WALVIS BAY – The Walvis Bay municipality allegedly paid about N$17 million to controversial debt-collector RedForce within the first nine months after inking their agreement.
On 22 September last year, the day on which the contract came into force, the debt-collector additionally received N$313 000, and over N$1 million on 13 October 2023 without collecting a cent on behalf of the council, it is further alleged.
These are some of the key findings in a report compiled by Metcalfe and Beukes Attorneys, on behalf of the municipality.
The report states that RedForce has been charging VAT on collection fees. These debt-collection fees, amounting to 12%, were added as late payment fees or levies to process debit journal entries on accounts, making them exempt from VAT, the lawyers found.
“No council resolution or any correspondence between the finance department and RedForce authorises these VAT charges. It decided that the input VAT should be paid and reclaimed from NamRA as output VAT. Further investigations are ongoing, and NamRA will be consulted. The VAT payment was also not charged to the arrear account holders, but was instead paid by the municipality to RedForce,” reads part of the report.
The lawyers found that the tender should have been referred to the Central Procurement Board of Namibia (CPBN) for proper guidelines to be followed.
“It would have cost a simple calculation to determine that N$302 million is outstanding to the municipality, and 12% thereof is N$36 million. This simply shows that this tender could not be entertained by the local authority as it exceeded N$20 million,” lawyer Richard Metcalfe said in his findings.
The Public Procurement Act states that any consulting service which exceeds the amount of N$20 million needs to be remitted to the CPBN for allocation to a successful bidder.
On Monday, RedForce told New Era that they have filed two separate civil claims against the municipality, of which both are pending.
“We have appointed a reputable, respectable and distinguished law firm that does not litigate in the media. Cconsequently, we do not have any comment on the report,” RedForce legal advisor Margaret Malambo said when asked to comment on the Metcalfe report.
However, in an earlier response, Malambo claimed that the contract does not exceed N$20 million. According to them, the financing of the contract is not directly derived from municipal funds, and it could thus not have been budgeted for because the monies were yet to be recovered from the defaulters.
“Similarly, it cannot be deemed to exceed the thresholds detailed in the Procurement Act for the very same reason as the amount that would be collected and subsequently paid to us was not known at the time the tender was advertised,” RedForce said at the time.
They added that it is only logical and legally-sound that any termination should also be done in compliance with the Public Procurement Act.
CPBN spokesperson Johanna Kambala said they did not handle any procurement application for debt-collection of any SOEs or local authorities.
“Please take note that the CPBN did not handle any procurement awards that have to do with debt-collection by RedForce. Kindly reach out to the respective public entities to enquire how they awarded the bids,” she said, and referred New Era to the Procurement Policy Unit under the finance ministry.
When contacted, finance ministry spokesperson Wilson Shikoto said they have no recollection of an exemption granted or requested in relation to the subject matter.
“We also do not have a centralised database of all procurements conducted by all public entities,” he said. Shikoto indicated that the procurement method used in this instance is a non-consultancy service.
There is thus no need for a request for exemption if the public entity is procuring within its threshold.
However, in instances where the procurement is above the threshold of a public entity, then an exemption should be requested from the minister.
The Metcalfe report furthermore noted that the bid evaluation committee (BEC) did not fully comprehend the technical and financial scope of RedForce’s bid.
Moreover, the bidding document appeared tailor-made to favour RedForce.
“It appears that various criminal offences reveal themselves from this preliminary investigation and must, upon further investigation, be handed over to the criminal authorities for prosecution,” Metcalfe said in his report.
(Metcalf)
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