…As the FIC says Govt continues losing money through corruption

By Bennie Mundando

THERE are individuals who are using their positions in public institutions to influence the awarding of contracts to companies in exchange for gratification in the form of cash, real estate, and motor vehicles, the Financial Intelligence Centre (FIC) has revealed.

In its 2019 trends report, the FIC says it received a total of 18 reports involving suspected corruption mostly perpetrated by individuals charged with authority where Government has continued losing funds that are meant for the provision of public goods and services due to corruption.

It says it was observed that individuals used their positions in public institutions to influence the awarding of contracts to companies in exchange for gratification in the form of cash, real estate, and motor vehicles.

“There were also a number of reports to the Centre on suspected corruption that bordered specifically on fraud and or bribery. Public servants were the perpetrators who were paid in order to grant favours to business persons, especially foreign nationals.

“One of the major sources of corruption continues to be single sourcing of projects which are non-competitive. The contraction of loans on these projects also attracts usury arrangement fees, in some instances up to 9 % of the amount of loan contracted. These fees are distributed between agents and persons responsible for the projects in public institutions.

“Projects under the Public Private Partnership (PPP) arrangements and loans contracted by quasi-Government bodies from private entities are of particular concern. The provisions of the Public Private Partnership Act No. 14 of 2009 as amended (PPP Act) creates vulnerabilities in the procurement process relating to PPP projects,” reads the report in part.

Specifically, section 35 of the PPP Act states that a contracting authority may negotiate an agreement, subject to the approval of the Council, without using the procedure set out in this part where the project is of short duration and the anticipated initial investment value does not exceed an amount prescribed;

This also applies where the project involves national defence or national security and where there is only one source capable of providing the required service, such as, when the provision of the service requires the use of intellectual property, trade secrets or other exclusive rights owned or possessed by a certain person or persons.

It also applies where an invitation to the pre- selection proceedings or a request for a proposal has been issued but no proposals were submitted or all proposals failed to meet the evaluation criteria set out in the request for proposals and if, in the opinion of the contracting authority, issuing a new invitation to the pre-selection proceedings and a new request for technical proposals is not likely to result in an infrastructure project or facility award within the required time frame; or

It also applies in any other case where the Council authorizes such an exception for compelling reasons of national or public interest.

The FIC says the vulnerabilities arising in the cited sections provide a wide scope within which discretion maybe given for awarding an agreement without following competitive procedures and has recommended that Section 35 of the PPP Act should be amended to increase transparency and reduce the incidence of single sourcing, non-competitive and unsolicited proposals that are prone to corruption.

“Reporting entities in particular, financial institutions should enhance their CDD processes at account opening and perform enhanced due diligence on high risk customers. Zambia should put in place legal and institutional framework to supervise Virtual Assets (such as crypto currency) and Virtual Assets Service Providers (VASPs).

“The public should be cautious with invitations to invest in virtual assets and if in doubt consult the Securities and Exchange Commission, Bank of Zambia and the Pensions and Insurance Authority. Government through Smart Zambia should develop a mechanism for biometric identification to establish existence and accuracy of payroll records,” reads the report in part.

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