Shanghala wants fuel storage tender probed

March 2, 2017, 5:38pm



More than five months after Attorney General Sacky Shanghala asked the Sec- retary to Cabinet George Simataa to charge and suspend the National Plan- ning Commission permanent secretary Andries Leevi Hungamo for the way he handled the bulk fuel storage tender, nothing has been done.

Shanghala also recommended that the Anti-Corruption Commission should probe Vaino Nghipondoka and his com- pany Babyface Civils; his joint venture partner, the China Harbour Engineering Company; and Hungamo for their suspi- cious roles in the same tender.

The tender for the construction of the bulk fuel storage depot underway at Wavis Bay was given to CRB, a joint ven- ture of China Harbour Engineering, the Roads Contractor Company and Baby- face Civils in 2013.

Initially, the government had budgeted N$3,699 billion for the project but the cost has since ballooned to N$5, 4 billion because the bid was quoted in US dollars contrary to an express order that whoever wins the tender should quote in Namibia dollars.

Hungamo chaired the Cabinet Techni- cal Committee whose members were the then works permanent secretary Peter Mwatile, finance permanent secretary Erica Shafudah; the then mines perma- nent secretary Kahijoro Kahuure; the At- torney General’s Office and the National Planning Commission.

Hungamo, in his capacity as the chair- person of the technical committee that foresaw the selection of the winning bid, also faces misconduct charges for diso- beying, disregarding or wilfully default- ing in carrying out a lawful order given by a ministerial committee appointed by former president Hifikepunye Pohamba in 2011.

The technical committee was instruct- ed to put out a tender through the tender board and then recommend to the gov- ernment on the progress.

Instead of following the orders, Shanghala said Hungamo went ahead to recommend CRB whose quote was in US dollars and that even after the ministerial committee had instructed them to rene- gotiate after realising the foreign curren- cy trap, they still ignored the order.

Shanghala argues that Hungamo’s actions as the chairperson has cost the government and the taxpayers N$500 million and raised the cost of building the fuel storage depot to N$5,4 billion.

Therefore, Shanghala advised Si- mataa, in his letter dated 20 September 2016, that he should consult the Prime Minister regarding charging and sus- pending Hungamo once he has reasons to believe that he is guilty of misconduct according to the Public Service Act.

He told Simataa that Hungamo com- mitted misconduct as defined in the Pub- lic Service Act in that they:

• Approved and/or recommended of CRB’s tender bid contrary to the tender specifications which dictated that the contract should be sounding to the N$; and/ or

• Failed to engage the ministerial com- mittee before recommending for the ap- proval of the tender by the tender board as aforesaid; and/or;

• Did not obtain approval to recom- mend such an award on such terms and conditions as it has been awarded; and/or

• Withheld the knowledge that the tender exposed the government to the US$-N$ currency fluctuations notwith- standing and contrary to the express in- tentions of the ministerial committee and the treasury in particular

Shanghala said he would seek advice on waht civil action to take against those involved in the tender and are about to retire.

He also told Simataa that he would consult the ACC director general Paulus Noa and the prosecutor general Martha Imalwa “so that they are aware of the im- pending” action and “are in a position to exercise their powers”.

On 5 December 2016, Shanghala wrote to Noa requesting him to open in- vestigations into the “potentially corrupt practices in respect of the National Oil Storage Facilities Project”.

Shanghala said those to be probed are the China Harbour Engineering Compa- ny; Babyface Civils; Nghipondoka and Hungamo.

He said China Harbour Engineer- ing should be probed for quoting in US dollars despite clear directives from the finance ministry at the time that the contract should not contain a US dollar component to avoid exposing the govern- ment to foreign exchange risks.

According to Shanghala, Hungamo as a public servant oversaw the signature to an agreement that “exposes the govern- ment to foreign currency exchange risk without at the very least and at a bare minimum, making any provision for hedging or the management and/ or mit- igation of that risk”.

“Suffice to say that because of this, there are runaway costs to the project. In my view, the allegations that this consti- tuted a dereliction of duty on the part of Hungamo, can easily be sustained and proven,” Shanghala wrote.

Shanghala said Nghipondoka, whom he said is a known associate of Hunga- mo, has an agreement with China Har- bour for a total ‘commission’ of 5% of the value of the contract.

“What was initially meant to be a pro- ject budgeted at N$3 699 billion is now ballooning to over N$5,4 billion [there- by] increasing Babyface’s net income,” he said, adding that Hungamo’s lifestyle and farming activities are far beyond the means of an ordinary civil servant or per- manent secretary.

Shanghala suggested that the ACC should request for:

• A copy of the contract between Baby- face and China Harbour

• A copy of the register of all transport permits, farming implements, assets, game and cattle held at Hungamo and Vaino’s farms either from the two parties or the veterinary services or the environ- ment ministry

• Copies of all receipts and proof of payments from the game and cattle

• Copies of all receipts and proof of payments made to contractors and sub-contractors who built Hungamo’s house at Finkenstein Estate

• Hungamo’s asset register

• Babyface, Nghipondoka and Hunga- mo’s banking records as well as those of their immediate relations and associates

• Communication between Nghipon- doka and Hungamo or evidence thereof from cellphone activity and physical meetings

• Cabinet directed Shanghala to draft charges against the culpable civil serv- ants responsible for the fuel storage’s price hike.

No action from Simataa, Noa

Although Shanghala made these rec- ommendations in a letter he sent to Si- mataa on 20 September 2016, no action has been taken against Hungamo - more than five months later.
In a memo dated 30 January 2017

that he submitted to Cabinet, Shangha- la said that Simataa does not seem keen to act on Hungamo despite the available evidence and instead said he would seek further legal opinion on the matter.

This is despite the fact that Shanghala said he had sought legal opinion from Jurie Badenhurst and Karin Klazen of ESI law firm and spent N$100 000 to put together a memorandum detailing the culpable conduct.

The charges, he said, were drafted in consultation with Simataa, Prime Minister Saara Kuungogelwa-Amadhila, - nance minister Calle Schlettwein and the cabinet committee on treasury.

Noa and the prosecutor general Mar- tha Imalwa, according to Shanghala, were also contacted on the drafting of the charges.

“Having spoken to the Secretary to Cabinet myself, it is clear he does not have all the facts before him or alterna- tively, he does not appreciate same.

“It is further submitted that the Secre- tary to Cabinet is misconstruing his role as espoused in the words “reason to be- lieve” that a misconduct was committed

as there are two tests utilised in prosecut- ing similar misconduct misdemeanors/ transgressions: the evidentiary test and the public interest test,” Shanghala told the Cabinet.

As far as evidence is concerned, he said, there is documentary evidence to conclude that all parties knew that the government intended the tender to be denominated in Namibia dollar yet the permanent secretaries and the planning commission went ahead to award the contract as presented by CRB at N$10, 17 to the US dollar at the expense of the government.

On public interest evidence, Shangh- ala said taking action against Hungamo and other involved would send a clear message that if civil servants act negli- gently, there could be repercussions.

According to Shanghala, it seems, however, that in calling for a third legal opinion on the matter, Simataa thinks that he ought to have tried the facts be- fore a disciplinary hearing as opposed to reasonably assessing the allegations and presentable evidence that can be ob- tained if not available.

He also said it is not for Simataa to nd Hungamo guilty but that it is the function of an impartial disciplinary hearing.

“For the question can be posed, is it not reasonable to accept the opinion of the constitutionally tasked of cial, who has taken outside advice before opining as a basis for charging a permanent sec- retary?” he asked.

If Simataa goes ahead to seek third le- gal opinion, Shanghala said, this would cost the government more and would raise concern on what will happen if the third legal opinion differs with his nd- ings and those of the outside counsel.

Shanghala urged Cabinet that:

• Simataa should present the charges to Hungamo

• Suspend him with remuneration for the duration of the disciplinary hearing

• Appoint an acting permanent secre- tary for the planning commission

• Consider former deputy prosecutor general Advocate Danie Smalls to pres- ent charges to Hungamo

• Consider former prosecutor general Taswald July or former divisional magis- trate Gibson Imbili to chair the discipli- nary hearing

• Treasury should con rm to him in writing whether or not it was aggrieved by the escalation in price as a result of the tender, without which it will be dif cult to see what injury government suffered

• Treasury should consider in writing whether or not to instruct the attorney general to consider ling a civil action for a possible recovery of loss as may be deemed reasonable.

“There can be no doubt that some- thing awry went down in the conclusion of the contract for the construction of the National Oil Storage Terminal Project and the reality is that from a N$3,6 bil- lion contract, treasury is now exposed to the tune of N$5,4 billion with direct and indirect state guarantees on the line,” Shanghala concluded.

He also said although the disciplinary hearing may acquit the permanent sec- retary in question, it is possible that the evidence to be presented may convince the hearing that indeed some form of cul- pability may be apportioned.

Even if the culpability may not be 100% on the conduct of the staff, the gov- ernment would have scored some victory if it recovers even N$1, he said.

For this reason, Shanghala said, Si- mataa should retreat from seeking third legal opinion because if he insists, this would “present the regrettable boldness upon the conduct of civil servants that they can never do any wrong and will never be followed by consequences for their conduct, which causes systematic economic consequences”.

Government has engaged CRB to re- negotiate the tender with a view to bring- ing down the price to about N$4,5 billion.

Shanghala could not con rm anything on Tuesday, citing client-attorney privi- lege.

“Please be advised that I am con- strained by client-attorney privilege, a cornerstone of our legal profession and democracy, not to disclose, discuss or divulge information or correspondence relating to any advice rendered to clients.

“In this respect, the Secretary to Cab- inet is my client and as a constitutional of ce-bearer vested with statutory func- tions; the Secretary to Cabinet is covered by client-attorney privilege.
“Let me further add that the Secretary

to Cabinet is bound to act in terms of law, and until he has exercised his function, he is under no obligation to respond to speculative inquiries,” Shanghala said.

He also said that he had not yet writ- ten to Noa regarding probing Hungamo, Nghipondoka, Babyface Civils and Chi- na Harbour because he had not received instructions.

As to how far the negotiations to con- tain the cost have gone, Shanghala said the matter was being tabled before Cab- inet.

“The minister responsible for infor- mation will be tasked to communicate whatever the Cabinet determines as per Cabinet Handbook. I am therefore not at liberty to discuss beyond what I have stat- ed, save as to con rm that indeed, negoti- ations were conducted,” he said.

Simataa could neither con rm nor deny that Shanghala asked him to charge Hungamo although he admitted that the attorney general has prepared a number of reports on the matter of the bulk fuel storage project.

“Cabinet was briefed about the fund- ing structure of the project and nan- cial implications thereof and agreed on measures to engage the stakeholders to limit government to further nancial ex- posure.

“Similarly, Cabinet also agreed that procedures that were used in awarding the oil storage tender be reviewed in or- der to verify if there were any possible deviations.

“Should such a review show that there were deviations in procedures; such mat- ter will be dealt with in terms of the exist- ing laws,” he said.

Noa said he is yet to receive anything from Shanghala.

“Maybe it is still coming. I have no idea. if it still coming I am waiting for it,” he said.

Both Hungamo and Nghipondoka said they had not heard about any inves- tigation on them by the ACC.

“Not that I am aware of” Nghipondo- ka said.

“No, I am not aware of any what you are saying right now,” Hungamo also said.