstruing his role as espoused in the words “reason to believe” that a misconduct was committed, as there are two tests utilised in prosecuting similar misconduct misdemeanors/ transgressions: the evidentiary test and the public interest test,” Shanghala told the Cabinet.

As far as evidence is concerned, he said, there is documentary evidence to conclude that all parties knew that the government intended the tender to be denominated in Namibia dollar yet the permanent secretaries and the planning commission went ahead to award the contract as presented by CRB at N$10, 17 to the US dollar at the expense of the government. On public interest evidence, Shanghala said taking action against Hungamo and other involved would send a clear message that if civil servants act negligently, there could be repercussions. According to Shanghala, it seems, however, that in calling for a third legal opinion on the matter, Simataa thinks that he ought to have tried the facts before a disciplinary hearing as opposed to reasonably assessing the allegations and presentable evidence that can be obtained if not available.

He also said it is not for Simataa to find Hungamo guilty but that it is the function of an impartial disciplinary hearing. “For the question can be posed, is it not reasonable to accept the opinion of the constitutionally tasked official, who has taken outside advice before opining as a basis for charging a permanent secretary?” he asked. If Simataa goes ahead to seek third legal opinion, Shanghala said, this would cost the government more and would raise concern on what will happen if the third legal opinion differs with his findings and those of the outside counsel.

Shanghala urged Cabinet that:

• Simataa should present the charges to Hungamo • Suspend him with remuneration for the duration of the disciplinary hearing

• Appoint an acting permanent secretary for the planning commission

• Consider former deputy prosecutor general Advocate Danie Smalls to present charges to Hungamo

• Consider former prosecutor general Taswald July or former divisional magistrate Gibson Imbili to chair the disciplinary hearing

• Treasury should confirm to him in writing whether or not it was aggrieved by the escalation in price as a result of the tender, without which it will be difficult to see what injury government suffered

• Treasury should consider in writing whether or not to instruct the attorney general to consider filing a civil action for a possible recovery of loss as may be deemed reasonable. “There can be no doubt that something awry went down in the conclusion of the contract for the construction of the National Oil Storage Terminal Project and the reality is that from a N$3,6 billion contract, treasury is now exposed to the tune of N$5,4 billion with direct and indirect state guarantees on the line,” Shanghala concluded.

He also said although the disciplinary hearing may acquit the permanent secretary in question, it is possible that the evidence to be presented may convince the hearing that indeed some form of culpability may be apportioned. Even if the culpability may not be 100% on the conduct of the staff, the government would have scored some victory if it recovers even N$1, he said.

For this reason, Shanghala said, Simataa should retreat from seeking third legal opinion because if he insists, this would “present the regrettable boldness upon the conduct of civil servants that they can never do any wrong and will never be followed by consequences for their conduct, which causes systematic economic consequences”. Government has engaged CRB to renegotiate the tender with a view to bringing down the price to about N$4,5 billion. Shanghala could not confirm anything on Tuesday, citing client-attorney privilege.

“Please be advised that I am constrained by client-attorney privilege, a cornerstone of our legal profession and democracy, not to disclose, discuss or divulge information or correspondence relating to any advice rendered to clients. “In this respect, the Secretary to Cabinet is my client and as a constitutional office-bearer vested with statutory functions; the Secretary to Cabinet is covered by client-attorney privilege.

“Let me further add that the Secretary to Cabinet is bound to act in terms of law, and until he has exercised his function, he is under no obligation to respond to speculative inquiries,” Shanghala said. He also said that he had not yet written to Noa regarding probing Hungamo, Nghipondoka, Babyface Civils and China Harbour because he had not received instructions.

As to how far the negotiations to contain the cost have gone, Shanghala said the matter was being tabled before Cabinet. “The minister responsible for information will be tasked to communicate whatever the Cabinet determines as per Cabinet Handbook. I am therefore not at liberty to discuss beyond what I have stated, save as to confirm that indeed, negotiations were conducted,” he said. Simataa could neither confirm nor deny that Shanghala asked him to charge Hungamo although he admitted that the attorney general has prepared a number of reports on the matter of the bulk fuel storage project.

“Cabinet was briefed about the funding structure of the project and financial implications thereof and agreed on measures to engage the stakeholders to limit government to further financial exposure. “Similarly, Cabinet also agreed that procedures that were used in awarding the oil storage tender be reviewed in order to verify if there were any possible deviations. “Should such a review show that there were deviations in procedures; such matter will be dealt with in terms of the existing laws,” he said.

Noa said he is yet to receive anything from Shanghala. “Maybe it is still coming. I have no idea. if it still coming I am waiting for it,” he said. Both Hungamo and Nghipondoka said they had not heard about any investigation on them by the ACC. “Not that I am aware of” Nghipondoka said. “No, I am not aware of any what you are saying right now,” Hungamo also said.

 

Fact files Andries

Leevi Hungamo’s business deals

2003

Formed Hanganeni Investment Holdings with James Hatuikulipi (chairman), Dr Ndeutala AngoloAmutenya. Both Hungamo and AngoloAmutenya once worked in the former president Sam Nujoma’s offi ce.

• Hanganeni subsidiaries are Hanganeni Emona (Pty) Ltd, Ububele Holdings (Pty) Ltd, Network Energy & Telecom Solutions (Pty) Ltd and JaLeSaNd Properties

• Hanganeni Emona owns the 800bed student hostel at Unam where the company has a 30-year contract that was signed when Angolo-Amutenya was the vice-chairperson of the Unam Council and the permanent secretary in the Offi ce of the President in 2009. The deal is worth N$80 million a year. They are partnered by Sacky Shanghala, who at the time of signing was the special advisor to the justice minister Pendukeni Iivula-Ithana. 2004

• Owned 12% in Namibia Liquid Fuel (later Philco Twenty) together with Angolo-Amutenya; former trade unionist, Ranga Haikali; Shanghala; businessman Naeman Amalwa and James Hatuikulipi.

• Six months after winning the tender, according to Insight Magazine, Hungamo and others paid themselves N$4 million in dividends each

• ACC said at the time that there was nothing wrong with Hungamo, Angolo Amutenya and Shanghala’s involvement in the multi-million dollar deal despite being civil servants

• In 2008, according to Insight Magazine, Hungamo and other directors received N$36 million in dividends excluding other perks 2012

• Hungamo was one of the permanent secretaries cited in the delay of the N$2 billion Neckartal Dam construction when he clashed with the then agriculture permanent secretary Andrew Ndishishi on whether to give the job to the Chinese or Italians

• Hungamo, according to The Namibian, wanted the job to be given to the Chinese company, China Henan International, while Ndishishi wanted the Italian company Impreglio, which eventually got the job. 2012

• As the chairman of the NamPower board, Hungamo pushed for the setting up of the 300 megawatt Erongo power station at the expense of Kudu Gas.

• At the time, Hungamo said NamPower had to consider a project that would generate electricity for Namibia sometime in the near future. NamPower called for an expression of interest and 13 companies including six Chinese wee pre-qualifi ed 2013

• He chaired the ill-fated Targeted Intervention Programme for Employment and Economic Growth (Tipeeg) where his close relatives were awarded multimillion dollar tenders. Tipeeg, a N$22,8 billion project was implemented between 2011 and 2014 to fast-track economic growth and reduce unemployment rate.

• His brother Joseph and uncle Romanus Kandjimi and another cousin got tenders in the Kavango region for de-bushing in the Vhungu-Vhungu area

• Hungamo admitted that some of his close relatives got Tipeeg tenders but denied influencing the decision to award since he recused himself

• Kandjimi got the tender to renovate Max Makushe Secondary School In response to questions from Confidante in 2013, Hungamo said: “I do not give out government tenders. Yes, I have got brothers; Joseph is a businessman as well as Kandjimi my uncle. I suspect they applied for tenders as I see they are now doing government jobs. If there is a new dispensation in government that allows Hungamo to give out tenders then I must be very powerful maybe I underestimate myself. “If there is favouritism, it’s not right. If indeed it’s true this happened then it has to be reported to the relevant authorities so that the allegations are thoroughly investigated and the likes of Hungamo are exposed.

The public must be objective also, they should not smell a rat where no rat is simply because they have seen a neighbour driving a brand new car in the village, and they think it was corruptly acquired.” 2016

• In October last year, Judge Hosea Angula advised the land reform minister Utoni Nujoma to take action against Hungamo and his wife Tereza for violating the Agricultural (Commercial) Land Reform Act when they entered into a partnership agreement with the late Swiss Kurt Wyss in 2008. Wyss died in 2011.

• According to the agreement, if Wyss wanted to sell his 49% shares, the Hungamos would be given first opportunity and would be offered N$5 579 a share. They would then had to pay N$273 000 for about 50% of owning a 2 600ha farm

• The farm – Laconia in the Otjiwarongo area – was held by the three under a close corporation called Laconia CC. The cited act prohibits foreigners to own commercial farm land in Namibia without the land reform minister’s permission. They are also not allowed to enter into any agreement by locals through which they receive a right to occupy or possess commercial land for more than 10 years

• Ironically, Hungamo and his wife, also used this fact that the deal was illegal when they argued their case against Kurt’s son, Thomas, who had taken them to court demanding that his father’s shares should be transferred into his name

• Laconia CC has since October 1994 been the registered owner of the farm Laconia in the Otjiwarongo district. The farm is 2 598 hectares in size.

• Both Wyss and Hungamo each had a 49% share in the CC, while Tereza had 2%. Wyss had the right to hunt on the farm and Hungamo was allowed to graze his cattle.