Audit exposes rot in Botswana Railways tenders
As more skeletons continue to tumble out the Botswana Railways multi-million pula train scandal, a forensic report has shown how uncompetitive bidding practices unethically catapulted contracts by up to 100%, exaggerating by as much as P325 million the cost of procuring train wagons and coaches.
SONNY SERITE & LAWRENCE SERETSE
A leaked investigative forensic report shows that Botswana Railways (BR) management has violated procurement regulations through aggressive hiking of tender contracts when awarding bids for the provision of 260 wagons for the embattled parastatal.
Fresh information has also exposed how BR management may have flouted tendering processes, with deserving bidders possibly being wrongly disqualified and tenders awarded to wrong bidders.
The forensic audit report compiled by one of the most prominent audit firms in Botswana, states that BR management amended some contract values by 81% and 98%, doubling the cost of procurement at the expense of tax payer funds in some instances.
In two specific tenders for the supply of 130 salt wagons and 130 general purpose wagons, the forensic audit report shows that tender TC1030-11/12 was increased by 98% to R205, 404,885 from the original cost of R103, 614, 855, while another tender-TC1045-09/10 increased to R217, 500, 000 from an initial R120, 000, 000 which was bidded for.
The auditors however noted that during review of the two awarded contracts, BR management increased their prices by 81% and 98% respectively, violating Regulation 95 (6) of the PPADB regulations. The auditors noted that this violation was caused by the non-alignment of Botswana Railways Tender Regulations and Procedures to the PPADB Act and its regulations.
While the management did not respond to this issue in the report, the investigating auditor said that the implication of vigourous price hikes and under-procurement could “open doors for corrupt practices by both bidders and the management and also disadvantage other bidders from bidding.”
The PPADB Act (CAP 42:08) Section 3 (ab) states the entities to which the provisions of the Act should apply. Regulation 95 (6) of the PPADB prescribes that “no individual contract amendments shall increase the total contract price by more than 15 percent of the original contract price.
According to a report studied by The Botswana Gazette, it was discovered by external auditors that BR management disqualified some companies that had bidded for another tender- TC 1020-11/12, even though they had passed and were legible to move to the next stage of bidding.
According to the report, tender evaluation goes through 3 stages, being; eligibility, technical and financial evaluation and during the evaluation of tender-TC 1020-11/12, five bidders passed the technical stage and were to proceed to the financial evaluation stage, but only two bidders proceeded as management disqualified the other three.
Management told the auditors that they disqualified the other three bidders because they failed an interview that was conducted to clarify some issues on technical aspects, the audit report shows.
To this response, the auditors however raised concerns, according to their report, that it was not clear as to why the interview was conducted after the bidders passed the technical evaluation and qualified to proceed to the financial evaluation stage.
“Deserving bidders may have been wrongly disqualified and tender awarded to the wrong bidder,” the auditors state in the report.
This emerges following last week reports by this publication that the Directorate on Corruption and Economic Crimes raided the parastatal’s Mahalapye headquarters and confiscated some of the Executive management’s electronic gadgets and cellphones.
Poor auditing of Assets
The forensic audit report also reveals how BR management could be clueless about the organisation’s assets as no physical asset count was carried out in financial years of 2013/2014 and 2014/2015.
The auditors also say that there was no documentation to support any physical verification of BR assets. According to the report, by failing to carry out the asset count, BR was in contravention of its Finance and Accounts Manual Volume I (10.22) which stipulates that the verification (Fixed Assets physical verification) will be undertaken every alternate year by a team comprising representatives of the Chief Internal Auditor and the Department concerned with reference to the assets records list.
While BR had in previous years carried out physical asset verification exercises or asset counts to verify their existence and their conditions, auditors found that the exercise had been halted with no explanation from management.
“As such the existence and conditions of some of the assets is uncertain”, reads part of the auditor’s report. The auditors say the implication of this non-compliance by BR management could lead to the loss of the parastatal’s property “due to theft and other reasons”.
The auditors recommended that asset count should be carried out, variance be investigated and appropriate decisions be taken. It was also discovered by auditors that BR had no Asset Management Policy.
Asset Management Policy is a set of guidance to ensure that assets are managed and utilised in the most effective way to achieve the set service delivery objectives, and provide guidelines with a view to ensure that assets are well maintained. BR has no such policy and auditors fear that this could lead to assets being over-valued due to obsolete assets and inventory.
While BR Public Relations and Communications Manager Kebabonye Morewagae failed to respond to press reports into the developments of the scandal, indications are that some senior management staff was taken in for questioning by crime and corruption investigating organs.