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There are big fraud syndicates in public institutions – ZIPS

There are big fraud syndicates in public institutions – ZIPS
Written by Masuzyo Chakwe
Wednesday, May 20, 2009 11:49:37 PM

ZAMBIA Institute of Purchasing and Supply (ZIPS) president Jones Kalyongwe has said there are big syndicates of fraud when it comes to fund disbursements in most public sector institutions.

Commenting on the continuous systematic plunder of public resources by some government workers and officials, Kalyongwe said the revelations in The Post newspaper of the K10 billion scam at the Ministry of Health and the K925 million corruption ploy to defraud in Chipata as busted by the Anti Corruption Commission (ACC) had caused alarm to ZIPS.

Kalyongwe said the systematic plunder of public resources had a genesis in the weak systems and procedures of government procurement.

"This is despite the old Zambia National Tender Board Act No. 394 of 1982 and the Zambia Public Procurement Act No. 12 of 2008, having been and being in active use by the public sector officials in matters of public procurement," he said.

He said regardless of the ministry, government department, parastatal or grant aided institution, user departments had taken a greater role in the purchasing lifecycle.

Kalyongwe said the process of the purchasing lifecycle for a project included defining the requirements, drawing the specification, decision to buy services from outside the organisation or use in-house labour for works-where this was feasible for small works contracts, identification of sources to be contracted, source selection and contracting.

He said the above processes had in some government institutions involved some and not all the time the participation of the procurement unit staff.

Kalyongwe said receipt and payment on major works, contract management, consumption on works in progress and the de-commissioning and handover of completed work did not involve the procurement unit staff hence “all hell breaking loose.”

He said in the case of buying goods and services, the purchasing lifecycle involved preparation of tender document, prequalification of tenderers, invitation to tender, confirmation of intention to tender, questions from tenderers, tenders received, evaluation of tenders, post tender negotiations if any and awarding the contract.

Kalyongwe said the roles as placement of order, goods dispatched, delivery and invoice for the goods, inbound inspection, good receipt and payment.

He said as could be seen from the cycle, the procurement unit staff would in most government departments be involved as the spend would be relatively low and most of the goods and services would be "common use items."

Kalyongwe said the role of the procurement staff end when goods and services had been received by the procuring entity while in project buying, the role of the procurement staff ended at contract signing.

He said in most works contracts, the procurement cadre was only involved through the procurement process.

"It should be noted however that when procurement staff are not involved up to the implementation and commissioning stage, the procurement cycle is not complete.

In our view as Zambia Institute of Purchasing and Supply, the sidelining of procurement staff in the implementation stages, through inspections, monitoring and contract management by the project managers, is in most cases the root cause for misprocurement of projects," he said.

Kalyongwe said it had been noted that a project was an undertaking, which had a beginning, and an end, for which there was need for contract management by those who had commercial awareness in project buying.

He said the architects of the procurement process together with the civil engineers from the client ministry/ department, Roads Development Agency (RDA) engineers and the supervising consulting firm must work together as all four played different roles in the execution of work contracts.

Kalyongwe said unfortunately, this was not the case as engineers carried out all the work alone.

He said value for money could never be realised in the current scheme of things as 'pre-determination' of committing fraud in most works contracts was the order of the day, as these contracts attracted huge sums of money.

Kalyongwe said procurement staff in collaboration with other technocrats could save a lot of money for the nation and quality delivery and cost effectiveness could be attained in this collaboration.

He said it was only through this process that incidents of sharp practices could be reduced, as contract management would be managed by procurement staff.

Kalyongwe said connivance by the client ministry of government department staff, RDA engineers, consulting engineer and contractor as the case in the Chipata fraud had revealed, had been easy because the client ministry/department as user designed the specifications.

He explained that RDA engineers monitored the works, consulting engineer supervised the contractor and no one managed the contract from the commercial aspects, as focus was on the technical aspects of the works for which one to three could easily be in league to defraud as the case in the Chipata contract.

Kalyongwe said the issues of corruption as revealed at the Ministry of Health had a lot to do with laxity of controlling officers and weak internal controls.

He said the Auditor General's work was commendable but still matters of misprocurement were rampant due to high level cartels.

Kalyongwe said it was sad to note that due to conflict of interest by the overseeing project managers who felt that the project buying only involved them and only required their expertise and not that of the procurement staff had always been a costly mistake.

"We believe that if the same procedure for procuring goods and services can be applied in works contracts, the procurement cadre can show their skills in supply chain management and thus minimise sharp practices and improve quality delivery. The procurement function is one of the stakeholders in the implementation of projects in both the private and public sectors," he said.

Kalyongwe said it was the institute's view that there was minimum or no punishment or deterrent measures in works contracts to ensure that both the outsourced supervising engineers/ consultants and overseeing client engineers that certifies shoddy works were brought to book or ensure that a certain amount of works that a consultant certifies and which was not in conformity with specifications or in case of failure, the client must be indemnified through insurance taken by the aforesaid consulting firm to cover for the government losses.

He called on all professional bodies in Zambia whose members were engaged in fraud and theft of public resources to be vigilant and de-register and admonish such members as the Law Association of Zambia (LAZ) does to its members who misbehave.

"We as professional bodies cannot afford to sit and watch our members plunder public resources at will," said Kalyongwe.

Labels: ACC, CORRUPTION, JONES KALYONGWE, PROCUREMENT SYSTEMS, ZIPS

posted by MrK @ 10:52 PM