- Guma’s company allegedly subcontracts to Sefalana in violation of contract
- Sefalana allegedly imports from South Africa against tender requirements
- Ministry says subcontracting is a breach of tender contract
In January 2018, the Ministry of Local Government and Rural Development awarded United Refineries Botswana (URB), a company owned by among others Tati East Member of Parliament Guma Moyo with a tender for the manufacture, supply and delivery of 161,815.50 cartons of pure sunflower oil valued at P26, 983,834.99.
The Botswana Gazette has established that the tender [MTC 08/09/01-2017/18], was awarded to URB ahead of another local company, FMG Industrial Consulting Engineers (Pty) Ltd t/a Arona Natural Foods.
Investigations by this publication however reveal that the tender was eventually subcontracted to the Sefalana Group of Companies which obtained the sunflower oil already manufactured from South Africa and in breach of the tender contract. The Botswana Gazette is in possession of a letter dated 5 February 2018 signed by Sefalana Group Finance Director Mohamed Osman and addressed to Guma Moyo as Chief Executive Officer of URB where they detail how the Sefalana Group through its subsidiary, Foods Botswana, will deliver the sunflower oil to the Ministry of Local Government on behalf of URB.
The letter, marked Private and Confidential, discusses how the proceeds from the tender will be shared between Sefalana Group and URB. ‘‘We are pleased to note the contents of the letter dated 11 January 2018 addressed to you from the Local Government Finance and Procurement Services Department in which the Acting Director has indicated that your company, United Refineries Botswana Holdings (Pty) Limited, was determined to have been the best evaluated bidder’’, Osman wrote to Guma.
He went further, ‘‘we understand that the supply contract between your Company and Government has been signed. As per our understanding, the tender is for the supply of 161,815.50 cartons. The award tender price is P26, 983,834.99 inclusive of VAT and P24, 092,709.81 exclusive of VAT. Foods Botswana (Pty) LTD has agreed to supply the contract at the tender awarded price. Payment from Government should be made directly into a single nominated bank account to URB. This must be normalised in an instruction letter to Local Government and an acknowledgment from the Local Government in this regard must be received and provided to Foods Botswana records,’’ the Sefalana Group Finance Director wrote.
In the letter, Osman further instructed, “The Bank Account must be set up such that all payments and payment instructions should only be possible with a joint signature by Mr Guma Moyo (representing URB) and Mr Mohamed Osman (representing Foods Botswana)’’.
He noted that Foods Botswana will supply Government directly in accordance with their requirements and will notify URB within 3 days of each delivery. In turn, URB will then raise an invoice to the Government in respect of the said delivery within 2 days.
“On receipt of payment by Government, the full amount will be transferred to Foods Botswana within 3 days to ensure the working capital for the supply of the tender is not compromised,’’ Osman instructed and supplied the bank account in which the money must be deposited at Standard Chartered Bank. “URB will be entitled to a profit margin of P44.89 per carton or P3,631,948 in respect of the entire order quantity of 161,815.50 cartons,’’ wrote Osman.
He indicated that the profit margin that Guma’s company will be entitled to will be paid to the company’s bank account within 7 days of Foods Botswana receiving payment from URB.
Responding to our enquiries, the Ministry of Local Government’s Spokesperson Masego Ramakgathi confirmed that indeed Guma’s company, URB was awarded the tender after the Ministry took a decision to go for selective tendering while re-tendering of the main tender was ongoing. ‘‘Two (2) local manufacturers were identified, namely; FMG Industrial Consulting Engineers (Pty) Ltd t/a Arona Natural Foods and United Refineries Botswana Holdings ((Pty) Ltd. URB was then awarded the tender,’’ Ramakgati revealed.
He said URB managed to deliver 161, 771.50 out of 161, 815.50 (99.9%) cartons to all Ministry depots and that only 44 cartons were not delivered by the time the contract came to an end on the 15th June 2018.
Ramakgati however said the Ministry is not aware that URB sub-contracted another company to supply and deliver sunflower oil. ‘‘However, the Ministry is aware that a request was made by URB to procure packaging sunflower oil in South Africa. This request was not acceded to as that would have been violation of terms and conditions of the Contract and the invitation to tender (ITT) which stipulated that procurement be made from locally based manufacturers,’’ he pointed out.
He indicated that URB has at one stage supplied non-complying sunflower oil at some of the depots, with labels indicating manufactured and packaged in the Republic of South Africa. ‘‘The deliveries carrying this labelling were rejected and the supplier was ordered to supply locally manufactured sunflower oil with proper labels. The supplier subsequently complied,’’ the ministry spokesperson indicated in his response.
Ramakgati pointed out that the contract between URB and the Ministry did not allow sub-contracting as there is a clause in the contract that clearly prohibits sub-contracting. ‘‘The contract was very clear just like the ITT that it was exclusively earmarked for locally based manufacturers of sunflower oil and not any other supplier. Sourcing from outside the country was strictly not allowed,’’ he reiterated.