THE Harare City Council attempted to award water and sewage contracts worth close to US$1 billion to four Chinese firms without going to tender, available information suggests.
The council’s finance and environment committees ratified the contacts on October 3, 2019.
State investigators that include the Special Anti-Corruption Unit (Sacu) and police are now investigating this violation of public procurement procedures by the named officials at the capital’s municipality, the Zimbabwe Independent found out.
The Information for Development Trust collaborated in the probe.
The US$868 million deals were purportedly meant to address greater Harare’s perennial water crisis, which recently saw council temporarily cut off supplies to all areas due to critical shortages of chemicals and poorly performing infrastructure.
Town Clerk Hosea Chisango and officials in the water section allegedly allocated the contracts to Sino Hydro, China Gezhouba Group Company (CGGC), China Geo-Engineering Company (CGEC) and China Machinery and Engineering Company (CEMC), but in so doing reportedly violated the tender book.
The officials chose CMEC as one of the contractors despite the company’s controversial record in the past.A source close to management of the contracts said there was no due diligence of the four contractors.
The council was meant to benefit from a 2010 US$144 million government-to-government loan facility between Harare and Beijing but hardly any work was done amid reports of financial impropriety.
The facility was supposed to rehabilitate, replace, install and commission equipment at Morton Jaffray and Prince Edward water treatment plants as well as the Crowborough and Firle sewer works.
In the deals under investigation, Chisango was allegedly given sweeping powers to approve commercial contracts between the Harare council and the four Chinese companies for water and wastewater refurbishment projects under the Harare Metropolitan Master Plan.
Minutes from a combined Environmental Management and Finance Committee meeting dated October 3, 2019 show that council members resolved to empower Chisango to unilaterally approve commercial contracts.
Former council chairperson for the Environmental Management Committee Kudzai Kadzombe revealed that the Chinese companies got the tenders from council despite having no resources of their own.
“We found out that these companies would actually not have the requisite resources but would use the memoranda of agreements with us to apply to the Chinese government for funding,” he said.
Chisango was also controversially authorised to sign a memorandum of understanding with CGEC for the rehabilitation of water networks in central Harare, Alexandra Park, Eastlea, Greendale, Borrowdale, Marlborough, Mabelreign, Hillside, Arcadia, Hatfield and Prospect at US$176, 79 million.
Sino Hydro proposed to fund and construct the 60-mega litres Lyndhurst sewage treatment plant, in addition to the expansion of the Crowborough sewage works and associated pipelines.
The CGGC was meant to fund water distribution rehabilitation in Highfield, Glen Norah, Glen View, Dzivaresekwa, Glaudina, Warren Park, Mabvuku, Tafara and Westlea.
But, sources said, the council failed to advertise the tenders as required by the Procurement Regulatory Authority of Zimbabwe (Praz).
As a result, the choice of the contractors did not involve competitive bidding and lacked transparency.
Council has offered vast tracts of Harare land as collateral for the Chinese loans that, like the US$144 million one, are supposed to be rendered on a government-to-government basis, but some senior employees at Town House as well as councillors have tried to oppose the move as it lacks transparency.
The council held a series of meetings with the selected contractors, one of them being with Sino Hydro at Imba Matombo Hotel and Conference Centre in July 2018, to deliberate on technical and financial proposals on Lyndhurst and Crowborough sewage treatment plants.
At one of the meetings, it was discovered that prices were inflated in some cases.
Thabani Mpofu, the Sacu head, confirmed that reports of irregularities in the water deals had reached his office and they had started a probe.“There is such an investigation into the water issues and many others, but I cannot comment further,” Mpofu said.
It was established, though, that Sacu has been on the case for several months.
Chisango told the Independent that the deals had not yet taken off and they were waiting for the approval of funding between Harare and Beijing. He described the Chinese deals as “unsolicited bids”, adding that actual tendering would commence once the loans were approved.
Chisango, however, admitted that the council had not communicated its deliberations and choices to the cabinet for approval, after “negotiating” with the four Chinese companies.
“It was a government-to-government project (sic), the one we called mega-deals at that time. The Chinese companies came to negotiate and we then submitted the relevant documents to the Ministry of Local Government and, from there, they (documents) went to cabinet,” Chisango said.
“We were supposed to have detailed designs and everything else upon funding approval. What we did were preliminary negotiations. After approval of funding, we would then conduct tender processes together with Praz. We advised Praz of what we were doing.”
Ben Manyenyeni, the former mayor of Harare, said the municipality lacked the capacity to handle huge amounts like the ones involved in the Chinese deals, bemoaning the general absence of transparency within the local authority.
“I panic over the ability of people to make decisions around such big contracts. The assurance we need is around the internal capacity to evaluate an US$800 million transaction within council,” Manyenyeni said. “In fact, any transaction above US$10 million should be subjected to independent professional advice so that residents know they are getting value for money.”
Current Harare mayor, Jacob Mafume said of the contacts: “I don’t think that the deals will materialise.
There is no movement because these are government-to-government loans and we only signed as council because we own the property that is going to be improved and we are supposed to be the major beneficiary.”
Officials from Praz had not responded to questions sent out to them by the time of going to print.