Damning NRZ probe result out

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BULAWAYO — The 10 million pound fraud reported to Bulawayo police last week could be a result of flaws and loopholes in the tendering process at the National Railways of Zimbabwe (NRZ) an audit has shown.
The audit, conducted by audit firm BDO Kudenga and Company, observed that the tendering process for supplies and basic services to the railway company was ineffective.
Patrick Bondayi the parastatal’s finance director is currently on suspension pending investigations into his conduct at the company.
The NRZ management has made numerous allegations against Bondayi.
Chief among the accusations is that Bondayi made unilateral decisions that benefitted his friends and partners resulting in the NRZ being prejudiced of varying amounts of money.
He is also accused of having violated tender board procedures and supplying 20 trucks to the parastatal in an irregular manner.
Bondayi is further accused of accepting or having accepted kickbacks from customers and suppliers, and service providers to the parastatal.
He has however denied the allegations.
According to the audit report, the NRZ subverted set operational guidelines in the procurement of spare parts from outside the country.
“Our review of the tender files processed during the year revealed that there is no evidence of checking the reasonableness of the prices quoted by suppliers.
“This function should be performed by the technical assistants. However, upon enquiry from the technical assistants, we established that they were not performing this function as they had been advised that they should check whether the bids meet the technical standards required.
“The deficiency in the adjudication process resulted in unrealistically high prices being accepted by the tender committee,” said the auditors.
The auditors cited examples where a company in South Africa was awarded a tender to supply 70 terminal motor boxes at a price of £1 200 per unit.
A total of £126 000 was paid out.
However, the auditors, upon comparing other quotations provided for the same product, realised there was a bidder who had presented a bid of US$12 per box for the same product — leaving the total cost at US$840.
This means the NRZ was prejudiced of US$125 160.
The auditors also cited another transaction in which the NRZ procured 7 200 litres of what was called Arsenal chemical.
The winning bidder quoted the NRZ R520 per litre. After awarding this bid, the NRZ forked out R3, 7 million for the chemical.
Upon cross-checking the other bidders for the same product, the auditors realised there was a cheaper bidder who charged R231 per litre of the same product.
In the final analysis, the auditors realised the NRZ was prejudiced of R2, 1 million as a result of the deal.
The auditors stated that had there been effective checking and monitoring mechanisms, the technical assistants would have rejected the prices and competitive offers would have been settled for.
“(The audit) identified a risk whereby there was financial loss as a result of purchase of overpriced items,” reads the audit report.
The parastatal’s management is also facing accusations that it ignored advice and recommendations of the internal audit department on various issues.
The external auditors said the company was at high risk of losing serious amounts of money as a result of its decision to ignore recommendations from the internal audit department.
NRZ, the auditors said, was saddled with a salary demand that chewed up 82% of its total revenues from its operations.
“This is not sustainable,” the auditors noted.
“This means the bulk of money generated goes to salaries, leaving very little for capital expenditure.
The huge salary bill is also evidenced by the fact that the NRZ has been struggling to pay salaries in time as shown by the arrears at year-end,” the auditors said.
The audit report also noted that funds released to “internationally-based” service providers were authorised by one
person – a situation they said was open to fraud and misappropriation of funds.
The finance and administration department director (Bondayi) was the sole signatory to the transfers.
In the report, the auditors gave an example where the finance director, from April to October last year authorised and transferred money amounting to more than $2, 4 million without any other signatory. .