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No heads will roll any time soon over the bulk fuel storage tender

Sat, 6 May 2017 00:02
by The Villager Reporters
News Flash

The outcome of the probe into the bungled bulk fuel storage tender is likely going to take long after it emerged this week that Secretary to Cabinet George Simataa has ordered a second probe after the one done by the attorney general’s office last year.

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 Road Contractor Company and Babyface Civils in 2013.

Attorney general Sacky Shanghala’s probe recommended that two permanent secretaries – Leevi Hungamo and Kahijoro Kahuure – should be suspended and disciplined for bungling the tender whose cost has risen from N$3,699 billion in 2014 to N$5, 4 billion now because the company that got the tender quoted in US dollars. When the project was conceived in 2012, the cost was N$740 million before it moved up to N$900 million and then to N$1, 8 billion.

The attorney general wrote to Simataa early this year suggesting the nature of the charges that should be laid against Hungamo and Kahuure. Shanghala also wrote to the Anti-Corruption Commission to probe China Harbour, Babyface Civils and Nghipondoka for possible collusion in the awarding of the tender. In one of his reports he tabled before cabinet, Shanghala advised Simataa that it would be a waste of money to seek a second opinion on the bungling of the bulk fuel storage tender. Simataa has, however, gone ahead to seek a second opinion on the matter despite Shanghala’s advice.

Shanghala this week also said that the probe into the bungling of the bulk fuel storage tender that has cost the government billions of dollars is now being handled by the finance ministry. When The Villager broke the story in February this year, Simataa could neither confirm nor deny that Shanghala asked him to charge Hungamo although he admitted that the attorney general had 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,” Simataa then.

On the issue of hiring lawyers for another probe, Simataa could not confirm anything apart from saying it was an internal matter. “Seriously, I am not worried if the story targets me. I am afraid I cannot answer your questions because these are internal matters,” he said on Wednesday.

Finance minister Calle Schlettwein told The Villager this week that the Cabinet Committee on Treasury will sit on Wednesday. “The Cabinet Committee on Treasury has not as yet exhausted its considerations regarding the report received from the Attorney General,” he said. Hungamo chaired the Cabinet Technical Committee whose members were the then works permanent secretary Peter Mwatile, finance permanent secretary Erica Shafudah; the then mines permanent secretary Kahuure; the Attorney General’s Office and the National Planning Commission.

In his capacity as the chairperson of a Cabinet 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 Hifikepunye Pohamba in 2011. The chairperson of the ministerial committee on capital projects, Tom Alweendo, has written to Hungamo asking him to explain his role in the bungled tender.

Alweendo told The Villager last month that Hungamo had responded to his letter but he could not give details of the letter. 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 and Kahuure 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 to renegotiate the tender in Namibia dollar.

The Villager has been trying to get hold of Kahuure since February without any success. Efforts to contact him through the Prime Minister’s Office did not yield any result after The Villager was informed that he has retired. Shanghala argues that Hungamo and Kahuure’s actions have 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 Kahuure and 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 specifications 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 had been awarded exposed to the US$-N$ currency fluctuations notwithstanding and contrary to the express intentions of the ministerial committee and the treasury in particular Since Kahuure, now retired as the permanent secretary at the Office of the Prime Minister in the Cabinet Secretariat has only a few years to retire, Shanghala said he would seek advice as to what civil action can be taken against him.

He also told Simataa that he would consult 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 dollar despite clear directives from the finance 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.

“Suffi ce 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. Nghipondoka, whom Shanghala 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$5,5 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. Shafudah, who chaired the now defunct tender board, has also been sucked in the bulk fuel storage saga following a letter she wrote to Hungamo’s committee advising them to ignore a presentation made by Om’kumoh Consulting Engineers regarding hedging plans against foreign currency fluctuations on the bulk fuel storage facility. Om’kumoh Consulting Engineers are the engineers appointed by the government to work on the bulk fuel storage had advised that because of the volatility of the exchange rate between the US dollar and the Namibia dollar, “it would be unreasonable for the TBN (Tender Board of Namibia) to expect the tender amount to remain fixed”.

“We recommend that the tenderer obtain forward cover and firm up the tender amount since 70% of the material will be sourced internationally in US dollars,” the report said. The presentation was prepared by AIJ Consultancy, the company working together with Om’kumoh after the government realised that the project would be costly. In her letter dated 20 August 2014 to the technical committee, Shafudah ordered them to ignore the report saying that the suggestions made were “unsolicited”.

The Villager has a copy of the letter. Although Shafudah did not respond to questions sent to her early last month regarding the letter, she referred The Villager to the mines permanent secretary Simeon Negumbo on Tuesday. “We were advised that all questions on that should go to the permanent secretary of the Ministry of Mines and Energy.

Even if the questions are on me,” Shafudah said. When The Villager contacted Mines permanent secretary Simeon Negumbo, on the progress of the investigations, he requested for questions in writing which The Villager had already forwarded to his communications office. During follow ups the office was out of reach. “I will still talk to him (communications officer) again. I will follow up”, he said on Wednesday afternoon. The Villager did not receive a response from Negumbo’s office by the time it went to print.