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Zim Traditional Chiefs Bought One Vehicle For US$125 000 But Market Value Was US$38 000

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By News Desk

Auditor General latest reports says that The Council of Chiefs bought four vehicles (Isuzu KB 250 Double Cabs D-Tek 4×4) on October 28, 2018 through the payment facility at a total cost of $499 999 (ZWL).

 

The exchange rate that was used was not specified, however, at the time of procuring the vehicles, the official exchange rate of ZWL to USD was one to one (1 USD:1 ZWL).

 

Therefore, the vehicles were purchased for a total value of US$499 999 with each vehicle costing US$125 000 and the supplier’s invoice dated October 29, 2018 quoted in USD, showed the total of US$499 999.

 

The procurement was based on resolutions made on June 26, 2017 by the State Procurement Board (ref SPB/C/5) and an amount of US$50 500 was approved for each vehicle giving a total of US$202 000 for the four vehicles.

 

The Council therefore procured the vehicles at a cost that exceeded the authorised amount by US$297 000.
No documentation was availed as authority to acquire the vehicles at a price higher than originally approved.

 

Furthermore, market analysis revealed that the price for the same vehicles ranged from US$38 000 to US$70 000 as at January 19, 2021. Therefore, I was not satisfied that the entity got value for money out of this purchase.

 

This was against the provisions of section 22 (1) of Public Finance Management (Treasury Instructions), 2019 provides that it is the duty of every person responsible for the expenditure of public funds to safeguard the funds and ensure that they are spent only on legally authorised purposes and in legally authorised amounts.
Risk/Implication Failure to follow procurement procedures may expose the Council of Chiefs to fraudulent activities and uneconomic buying which may not be to the best advantage of the State.

 

Recommendation Procurement guidelines should be adhered to as this will ensure efficient use of government resources.

 

Investigations should be carried out to establish the reasonableness of the transactions in terms of the value paid.

Management Response

 

The Procuring Unit was not fully operational and we used the running tender at CMED to urgently procure four vehicles for the outstanding Chiefs who had been appointed.

 

All procurement is now done through the PMU. Please note that the price on the tender is US$50 025 on June 22, 2017 but the quoted price per vehicle on October 29, 2018 was $125 000 RTGS.

So the two cannot be compared.

 

The Appropriation Account and SAP printout reflected total expenditure of $45 464 153 for the voted and constitutional appropriation while the Sub-Paymaster General Account (PMG) showed an amount of $43 776 831 resulting in an imbalance of $1 687 321.

 

The two figures were not reconciled, therefore, the accuracy and completeness of the total expenditure incurred by the Council of Chiefs could not be ascertained.

 

Overstatement of Traditional Leaders’ Allowances The expenditure figure of $7 936 732 indicated as Traditional leaders’ allowances could not be relied on as the figure included outstanding allowances worth $623 889.

 

The issue of overstatement of Traditional leaders’ allowances was not resolved as the pay sheet was still being reconciled.

Robert Tapfumaneyi

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