A draft status audit into the operations of the conveged communications services company, Africom Holdings, has revealed shocking irregularities in its operations including awarding supply contracts to unregistered companies and those owned by directors.
The 34-page draft report dated October 27 2011 on the forensic investigation of local and foreign contractor payments compiled by Ernst & Young seen by NewsDay, details how senior management at the company manipulated the systems to conduct dealings in an unprocedural manner.
The audit sought to evaluate supplier contracts entered into by Africom between February 2009 and July 2011, analyse the Accounts Payable account and trial balance transitions.
An analysis of the company’s supply contracts indicated Africom had 442 local suppliers and 52 foreign supplies. However, only 16 of the local and foreign companies had supplier contracts.
Business intelligence system procedures were conducted on 24 Zimbabwean and 45 South African suppliers. Of the 24 local suppliers, only 11 were registered with the Registrar of Companies in Zimbabwe.
“Four of the 24 Zimbabwean suppliers, namely Managed Data Services t/a Roncon, Monchris Investments, Sola Winds Company and Forest Security, had only registration numbers indicating there were registered with the Registrar of Companies Zimbabwe,” reads part of the report.
“We, however, could not find the companies’ Articles and Memorandum of Association, Certificates of Incorporation and Forms CR14, CR2 and CR6.”
According to the report, auditors could not trace six companies namely Genesis Office Suppliers, Bamm Stationers, Matcol, Datanet Infrastructure Group, Pacstar Cement and Concrete and Venture Com.
Of the 45 South Africa suppliers, only 32 were registered with the Registrar of Companies in South Africa. However, no details could be found on five of the companies.
South African companies, Alclad In-Store Solutions, Whitesands, Photo-Fax, Ripple Communications and Network Liquidators-Vology were identified as unregistered.
The audit also uncovered several South Africa companies that had similar names to the ones contracted by the company.
“We also observed by analysing contract files that Africom did not have tender procedures. There was no indication in the contract files that bids were being invited from various suppliers and that the best suppliers were being selected based on a thorough vetting exercise,” reads the report.
“We further analysed the supplier contracts and noted they were approved by seven different individuals.”
The people who signed the contracts were identified as Millicent Gorogodo (former company secretary), Kwanayi Kashangura, (chief executive officer), Rudo Madavanhu (chief commercial officer), HN Chigubu (former network engineer) and Sekai Saungweme (Africom acting secretary).
The report said it noted weak controls around the safe keeping of supplier contracts, as they were kept by different individuals in different departments.
. . . suspicious transactions
The audit also exposed a conflict of interest with regards to some of the companies awarded supplier contractors at it emerged some at the time belonged to Africom directors.
“We noted that Kwanayi Kashangura (South African ID number 6912040000000) is a director (principal owner) of Netweave Consulting, a South African registered company (registration number 2006/026881/07)
“The fact that Kwanayi Kashangura is both a director of Netweave and Africom chief executive officer, shows a conflict of interest between Africom and Netweave as Kashangura approved/authorised most company payments to Netweave,” he said.
It was also discovered transactions in the Accounts Payable accounts did not include payments to Netweave through African Export-Import Bank in the trial balance as at December 31.
It said Africom received a loan worth $600 000 from Afreximbank, to purchase CDMA equipment from Netweave.
According to the report relative to this loan, Africom paid $600 000 to Netweave on September 2 2010, through Afreximbank, for the purchase of one microwave equipment CDMA base station transmission kit for $150 000 and one OSN equipment kit to link Fiber Optic to CDMA base stations for $450 000.
Journal entries for the CDMA equipment were posted into the Good-In-Transit Account, which is indicative of the pending delivery of the equipment at Africom.
“We interviewed and requested from Leonard Dingwa, Africom warehouse manager, for evidence to prove delivery of the goods at Africom and he told us there was no such documentation and the equipment has not been delivered to date,” reads the report.
“We also interviewed Mecellina Tshabalala, current Africom chief finance officer, about the transaction and she informed us she was aware of the payment and that she had heard the CDMA equipment had not yet been delivered at Africom.”
The report unearthed that in certain instances Netweave would directly settle Africom’s obligations with other third parties.
Netweave reportedly paid $41 700 on June 24 2010 to PCCW on behalf of Africom.
On November 25 and December 2010 Netweave funded the procurement of Africom furniture after paying $49 963 and $84 057 respectively.
Who is Africom?
According to the company’s website Africom is a converged communications service provider with a unique people-centered approach.
Its goal is to build a world-class information and communications technology (ICT) platform that traverses Africa and enables people to achieve the success they desire.
They are building and continue to expand telecommunications infrastructure in Africa.
In addition to being a pioneer, private equity investor in telecommunications infrastructure in Zimbabwe, they are also among the first in Africa to build a wholly IP (Internet protocol)-based telecommunications network encompassing satellite, fibre and broadband wireless access.
More recently, they have invested in a CDMA network, which will enhance their capacity to deliver truly converged voice video and data services of superior quality.
Their billing, CRM and financial modules are integrated to deliver convenience and exceptional value for their customers.
The platforms they build can deliver virtually any combination of multimedia services.