An independent audit into the operations of a glass manufacturing plant by Botswana Development Corporation in Palapye has unearthed systemic abuse of money by executives at the Government’s investment arm.
The audit has also turned up a flagrant flouting of procedures by the contractor who may have been colluding with some of them to pass invoices for works and equipment not delivered at the site.
A report of which Sunday Standard is in possession shows that a Chinese contractor, Fengyue, has been overpaid by more than P100 million even as the project completion has dragged on much longer than anticipated.
The audit was conducted by G4 Consulting Engineers.
The consulting engineers have also found that BDC money amounting to $1.5 million (roughly P9 million) was illegally diverted to finance an adjacent project at a site not owned by BDC.
Although the Oxygen Making project has nothing to do with BDC, the corporation’s money has been used to finance construction of the plant.
Investigations by Sunday Standard have revealed that an executive of Botswana Development Corporation is a shareholder in the Oxygen Making Machine project.
How BDC money was used to finance what is effectively a privately owned project not related to the corporation remains a mystery that baffled even the consulting engineers doing the audit.
“Please note further that the schedule of paid invoices includes an invoice for Oxygen Making Machine… Oxygen making is not part of the turnkey contract and is being built outside the site as we witnessed at the site meeting. This invoice should therefore not have been paid by BDC,” says the Managing Director of G4 Consulting Engineers, Botsile Gubago in a confidential report to BDC Industrial Manager, Ms Rosemary Mogorosi.
“Our assessment shows the amount due and payable to the contractor as P254, 588,358 compared to P352, 000,000 as per your email. We are therefore of the opinion that, at this point in time, the contractor has been overpaid by an amount in excess of P100, 000,000,” says the consulting Engineers.
The auditing engineers have also discovered that although BDC has paid over 90 percent towards the equipment shipping, very few equipment items have been delivered to the glass manufacturing site.
“Please also note that with respect to equipment, that over 90 percent of the amount payable on shipping, which should be 25 percent of the contract amount, has already been paid, although from the equipment on the invoice schedule, other major equipment items are still to be shipped.”
The audit engineers end their correspondence to BDC Management by emphasizing that the Chinese contractor should be compelled to submit a full and detailed listing of equipment so far delivered to the site so that the list could be assessed against the invoices so far paid by BDC.
“There could be additional items for which payment has been due to the contractor, relevant expenses and other costs as per article 10. We, however, believe that these items would be relatively minor and our opinion is therefore that the contractor has been overpaid by an amount in excess of P100, 000, 000,” says Gubago.
In a separate letter to Solomon Sekwakwa, Permanent Secretary (Ministry Finance) and also the Chairman of Botswana Development Corporation, the consulting engineers express a discomfort that BDC has been overcharged in some aspects of the contract and also that the contractor has consistently not complied with the terms and conditions of the agreement.
“We have also highlighted that the site substation is part of the original EPC Contractor and that the diesel standby generator could be obtained for nearly half the price quoted by the contractor.”
Further highlighting the discomfort at the high amount of money paid so far and suspicions that the contractor does not have a performance bond in place, the consulting engineers say: “We must, however, point out that no inspection certificates are included with the copies of documentation for the paid invoices passed to us. We have, however, received copies of some test certificates separately although these do not seem to be completely matched to the equipment on paid invoices. We assume the performance bond is in place.”
The glass manufacturing plant in Palapye recently attracted attention after the BDC Board of Directors discovered that even as the corporation had paid close to 90 percent of the total price tag, very little work has actually happened at the site.
“The amount payable for construction works on site would therefore be 50 percent – which we work out as 40 percent down payment plus a further 10 percent,” reported the consulting engineers.