WALVIS BAY – No exemption or approval was granted by the line ministry for local authorities and state-owned enterprises (SOEs) to acquire external debt-collection services.
Several SOEs and local authorities have contracted RedForce Debt Management to collect outstanding debt from clients, from which RedForce is expected to pocket millions of dollars. They are set to collect almost N$2 billion on behalf of SOEs and local authorities.
The SOEs include the Namibia Airports Company, which is owed N$60 million, the National Housing Enterprise (N$53m), the Communications Regulatory Authority of Namibia (N$12m), Social Security Commission (N$80m) New Era Publication Corporation (N$21m), and Agribank (N$113m).
Local authorities who are owed money for services rendered are the municipalities of Windhoek (N$400m), Gobabis (N$90m), Keetmanshoop (N$78m), Omaruru (N$34m), Okahandja (N$50m), Ondangwa (N$80m), Oshakati (N$80m), Katima Mulilo (N$145m), Henties Bay (N$60m), Outapi (N$24m) and Rundu (N$370m).
They all contracted RedForce to recover the outstanding debt. The terms of these agreements range from one year up to five years.
The local authorities’ debt alone is estimated to be more than N$1.3 billion according to documents in New Era’s possession, while the SOEs’ debt is more than N$500 million.
However, the legality of these contracts is currently being questioned.
According to the Public Procurement Act 15 of 2015, any consulting service that exceeds the amount of N$20 million needs to be remitted to the Central Procurement Board of Namibia (CPBN) for allocation to a successful bidder.
CPBN in the dark
CPBN spokesperson Johanna Kambala upon inquiry told New Era they did not handle any procurement application for debt collection of any SOEs or local authorities.
“Please take note that 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,” Kambala said and referred New Era to the Procurement Policy Unit under the finance ministry.
No approval or exemption granted
Meanwhile, spokesperson for the finance ministry, Wilson Ashikoto on Friday said: “At this point, we 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 indicated that the procurement method used in this instance is a non-consultancy service.
According to him, there is no need for a request for exemption if the public entity is procuring within its threshold. However, he said in instances where the procurement is above the threshold of a public entity, then exemption from the provision of Section 8, read with Regulation 2, to the Public Procurement Act, should be requested from the minister.
Contract null and void
Meanwhile, the Walvis Bay council’s legal representative, advocate Richard Metcalfe also on Friday in a letter addressed to RedForce legal representative indicated that the contract signed by the Walvis Bay municipality and RedForce is null and void and is in contravention of the provisions of the Public Procurement Act 15 of 2015.
He said the contract exceeds the stipulated amount of N$20 million for the 12% collection commission on an outstanding debt of more than N$360 million.
“Such process had to be remitted to the Central Procurement Board of Namibia for allocation to a successful bidder.
According to Metcalfe, RedForce failed to comply with the provisions of Section 31 A of the Local Authorities Act 23 of 1992, as the council at no stage passed any resolution to authorise the CEO to sign the agreement, neither was it co-signed by the chairperson of the management committee or authorised employee.
“No matter how your client attempts to spin this matter, there is no legally binding agreement between our respective clients in circumstances where the conclusion of such an agreement failed to comply with the mandatory applicable legislation. It is simply null and void,” Metcalfe stated in a letter addressed to the legal representative of RedForce.
Contacted last week, RedForce CEO Julius Nyamazana told New Era they do not want to comment on the matter.
However, their legal representative Margaret Malambo said the Walvis Bay contract indicated that it does not exceed N$20 million.
According to her, their appointment was done in compliance with the due procurement process as they offer debt collection consultancy services and that the financing of the contract is not directly derived from council/municipal funds.
“Thus, it could not have been budgeted for because monies were yet to be recovered/recouped from the defaulters. Similarly, it cannot be deemed to exceed the thresholds detailed in the Procurement Act or regulations, because the amount that would be collected and subsequently paid to us was not known at the time the tender was advertised,” she said.