HomeLocal$4m ‘murky deal’ haunts minister

$4m ‘murky deal’ haunts minister

President Robert Mugabe has been briefed about Information, Communication and Technology (ICT) minister Supa Mandiwanzira’s alleged involvement in an alleged murky deal where struggling mobile operator NetOne shelled $4 million to a South African firm without going to tender.


ICT minister Supa Mandiwanzira
ICT minister Supa Mandiwanzira

Mandiwanzira, who is accused by some NetOne executives of nepotism and interference in the operations of the mobile phone operator, is accused of engaging Megawatt Energy — a Chinese run consulting linked to him —to investigate a deal between NetOne and Chinese firm Huawei without going to tender.

According to a report authored by former NetOne CEO Reward Kangai for Mugabe and obtained by this paper last week, the minister engaged Megawatt Energy to investigate prices of goods and services paid for through a $218 million loan facility from China Exim Bank by Huawei.

The minister allegedly told NetOne to pay a staggering $4 million for services that other companies could have billed for a meagre $300 000.

according to documents at hand, the minister solely engaged Megawatt Energy, fronted by Xiaodong Li, to carry out an audit of the loan deal without involving NetOne management or the board.

Mandiwanzira has been linked to the South African company.

Documents at hand suggest that Mandiwanzira, through a South Africa registered firm — Blue Nightingale Trading 906 where he was  registered as a director — jointly owned  a building in South Africa, Rivonia, with three other firms owned by Xiaodong.

According to a deed of registration for a property in South Africa attached to Kangai’s report and validated by officials in the Office of the President and Cabinet, Blue Nightingale Trading jointly owns a building with CSEEC South Africa, LXD Group and Megawatt Energy Pvt Ltd —all companies owned by Xiaodong, a director at Megawatt Energy.

According to Kangai’s report, Mandiwanzira instructed NetOne to pay $4 million for “consultancy services” to Megawatt for allegedly helping the parastatal recover $31 million which had been lost due to overpricing of the deal by Huawei.

“A meeting between Megawatt Energy and NetOne was arranged by [former] chairman [Alex Marufu] on December 11 2015 to start at 9am,” Kangai’s report to Mugabe reads in part.

“Prior to that, a meeting was scheduled at 8am for NetOne management and chairman to discuss the Megawatt Energy issue and to come up with a common strategy.

“It was at the meeting that I outlined the procedures that needed to be followed before such an external payment of $4 million could be approved by the Reserve Bank of Zimbabwe and it is at that point that the chairman realised the minister breached procedures and he then said that the ‘board needed to protect the minister’.”

The documents suggest that Megawatt invoiced NetOne on November 5 2015, although there was no agreement between the two parties.

The $4 million was supposed to be paid through a Mauritius- based account in the name of Sinogy Investment Holdings.

The account number — according to documents at hand —is held at AfrAsia Bank, branch Bowen Square in Mauritius’ capital Port Louis .

This was despite that Megawatt Energy is registered in South Africa.

Kangai is said to have refused to make the payment, arguing that NetOne did not have an agreement with Megawatt.

He insisted that such a deal should have gone through tender as the amount involved was beyond the stipulated $300 000, which a head of a parastatal would authorise without engaging the State Procurement Board.

Miffed by the refusal to pay the $4 million, Megawatt Energy on February 3 2016 wrote a letter to Mandiwanzira complaining that NetOne was not complying with his directive.

“Following the meeting [that the] honourable minister chaired with all parties, including NetOne management, agreed that Megawatt had delivered its results, which is $31 million savings for NetOne and NetOne agreed to pay the Megawatt account.

“Initially, NetOne seemed to be preoccupied with understanding how and why Megawatt was engaged by your ministry. Megawatt’s response was that such queries should be directed to the minister’s office,” wrote Xiaodong.

“Megawatt respectfully requests that the ministry intervenes  and that Megawatt revert to dealing with the ministry as our efforts in engaging with NetOne do not seem to be yielding a tangible result.”

In refusing to pay Megawatt, Kangai argued: “At law, any external payments for a state entity to be processed by the central bank require among other things, [according to the monetary policy statement number 7 issued in 2015] a copy of signed contract between NetOne and [payee] Megawatt Energy, proof of approval by the state procurement board [where the amount falls within limit stipulated] and registration of the contract agreement with the central bank.”

None of the three requirements were met, rendering the payment to Megawatt illegal, the documents say.

After the letter, documents state that Mandiwanzira called for a meeting on February 11 2016 and in the build up to that, Kangai was tasked by Marufu (former chairman) to draft a report on the matter.

“During the meeting, the minister indicated his displeasure with NetOne management…he stated that the CEO must leave the operations of NetOne to Brian Mutandiro [now acting CEO], who was only 11 days old in the company,” read part of the minutes of the meeting.

“He went on to state that he had the prerogative to direct the board to fire the CEO.”

In his report to Mugabe, Kangai stated that “Megawatt was handpicked by Mandiwanzira to audit the Huawei deal and the firm did not provide a detailed report on how they arrived at the “so-called saving of $31 million”.

Upon realising the boob, the board sought to regularise the Megawatt Energy deal by tasking management to source for three more quotations.

Documents show that Kangai sought three quotations  for consultancy services from Detecon — a German company that had been used by government before — who  charged $500 000, while Sofrecom, a French firm in the IT sector and offering the same services  charged $300 000.

Government sources told the Standard that Megawatt Energy  had also been tasked to probe a TelOne loan deal with Huawei — another parastatal under Mandiwanzira — but the move failed as the fixed telecommunication giant opted to go for public tender, which was won by Sofrecom from France.

Besides that, documents suggest that the minister is also linked to another company — Blue Sea Technologies a firm that tried to enter into a joint venture project with NetOne for providing an aggregator platform for vending Zesa pre-paid electricity vouchers.

The deal, according to minutes of the finance committee of the NetOne board, was rejected as they found no merit in undertaking the project as a joint venture when the state entity could pursue it on its own.

Blue Sea Technologies, according to minutes from a TelOne board meeting, later tried to undertake a similar deal but failed after the board intervened.

A shareholders agreement suggests that a person named “Supa” is a concealed shareholder in Blue Sea Technologies together with a person referred to as Reward.

Kangai in the report to Mugabe stated that he had been approached by Blue Sea Technologies directors who wanted him to be a concealed shareholder but he turned down the offer.

He now suspects the minister is the one who owns the shares written under his name.

“The project sponsors for Blue Sea Technologies had previously approached the NetOne CEO and offered him shares in the company through a proxy and I refused,” Kangai wrote.

“As I refused to be part of that agreement, it was meant that the mentioned individuals are shareholder proxies for Supa [Tendai Gambe and Raphel Tirivanhu] and someone else.

Mandiwanzira did not directly respond to the questions sent to him about the deal but attacked this reporter over another story on NetOne published by this paper on December 24.

“I am really shocked and very disappointed with your article in The Standard of December 24,” he said.

“It makes a lot of unfounded allegations against the ministry and myself, even where official documentary evidence exists to prove our professionalism”.

Mandiwanzira did not provide the said documentary evidence to rebut the story, but went on to accuse this reporter of falsely claiming to have interviewed him.

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