A report into government’s spending during the Covid-19 pandemic has lifted a veil on potential maleficence in the State’s procurement of goods and services.
The Covid-19 report by Auditor General Junias Kandjeke points to government contracts that were awarded at whim, without following the Procurement Act under the pretext of ‘state of emergency’.
Kandjeke, however, says an emergency situation cannot be used as an excuse to flout laws in the republic.
“Compliance with the Procurement Act was unsatisfactory, based on our findings. In a disaster situation, government offices, ministries and agencies needed to act swiftly; however the emergency.
[The] appointment of service providers led to the contravention of the Procurement Act,” said Kandjeke.
The report was released last year.
What is apparent is that the Office of the Prime Minister (OPM) and the health ministry opted to follow a direct procurement method to source services from suppliers to the value of N$1.4 million and N$4.6 million, respectively.
“There was not sufficient evidence to prove that the chosen suppliers had exclusive right to supply the services procured or were the only suitable alternative available,” Kandjeke says.
This, he said, is in contravention of Section 36 of the Procurement Act, which dictates that direct procurement is permitted “where only one supplier has the exclusive right to manufacture the goods or to supply the goods, works or services to be procured, and no suitable alternative is available.”
Such blatant defiance of the law creates fertile ground for fraud, among others, the chief auditor said.
“The services rendered may not meet the required quality and quantity. It promotes lack of transparency and competitiveness in the procurement process and unfair procurement practices,” he said.
The auditor then recommended that executive directors at the helm of the two implicated institutions provide evidence that they complied with the Act.
“At the commencement of Covid-19, the Ministry of Health and Social Services came up with a list of activities on which they need assistance/funding. The OPM indicated it would assist to cover the cost of N$11 million, this was before the Covid-19 bank account was opened.
“When the Covid-19 account was opened, Covid-19-related expenses were directed to this account. The transactions were procured using emergency procurement as per Section 33 (1) (2) (3) (a) and (b) of the Procurement Act, 15 of 2015,” was the response the auditors got from the PM’s office.
The health ministry, on the other hand, admitted being in the red.
“However, during this period, the ministry was operating under a state of emergency and therefore all procurements were done under Section 33.
“The national lockdown contributed to suppliers being approached on an emergency basis for quotations. The quotations were sourced from suppliers that were willing to provide isolations and quarantine facilities and readily available services during the lockdown period,” Ben Nangombe, the health executive director says in the report.
Between April and June 2020, the auditors did not find any records concerning donations received in cash and in kind through the OPM for Covid-19.
“The ministry of health received donations to the value of N$265 million in kind as reported by the ministry. However, the auditors could not be provided with proof of Treasury authorisations as required,” Kandjeke added.
He continued by saying unauthorised donations may expose the State to unfavourable terms and conditions.
“It is recommended that the executive director [Nangombe] should obtain Treasury approval for all donations received and submit for audit purposes,” said Kandjeke.
Responding, Nangombe agreed with the recommendation but had reservations.
“The donations received were of such importance for the combating of Covid-19 and due to the volumes received, the ministry could not act as per the regulations by obtaining prior authorisation,” the technocrat said.
He then quickly pointed out that the ministry has since finalised a submission to the Treasury for the authorisation of acceptance of the donations.
Back in 2020, the government set aside N$8.1 billion to soften the impact of Covid-19.
At the time, some observers asserted that the government had not pumped that amount into the local economy.
“There was never an N$8.1 billion stimulus [package]. Simple arithmetic shows that the effective package was about N$2.3 billion. The other is monies that the government owed to businesses and the loan guarantees depend on the loan decisions by households and businesses as well as commercial banks assessments,” local economist, Omu Kakujaha-Matundu, said then.
Grant
In his report, Kandjeke also zeroes into the emergency income grant (EIG) which saw the government distribute N$750 cash grants to every qualifying individual.
The audit of the EIG was to establish if the payment was once-off and that only eligible individuals were paid.
“The audit observed that 515 208 duplicate SMS application attempts were received by MTC from 193 332 Namibian ID holders via SMS from 14 to 30 April 2020. All these attempts from the same ID holder(s) were successfully rejected and only appeared once for payment on the EIG approved list,” it was established.
The grant was paid to Namibians between 18 and 59 years who lost their jobs or income in the informal economy as a result of the deadly outbreak that extinguished business and household incomes.
Kandjeke established that N$772 million was spent in total on the EIG on 749 279 beneficiaries, including government employees.
The audit found five 11-digit identity card numbers that were paid but do not exist on the home affairs database.
Various Namibians on different government social grant schemes also tried their luck with the EIG but failed.
These include 322 war veterans, Namibia Students Financial Assistance Fund loan holders and 89 individuals already receiving other social grants.
Kandjeke was not satisfied with the overall rollout of the EIG, as some formerly employed individuals received it.
According to Kandjeke, 4 115 government employees received the grant. This means over N$3 million was paid to civil servants, who may have been gainfully employed and therefore not illegible.
The finance ministry disagreed, saying the auditors can simply not rely on ‘active tax’ or ‘social security’ numbers to determine whether or not a given individual is employed.
Even unemployed persons have active tax and social security numbers, the ministry held, seemingly acknowledging loopholes or inaccuracies in the database.
“Similarly, while active social security numbers proved superior to active tax numbers, the SSC registry had to issue certificates of deregistration to EIG applicants who turned out to be dormant on the SSC register. For this reason, the number of ‘so called’ employed persons (4 115) may be highly overstated as the SSC register is also not in real-time. This conclusion is entirely not correct. The ministry is conscious that some employed persons, including government employees who sought to exploit the apparent weaknesses of the tax and social security register, were paid the EIG grant.”
-emumbuu@nepc.com.na