Windhoek
Details emerged yesterday into Nampower’s bold decision to suspend managing director Paulinus Shilamba, chief officer for technical services O’Brien Hekandjo and the senior manager for energy trading Werner Graupe – who all seem to have paid a price for the controversial Xaris Energy deal.
The suspensions stem from a damning forensic report that found the three executives negligent in the execution of duties related to the tender awarded to KMPG Consortium to provide commercial and technical advisory services to Nampower at the expense of two other companies, Crisil and Aurecon, that tendered for the same job.
It was on the technical advice of KMPG Consortium that Nampower selected Xaris Energy as the preferred independent power producer to set up a 250-megawatt power plant as the relief mechanism to deal with the country’s looming power crisis.
The forensic report by accounting and auditing firm Saunderson & Co, says Shilamba “neglected his duties and responsibilities, and did not exercise reasonable care and skill” when dealing with the KPMG tender. He also “failed to inform the board of the costs implications of the tender and to ensure that proper authorisation was done for the project”.
The report found that Graupe single-handedly engaged in “a manipulation of numbers solely to get the tender approved”. He allegedly changed the tender conditions on pricing, from firm pricing to an hourly rate and recommended KPMG as the only company that submitted hourly rates, even though the tender specifications were for a firm price.
Nampower’s communication department would not confirm or deny the suspension, referring all queries to the company secretary, Suzan Mavulu, who did not respond to emails or SMS’s sent to her mobile phone. Saunderson & Co would not be drawn into commenting on the story with audit partner Edingtone Tafirenyika only saying: “Unfortunately we cannot comment.” Nampower incurred millions of dollars in expenses, without board approval or knowledge. It is said that Shilamba did not even bother to inform the board that the project costs exceeded the budgeted amount.
Shilamba and Hekandjo signed invoices for payments knowingly, sidestepping the Tender Board, which is supposed to give approval for such amounts, and without purchase orders as required by Nampower tender and procurement policy, the report says.
The forensic report, in New Era’s possession, also notes that Graupe “bullied the [Nampower] creditors department into paying the [KPMG] invoices” that were neither signed by Shilamba, as the managing director, nor by the board of directors as should be the case.
Shilamba and Hekandjo’s other alleged sin was to put too much trust in Graupe to manage the project, from shortlisting of tenderers to management of the project with the KPMG team, without any executive supervision. They signed documents and invoices without insisting that policies and procedures be followed.
All these “resulted in uncontrolled spiralling tender costs, and lack of control over the project costs”, Saunderson & Co stated in the forensic report.
KPMG Consortium received payment totalling more than N$34.5 million – way above what Nampower budgeted – between January 2014 and March 2015.
“Whereas the person may be operationally very competent, he cannot be allowed to have so much power and so many duties, without any adequate supervision by his superiors,” noted the report on Grauper’s dealing with the KPMG tender.
The report also found that Nampower went on to sign the contract with KPMG without first negotiating the final fee based on scope of services, as previously agreed, let alone including the final fees in the agreement.
This made it easier for KPMG to work on the second phase of the tender and to bill Nampower per hour, without purchase orders, or the payments being signed off by the authorised persons.