By Tabora Bojang
A special audit of the World Bank funded sub-Saharan African Women’s Empowerment and Demographic Dividend Plus Project under the Ministry of Health flagged ineligible expenditure, significant over pricing and financial losses amounting to D37,394,000 in the procurement of 14 Toyota Prado vehicles.
According to the audit finding, the unit price paid per vehicle was D5,871,000 totalling D82,194,000. However, KMF Technologies, the company contracted to procure the 14 vehicles, purchased 10 vehicles from CFAO Motors at D3,200,000 per vehicle and imported the remaining vehicles. The auditors said this led to “significant financial losses of D37,394,000” which could have been avoided if the vehicles were purchased by the ministry directly from CFAO or another authorised dealer rather than KMF Technologies, which was also the highest bidder” in the submission and evaluation process.
The auditors recommended a further investigation of the D37,394,000 and to ensure full recovery from the former project coordinator, contracts committee members and procurement staff to identify any “undeclared conflicts of interest” between these officials and KMF Technologies.
Responding to the finding, the Ministry of Health explained that the award to KMF was based on the evaluation process where both technical and financial responsiveness were considered.
The management argued that the difference in prices between a non-bidder and a bidder is “merely speculative” adding that CFAO had ample time to participate in the bid but chose not to on their own accord. The ministry urged the NAO to familiarise itself with legal instruments especially the grant agreement signed by the Minister of Finance and World Bank.
In response to the ministry, the auditors maintained that comparison between the unit princess of KMF technologies and CFAO Motors is “entirely justified” because KMF purchased the vehicles from CFAO which is supported by two invoices from CFAO to KMF for the purchase of 10 vehicles. The auditors further argued that the ministry could have avoided this excessive procurement cost by purchasing directly from CFAO instead of engaging an intermediary that charged higher prices. They dismissed the ministry’s assertion that CFAO did not participate in the bidding process as “misleading” explaining that CFAO had no interest in the bidding because they were aware that the vehicles would eventually be procured from them. The auditors charged that they are fully familiar with the terms and conditions of the grant agreement between the government and the World Bank and there was no clause in the agreement that justifies procuring vehicles at such exorbitant costs especially when the same vehicles were readily available at much lower market price from authorised dealers.
The special audit further stated that the team was not provided with evidence or supporting document indicating the need for 14 vehicles and that US$750,000 was initially budgeted for the vehicles but the actual expenditure rose to US$1,300,000 equivalent to D82,194,000. However, the ministry explained that procurement of the 14 vehicles was approved by both the Ministry of Finance and World Bank adding that the cost estimates in the approved document are just “indicative costs” and the “actual price may increase or decrease during implementation.”
But the auditors commented that the ministry’s response did not adequately address the significant budget overrun from US$750,00.00 to US$1,300,000 for vehicle procurement and this cast serious doubts on the budget credibility.
The auditors also observed that the procurement of the 14 vehicles failed to adhere to the GPPA Act 2022 and World Bank Procurement Guidelines as there was no transparent criteria for vendor selection . They also observed that the contract committee disregarded authorised dealership channels and awarded the contract to KMF which raises concerns of possible conflict on interest or undue influence from contract committee members and project coordination unit. But the ministry rejected this observation, saying the “NAO has failed to produce any credible and substantiated evidence of fraud or conflict of interest”.
Misallocation of vehicles
The auditors also found that the 14 procured vehicles were given to offices that already had vehicles in their possession instead of the project implementing partners on the ground. The auditors said the vehicles were issued to PCU, Directorate of Gender, Ministry of Health RMNCAH, Office of the Vice president, Education Unit, Ministry of Justice, Ministry of Youths and Sport and the Directorate of Gender Equality.
However the project management said the vehicles were allocated based on the needs of the implementing partners adding that the SWEDD+ was a multi-sectoral project spanning several ministries and agencies.
