Part 1- Inside Zesa Holdings: A tale of corruption and plunder

Report by Nigel Pfunde, Fani Mapfumo, Elias Mambo and Nicholas Gochai

  • ZESA Holdings contracts shrouded in controversy
  • Corruption rampant due to price escalation, lack of due diligence and failure to follow procurement regulations
  • Lack of appetite to investigate corruption by government remains cause for concern

FROM failure to implement recommendations prescribed by a scathing forensic audit carried by Price Waterhouse Coopers to resuscitating controversial deals, Zimbabwe’s energy ministry remains an epicentre for corruption and a cash cow for top officials entrusted to supervise, procure and build the country’s multi-billion dollar energy projects.

Zim Morning Post takes a deeper look into some of the projects that have remained controversial and unresolved.

The microscopic view into the energy sector comes at a time when a new Energy minister has been appointed, ZESA board remains suspended and the executive chairman Sydney Gata faces arrest over corruption.

Tenders and Procurement

At the centre of corruption at ZESA Holdings is the tendering and procurement process which has been used to siphon billions of US dollars.

Lack of due diligence, bribery and nepotism have flourished.

As exposed by a recent audit, the cash-strapped and debt-ridden ZESA Holdings lost billions of dollars to a dubious company that was handpicked to dig trenches countrywide over a period of more than a decade.

The company, Zebra Consultancy, was awarded the contract without going to tender.

The company started offering its services to ZESA in 2003, but the only available records are that of September 7 2016 wherein a contract worth US$1,6 million (for Harare province only) was signed valid for a period of one year.

Zim Morning Post carried out a background check of the company but records of its existence could not be found at the Registrar of Companies offices.

A quick google search also yielded no positive result on the structure and track record of the company lending credence to claims that it was a briefcase company and no due diligence was undertaken before awarding the contract.

These startling revelations were stated in a forensic audit report conducted by Price Waterhouse Coopers.

As was reported by this publication, the audit also exposed how due diligence was not followed in the procurement of equipment.

Zesa Enterprises (ZENT) is also said to have procured equipment which include transformers, electricity meters, cables among other machinery which is lying idle at ZENT warehouse in Harare.

According to the audit report, the equipment is worth more than US$1.5 million and this loss comes at a time when ZESA is struggling to pay it service providers which include ESKOM of South Africa.

ZESA insiders revealed that the managers in the procurement department would connive with suppliers and pocket kickbacks while purchasing equipment which the power utility had no use of.

The equipment was bought without following due process as stipulated by the organisation’s procurement policy.

“The equipment which you are talking about was bought as a way of stealing money from ZESA; the managers were receiving kickbacks from the suppliers so this whole thing was a scam. The equipment was never used and some of it is outdated,” said an insider who spoke on condition of anonymity.

The report also noted that some of the equipment was bought as a result of ill advice and incompetence from ZESA engineers who would recommend equipment which was of no use.

Zesa bosses, senior govt officials plunder power utility

ZESA Holdings, is renowned for its many corrupt tendencies (including the habit to inflate prices of goods and services), with the Wicknell Chivayo Intratrek Gwanda Solar Project easily coming to mind.

Chivayo, was awarded US$5.6 million in advance payment – albeit under controversial circumstances – for a project which his company, Intratrek is yet to deliver almost a decade down the line.

The Intratrek contract was supposed to deliver a 100MW solar plant in Gwanda.

The Gwanda project is only one of the many controversial contracts ZESA Holdings has ‘administered.

Hwange Power station rehabilitation controversy

The rehabilitation of the Hwange Thermal Power station has also had its fair share of controversy.

Between 2014 and 2016, the rehabilitation costs at Hwange and other power projects had been inflated by almost US$550 million, raising suspicion that management at the power utility and senior government officials had connived to corruptly benefit from the prices escalations.

As if to buttress that, no one at ZESA or in government ever bothered to investigate reasons behind such abnormal price increases.

Last year, Zim Morning Post reported that Zimbabwe Power Company (ZPC) managing director, Robson Chikuri, came under heavy criticism for inflating prices of Unit 4 Boiler Outage Works at Hwange Power Station from US$808 580 to US$2 205 306, a price adjustment of close to US$1,3 million.

In comes Fortune Chasi

The appointment of Chasi as the Energy minister brought a ray of hope as the ‘hands-on-no-nonsense personality’ was the right candidate for the corruption-strife ministry.

Chasi moved quickly to implement audit recommendations and set a pace aimed at turning around the power utility.

It was, however, the appointment of Sydney Gata, as the executive chairman, which tainted Chasi’s era at the energy ministry.

Questions were raised because Gata had been at the helm of ZESA and his history was littered with allegations of corruption.

Chasi also appointed a new look board and tasked it to implement the forensic audit recommendations aimed at turning around the fortunes of the power utility.

However, Chasi’s stint was short-lived when President Emmerson Mnangagwa relieved him of his duties after having suspended Gata and the entire board on allegations of corruption and failure to perform their duties.

The forensic audit had recommended root and branch shake up at zesa following inflation of prices.

A good example is the smart metering project whose cost at the onset was US$22 million but the first phase ended with costs having escalated to US$42 million.

The audit exposed the variations and recommended that some managers face disciplinary action and be reassigned.

Enter Zesit

Upon his appointment, Gata formed a Zimbabwe Electricity Supply Industry Trust (Zesit) which was meant to carry out projects previously outsourced by ZESA Holdings.

Retired ZESA employees were brought back to run the ZESIT projects. Investigations show that ZESIT was created as a looting vehicle that would get projects without going to tender.

A good example is how ZESIT had planned to grab the digitalisation project.

Gata, since returning to ZESA Holdings as chief executive, has reportedly been using ZESIT as a cash cow project to loot funds meant for the digitalisation of the power transmission company.

The alleged looting spree was being done through shelf companies operating under a network of proxies.

Recently, Gata was exposed in a danming leaked audio where one of his allies, James Dzumbira, a ZESIT official, tried to recruit a ZESA Holdings employee so that he gives him inside information for use to clinch a ZESA project that would have ordinarily gone to tender.

The ZESA Holdings employee, Freeman Chikonzo, was advised that they would have to form a company first using proxies and Gata would make sure the company receives the tender, albeit irregularly.

“What I want you to do is set up a team of IT fundis within three to four days,” Dzumbira said while attempting to recruit a ZESA employee in the irregular deal.

“We are having presentations next week at the national training centre, and once the team submits a concept proposal, we then say this and this company are ready for the project (before submitting) the proposal to the chairman (Gata), and he will give us the money,” he added.

The digitalisation project was meant to computarise all ZESA Holdings systems but Dzumbira reportedly wanted to get the project done using ZESA employees who would, however, provide the requisite services as contractors.

The audio exposes how staff in some parastatals have milked government coffers for a job they should have done themselves during regular hours.

The leaked audio exposes how ZESA executives have also used ZESIT to loot the power company dry.

Besides the digitalisation project, ZESIT, as also exposed in the leaked audio is aiming at taking over the smart metering project and has already been dragged to court for grabbing mining claims in Midlands.