Escom in K1bn scam

…Stocks goods for 7 years with wrong technical specifications

Electricity Supply Corporation of Malawi (Escom) is embroiled in yet another misprocurement scandal which has, this time around, cost taxpayers $1 373 712.50 (over K1 billion), Nation on Sunday can reveal.

The power utility company, through a South African company Multistar International, procured goods through a contract number Esc561/ICB/2013/3.

However, seven years down the line, the imported goods are still in stock because they have wrong technical specifications.

The wrongly procured goods in question are high rupturing capacity (HRC) fuses of various specifications, circuit breakers of different specifications as well as surge arrestors, which came into the country in four shipments, according to documents we have seen.

Sources within Escom have also corroborated that the “null and void” consignments are still being kept at the parastatal’s Old Bata warehouse in Makata, Blantyre and are still in containers.

The consignments came through Chileka International Airport and were cleared on Malawi Revenue Authority (MRA) reference numbers C5465 of 20/12/2013 and had invoice numbers MS0789, C103 of 09/01/2014, MS0791, C211 of 20/01/2014 and MS0793, C407 of 31/01/2014.

Escom engaged Townlink Freight as a clearing agent in the deal.

But according to an internal inspection report dated 27/01/14 and co-signed by two Escom inspectors, namely Leonard Machonjo and Gladys Kaunde, all the imported goods were rejected.

Reads the report in part: “All the HRC fuses are rejected because they are not meeting Escom specifications and are not adaptable to our fuse carriers. All the circuit breakers are indoor type with no panels.”

Most internal communication we have seen between Escom and Multistar about the contract were addressed to former director of procurement Jack Thabwa.

Realising the magnitude of the mess in the contract, former Escom chief executive officer John Kandulu, on February 4 2015, wrote the then Commissioner General of MRA for the tax collecting body to assist in exporting the wrongly supplied goods back to the supplier in South Africa.

In the letter, which was copied to MRA Blantyre and Chileka ports as well as to the clearing agent Townlink Freight titled ‘Request to export wrongly supplied goods and process duty refund’, Kandulu admitted that the supplied goods had wrong specifications.

“Upon inspection of the shipments by Escom inspection team at Escom premises, it was noted that HRC fuses [and other line materials on the contract] that were supplied had wrong specifications,” Kandulu said.

According to the former Escom boss, the supplier was notified and they have since accepted to replace the wrongly supplied HRC fuses.

Kandulu continues: “At the moment, we intend to export all the wrongly supplied goods back to South Africa and claim back our taxes/Vat [value added tax] that was paid. The shipment will go by road exiting through Mwanza border but all paperwork will be processed at your Blantyre port….We, therefore, seek your authority to export the four shipments of HRC fuses back to South Africa for replacement.”

Kandulu could not be reached for his fresh comment on the matter as his phone was out of reach since Monday last week.

However, we can reveal that the same shipment with wrong specifications was returned to Escom by the same supplier without changes, despite Kandulu indicating in his letter to MRA that the supplier had accepted to replace the wrong goods.

According to three Goods Landed Cost forms (stock items) we have seen, some of the goods were received from South Africa and re-stocked at Escom on October 20 2015 and were signed for by a storekeeper a Mr. B. Chimera while other consignments were received and restocked by a storekeeper a Mr. S. Chingaipe on June 28 2016 and also on June 28 2017.

Escom was yet to officially respond to our questionnaire on the matter as we went to press last evening.

But the Malawi Institute of Procurement and Supply (MIPS) board chairperson Amos Nyambo on Saturday faulted Escom on the foiled deal, stressing that in any procurement process, the goods need to be accepted after being inspected by the technical persons.

He said: “If the items did not meet the specifications, the inspection committee was right to reject the items. Compliance with specifications is a critical criterion for any award of a contract. So, the supplier should always supply according to the specifications on which they were awarded the contract.”

He added: “This is where the procurement went wrong. Who accepted the goods? Why are the goods being kept? Who is paying for the storage? I am sure they are being kept because they cannot be used because if they were usable they should have been distributed for use. I would be surprised to learn that the supplier was paid because the supplier is not supposed to be paid because they supplied wrong goods.”

Nyambo commended the inspection team for rejecting the goods, saying they are the only right people who can issue an acceptance certificate or certifying that the goods are of the right specifications, right quality, right quantity and delivered at the right time as well as delivered within the contractual timeframe.

“As a procurement professional body, we ensure that our members conduct themselves professionally and advise their institutions on procurement best practices. Further to this, the Malawi Institute of Procurement and Supply Act empowers the institute to bar procurement professionals from practising if they are found  guilty of being involved in misprocurement by the mandated institutions,” he said.