CABINET ministers were evasive this week after being asked to explain the details of a murky deal between the government and Landela Investments (Pvt) Ltd, a company linked to President Emmerson Mnangagwa’s adviser Kuda Tagwirei. The company is raking in millions of dollars in taxpayer funds for buses bought on credit in China and now being sold to a state-owned company at inflated prices.
As first revealed by the Zimbabwe Independent, Landela Investments has been acquiring buses for the Zimbabwe United Passenger Company (Zupco) mass public transportation system, contrary to claims by public officials that the vehicles were directly sourced by the government. The opaque dealings between Tagwirei’s company and the government are mired in controversy.
According to a leaked memorandum, the government initially signed a hire purchase agreement with Landela, but will now pay the company ZW$863,2 million (US$34,5 million at the Reserve Bank of Zimbabwe (RBZ)’s official exchange rate of US$1:ZW$25) for 162 buses.
This means Landela is selling each bus to the government for US$212 962. The Independent can reveal that the company bought each 64-seater bus from Xiamen Golden Dragon Bus Company in China for US$58 900.
Based on the normal shipping and insurance costs, which are usually calculated by the Zimbabwe Revenue Authority at 8,1% of the purchase price of each bus, it is estimated that each bus landed at Beitbridge Border Post at a cost of plus or minus US$63 670. However, it is not clear whether Landela paid duty for the buses which, if they did, would have been calculated at 61% of purchase price plus additional costs which include transportation and insurance charges.
Official sources told Independent that there are plans for Landela to acquire more buses on behalf of Zupco and this comes as the government takes advantage of the Covid-19 lockdown to implement a process of phasing out private commuter omnibus operators.
Tagwirei, who has been rapidly expanding his vast business empire and is close to both Mnangagwa and Vice-President Constantino Chiwenga, has dealings with the military and other officials.
His companies have been mired in controversial public projects, including Command Agriculture and the Dema Emergency Power Plant.
Bank accounts belonging to his companies — including Sakunda Holdings and Landela — were temporarily suspended by the RBZ for alleged involvement in money
laundering and foreign currency parallel market dealings. The freeze on the accounts was later lifted and no charges were pressed against the companies.
All the relevant ministries in the bus deal have told the Independent that they were not involved in the agreement in which the state-run Central Mechanical Equipment Department (CMED) has a hire purchase agreement with Landela.
Although Zupco is under the Ministry of Local Government and Public Works, the minister, July Moyo, curiously refused to comment and referred the Independent to the Ministry of Transport and Infrastructure Development, which controls the CMED.
“Yes, Zupco is under my ministry, but this is a CMED issue and that is under the Ministry of Transport. Zupco also rents from over 20 companies and it is difficult for me to know the details of every agreement,” Moyo said.
Contacted for comment, Transport minister Joel Biggie Matiza said the Finance ministry was the right authority to talk to regarding the bus agreement.
“It is the Ministry of Finance that is responsible for purchases and the tendering. What is there now is there,” Matiza said.
As the astonishing merry-go-round continued, the Finance ministry also shifted the responsibility to comment on the matter to other government departments, including the Procurement Regulation Authority of Zimbabwe (Praz).
“No, the Ministry of Finance is not involved in the purchase, we only approve payment through normal channels,” Finance ministry spokesperson Clive Mphambela said.
“We are not the right people to talk to in terms of procurement. We have Praz. But let me also just say when government procures, we do not usually import something directly, as in the case with fuel and other things.”
Government officials have in the past claimed that the buses already belonged to Zupco, with Mnangagwa commissioning the fleet amid pomp and fanfare.
According to the official memorandum, the government has so far paid ZW$132,4 million (US$5,3 million), leaving a balance of ZW$730,8 million (US$29,5 million).
“We are in receipt of communication from the Minister of Local Government and Public Works as well as CMED (Pvt ) Limited requesting for variation of payment arrangements for the 162 buses procured by government from Landela Investments (Pvt) Ltd,” the leaked government memo, signed by Finance minister Mthuli Ncube and permanent secretary George Guvamatanga, reads. “Landela has a hire purchase agreement with CMED for the supply of 162 buses valued at ZW$863,2 million. To date CMED has paid ZW$132,4 million leaving a balance of ZW$730,8 million. The purchase agreement has been instrumental in reducing the hire cost under the mass transport system …”
The Independent has also learnt that Landela paid only 20% for the imported buses with the 80% balance payable a year after delivery. The buses were bought through a dealer, FAW Zimbabwe, which has offices in Harare.
At the time Landela imported the buses, the Civil Service Commission also acquired 20 new buses from the same supplier to boost its fleet.
In a letter to the Zimbabwe Revenue Authority (Zimra) dated March 2, 2020, Massbreed Investments (Pvt) Ltd, which trades as FAW Zimbabwe, named the importer of some of the buses as Landela Investments.
“We are aware that the vehicles are to be warehoused in our bonded warehouse in conformity with the Customs and Excise Regulations Section 69:2A regarding the operation of Bonded Warehouses,” a letter by FAW Zimbabwe director Kuda Muzvongi to the Zimra controller read. “Undertake to return signed proprietor’s report (Form 26), acknowledgement receipt of goods together with any discrepancies within five days of the date of the entry to the proper officer at the warehousing port.”
Mnangagwa has been travelling around the world accompanied by Tagwirei on some trips, with the government boasting that the president clinched important economic agreements for the nation, including bus purchase arrangements with China and Belarus, but the much-hyped mega deals have been shrouded in controversy.
The buses imported by Landela were reported by state media to be part of a consignment of 1 000 buses ordered from China and 500 from Belarus.