Friday, February 7, 2025

SADC burglary postdates audit report suggesting impropriety

The burglary two weeks ago at the SADC Secretariat’s data hub in Gaborone is expected to blackout crucial information about financial goings on at the regional grouping’s head office – and that may be the point.

For more than ten years, SADC Secretariat has not produced audited financial statements, has undercut all avenues of oversight and frustrated scrutiny of its activities – Sunday Standard investigations have revealed.

From violating financial regulations to brushing aside council of ministers’ directives, for close to a decade the SADC Secretariat acted as an opaque and unaccountable principal rather than a transparent and accountable agent.

The change of guard which saw Elias Magosi appointed Executive Secretary in August 2021 seems to have upset the institutionalised lawlessness.

Curiously, between November 2021 and January 2022, as Magosi started asking difficult questions, at least five senior SADC officials resigned under fuzzy circumstances. The Head of Procurement in November 2021 with two four year terms (eight years) still remaining in his contract. Senior Officer procurement also resigned after serving only one year, the Head of ICT also resigned after serving only two years, the Policy planning and Resource Mobilisation officer has also resigned. The latest to resign is the Deputy Executive Secretary.

The burglary at the SADC Secretariat offices and the mass resignations of senior staff members take place against the background of the change of guard which upset the apple cart, and an audit report suggesting financial impropriety.

The audit report compiled last year by the Board of Auditors under subheading “Weaknesses on preparation of SADC Annual Report” a copy of which has been passed to the Sunday Standard reads: “SADC Financial Regulation 75 “Annual Report and Oversight Report” provides that as part of the year end reporting requirements the Accounting Officer shall cause the preparation and submission of an Annual Report to the Council. The Annual Report shall include among other information the audited annual financial statements of the Secretariat, the Board of Auditors audit report on those financial statements; particulars of any corrective action taken or to be taken in response to issues raised in the audit report; and any explanations that may be necessary to clarify issues in connection with the financial statements.

Upon review of financial records, the Board noted that the latest Annual Report that had been posted on SADC website relates to 2011/2012 financial year and covered the Executive Secretary’s activity report on the SADC Secretariat. The 2011 / 2012 Annual Report however did not meet the requirements of Financial Regulation 75 on the additional information to be included such as, the audited annual financial statements of the Secretariat; the Board of Auditors audit report on those financial statements; the annual performance report in a format set out in the Framework assessing the Secretariats performance against the measurable performance objectives approved in the budget; and particulars of any corrective action taken or to be taken in response to issues raised in the audit report; and any explanations that may be necessary to clarify issues in connection with the financial statements.”

The board of auditors observed that this non-compliance with financial regulations may compromise the secretariat’s accountability to member states and international cooperating partners.

The auditors stopped short of blasting the SADC secretariat for moving too slowly to establish the fraud and corruption management policy, whistle blowing policy and fraud hotline. “The Board noted that SADC Secretariat, was operating without an approved Fraud & Corruption Management Policy, Whistle Blowing Policy and Fraud Hotline as the documents were still in draft form. The absence of such a policy does not complement the principle of transparency and openness regarding the business of SADC being an international organisation which handles huge amounts of public funds and process high volumes of transactions on a daily basis.”

The audit board pointed out that “the absence of the whistle blowing policy does not support SADC’s transparency, openness and stakeholder participation. The policy is an important tool that establishes a channel through which members of staff, stakeholders and the public may raise concerns about possible improprieties in respect of governance and financial reporting matters. Further, the Board noted that Secretariat had no communication hotline in place. It is imperative that mechanisms for addressing concerns about corporate wrongdoing can help the Secretariat protect itself from the risk of violating laws and regulations that provide protection to whistleblowers.

The Audit Board also “identified deficiencies in internal control processes. Not helping the organisation’s weak oversight was the fact that the position of the Director Internal Audit and Risk Management, which is an important governance structure has not had a substantive Director since 2017.

“The Board is also of the view that Director Internal Audit and Risk Management position is a critical post therefore having it vacant for such a long period may compromise the functions of the internal audit function. While audit acknowledges the presence of a personnel on secondment, the arrangement compromises the long-term strategic thrust of the internal audit function.”

The board warned that as a result “effective implementation of the audit and risk management strategies may be compromised; Reviews of legal guidelines, audit and risk management policies and internal controls may be compromised and the overall audit and risk management governance system may be compromised.”

The Board further pointed out that management decision to fill the position through secondment had not been approved by Council of Ministers.

This was not the first time the SADC Secretariat had acted against the wish of the SADC council of ministers.

According to the report, “a review of the March 2019 Council of Ministers minutes revealed that the Council approved a budget of US$ 893,805 for the SADC Solidarity Conference with the Saharawi Arab Democratic Republic (SADR) / Western Sahara to be obtained as follows:

i. US$ 450,000 to be obtained from internal budget re-allocations; and

ii. US$ 443,805 to be sourced from Contingency Fund.

Upon review of the accounting records, the Board noted that the Secretariat had drawn US$ 909,872.06 from the Contingency Fund for management of the Conference resulting into an unauthorised withdrawal of US$ 16,067.06. Does it mean there was no withdrawal from the budget re-allocations?

It was however observed that the excess withdrawal of US$ 16,067.06 was not authorized by the Council of Ministers in the 2018/2019 Adjustments Budget contrary to Financial Regulation 22 (1) (4) (a) which states that “expenditure that can be funded from the Contingency Fund should be expenditure undertaken pursuant to a decision of the SADC Council of Ministers or Summit for activities not provided for in the approved budget.”

The Board of Auditors also raised queiries over Executive Secretary, Dr. Stergomena Lawrence Tax’s questionable procurement of Videoconferencing Equipment.

Following the outbreak of COVID -19, the Executive Secretary in a correspondence dated 6th March 2020, temporarily suspended all missions by SADC Secretariat and directed that all meetings be held via videoconference or teleconference.

The following day, she directed the Deputy Executive Secretary, Corporate Affairs (DES- CA) to expeditiously facilitate the procurement of video conferencing equipment for the Council of Ministers meeting that was to be held from 16th to 18th March 2020. The initial meeting was planned to be physically held in the United Republic of Tanzania.

A day later, on March 8th the SADC Secretariat obtained a quotation SO2020-1880 from Inventions Technologies Company Ltd of Tanzania for the supply and installation of video conferencing equipment in Dar es salaam, Tanzania, at cost of $234,270.12 value added tax (VAT) inclusive. The equipment was to be used in the Council of Ministers’ virtual meeting. On the face of it, it all looks like a straight forward above board deal.

To the Audit Board however, the whole thing smelled fishy.

States the Audit Board report singed by Team Leader SADC Rinniah Situmbeko on the 29th January 2021: “Weaknesses were noted in procurement of video conferencing equipment. These included failures to consider possible viable alternatives of meeting the video conferencing needs, failure to undertake market survey, failure to define required equipment specifications, and failure to follow other steps stipulated in the Procurement Guidelines for Single Sourcing. This exposed SADC to additional costs such as costs of hosting equipment beyond the conference period and shipping costs to Botswana.”

The audit report’s queries assume an even shadier hue against the background that Tax is from Tanzania and all procurement rules in the book were bended to ensure that two Tanzanian companies benefited exclusively from the lucrative single source appointments.

According to the audit report,apart from engaging Inventions Technologies Company Ltd, SADC engaged another company Tanzania Telecommunications Company Limited (TTCL). Hardly a week after receiving the quotations, The SADC Secretariat on 13th October 2020, signed two contracts with TTCL, the first one being for the provision of internet and videoconferencing services while the second one was for provision of co-location services.

 It further emerged from the report that the Annual Consolidated Procurement Plan was unlawfully modified to include the procurement of video conferencing equipment. The SADC Procurement and Grants Guidelines require that Consolidated Procurement Plans should be reviewed by the tender committee.

However, a scrutiny of the minutes of meetings of SADC Internal Tender Committee (SITC) held during the last quarter of the period under review revealed that the amendment was not presented for tender committee review.

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