The European Investment Bank (EIB) has faulted the manner Blantyre Water Board (BWB) procured contracts to construct water kiosks in the commercial city, noting that most documentation lacked originals.
The bank has since asked the board to start prepaying the loan before the actual commencement dates, documents The Nation has seen show.
The multi-billion kwacha loan was given out in 2009 with a maturity period of 33 years, including a grace period of 10 years.
But after a Proactive Integrity Review of the inspectorate general of the EIB, the bank has powers to demand compulsory prepayment.
BWB board chairperson James Naphambo yesterday said he could not give further details because he was yet to read the EIB report and make recommendations.
He said: “I have not seen the report and, therefore, it would be difficult for me to make any comments. We
[the board] need to give our comments before any action can be taken but I need to see the report first.” Last evening, Minister of Finance, Economic Planning and Development Goodall Gondwe, while saying he is yet to see the EIB communication, said prepayment would be a difficult task for government.
He said: “I will ask for the letter, but asking for a prepayment would be difficult for us. What we can do is try to correct the wrongs that have been highlighted by the bank.”
The audit report, dated June 15 2016 and addressed to BWB management— n
and director of finance and administration, Secretary to the Treasury Ronald Mangani and Head of EU Delegation to Malawi Giorgio Pasqualucci, has revealed anomalies in procurement for the Malawi Peri-urban Water and Sanitation Project implemented by BWB.notably, chief executive
The report has also established strong indications of collusion between tenderers for construction of water kiosks.
Reads part of the letter: “The EIB is of the opinion that the above findings and the enclosed material, for certain matters, provide unequivocal evidence and for other matters provide reasonable grounds to suggest the breach of certain provisions of, and occurrence of certain events foreseen under the above Finance Contract and Grant Agreement, which allow the Bank to demand compulsory prepayment of the relevant part of the loan and repayment of the grant.”
In addition, the report says there is a concern on the absence of original bid documentation, noting that 50 percent of the procurements examined were not supported by original bid submission documentation.
The report notes that BWB employees have been unable to trace and locate all documents for all the procurement files requested.
“ODPP [Office of the Director of Public Procurement] no objections are missing, we found confusion at BWB regarding the ‘No Objection’ process to be used. BWB project and procurement managers suggested that ODPP, EIB both or neither would be used for no objection,” reads the report.
On possible collusion, EIB found that bidding documents revealed similarities in the submissions of two successful suppliers—Kaliyeka and CAS—and that the bid submission documents provided by CAS and/or Kaliyeka were fabricated and their bids should not have been successful.
Noted the audit: “CAS and Kaliyeka operate in the same offices. They share adjoining rooms with access to Kaliyeka gained via the office of CAS. They also share the same legal practitioner, with tax compliance certificates for both companies dated on the same day, with same errors on both sets of documents. Date stamps are all in the same place, signatures are the same and in the same locations.”
In recent months, BWB has been on collision course with EIB on several projects. In December 2014, EIB and the EU Delegation threatened to pull out of the Malawi Peri-urban Water and Sanitation Project implemented by BWB following similar concerns of mismanagement of funds through illegal procurement.
BWB acting chief executive Henry Bakuwa, in an earlier interview, described the Proactive Integrity Audits as normal.