HomeLocal NewsCorruption rocks $533m project

Corruption rocks $533m project

THE US$533-million Kariba South power extension project has been plunged into new controversy after Botswana legislator Samson Moyo Guma was hauled before the courts on bribery and corruption allegations, following the discovery of a series of suspicious payments to him running into more than US$10 million from the Zimbabwean project.

Owen Gagare/Hazel Ndebele

Guma’s business partner, Botswana minister of Youth, Sport and Culture Thapelo Olopeng — reportedly a friend of Botswana President Ian Khama — is also implicated in the scandal and is under investigation.

Through his company IRB Transport, Guma, a Motswana with Zimbabwean roots, says he was given a construction consultancy and transport contract by Sinohydro Corporation that led to him being paid the millions.

Sinohydro — a Chinese state-owned company and the world’s largest hydropower construction company with a 50% share of the international hydropower market — won the tender to carry out the power extension project in 2012.

Botswana authorities, however, suspect organised corruption involving high-profile Zimbabweans in the deal and have thus frozen Guma and IRB’s accounts.

Media reports from Botswana say Guma has high-level contacts in Zimbabwe and is close to a number of Zanu PF heavyweights. He also has mining interests in the country.

The Kariba South project was commissioned by President Robert Mugabe in September last year and is expected to feed an additional 300 megawatts into the national grid on completion. It involves building two 150MW power generating units to be added to the existing six, 125MW generating units. It is expected to increase total capacity at Kariba from 750MW to 1 050MW by 2017.

Questions have however been asked about the cost structure and escalation of the project with former energy minister Elton Mangoma and ex-finance minister Tendai Biti saying its costs have been inexplicably inflated from an initial US$370 million to US$533 million, suggesting the US$163 million difference has gone to networks of corrupt government officials and their cronies. The Guma case could shed light on that.

Mangoma and Biti were part of the team that negotiated the deal during the inclusive government era (2009-2013). After feasibility assessments, the deal was signed at a cost of US$370 million, but when Mugabe commissioned the project in September last year costs had ballooned to US$533 million, raising eyebrows.

Mangoma said this week the Chinese were supposed to provide US$320 million, while the Zimbabwe Power Company (ZPC) was expected to foot the balance. The Chinese loan has remained constant, but the ZPC’s component has increased as a result of bloating costs.

The Botswana case, being investigated by the Directorate on Corruption and Economic Crime, has added fresh controversy to the project.

The investigating officer says Guma had failed to justify why he was being paid such huge amounts. Investigators suspect his invoices given as evidence were forged.

In his defence Guma, through an affidavit, has explained that the huge sums of money paid in his accounts were for services provided to Sinohydro. He said in 2013 the Chinese company engaged IRB for the construction of the project.

On January 20 2013, Sinohydro transferred US$3,2 million to Guma’s transport company which he says he acquired through an equity buyout from Olopeng, but Botswana authorities believe the minister is still a shareholder in the company although he resigned as a director.

Guma said on March 30 2014 he issued the Chinese construction company an invoice of P45 126 190 (US$4,4 million). Another invoice was issued on August 18 2014 valued at P153 029 (US$15 000).

Sinohydro paid Guma’s company U$3 153 029,94 on November 28 2014.

Energy minister Samuel Undenge could not be reached for comment yesterday, while his predecessor Dzikamai Mavhaire, who took over from Mangoma, refused to comment saying he does not speak to the media.

Mangoma, who maintained that the cost of the project was inflated as it should have been US$370 million, yesterday expressed shock that a Botswana company was involved in the project.

“It would be interesting to find out the outcome of the case which is being investigated,” he said.

Biti said he was not surprised since the project was riddled with corruption right from the beginning.

“Investigations by the Botswana government are proof enough that the project is beset with corruption and the reality is that between 2009 and 2012, US$3 billion was lost through illicit financial flows from such undertakings as the Kariba South power extension project you are talking about,” he said.

Finance minister Patrick Chinamasa last week said the Kariba South Hydro Power Station extension project was on course.

“As at 30 June 2015, an amount of US$22 million had been disbursed, bringing the total disbursements to date to US$101,8 million,” he said. “The Zimbabwe Power Company has also contributed US$14,4 million this year towards the project, bringing the total contribution by the parastatal to US$50,9 million.”

Chinamasa also said the Kariba Dam was also being rehabilitated after the Zimbabwe and Zambian governments received grants and loans to the tune of US$295 million from different funders.

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