Campaign to scrap RDA malicious

FINALLY the Auditor General’s Office has issued a final audit report on the Road Development Agency (RDA). The report does not in any way differ with the draft report analysed earlier.

The focus remains on the K1.4 trillion alleged to have been misappropriated. The audit covers the period 2006-2009. The period covers construction of roads during this period.

However, external influences seem to have driven the core purpose of the audit. Following allegations that huge amounts of money were misappropriated, the donor community, being key stakeholders, ensured that a comprehensive technical and financial audit was done.

However, the accusations that monies up to US$250 million (K1.4 trillion) was misappropriated surprisingly turned out differently.

Some members of the donor community complained about Minister of Works and Supply, Mike Mulongoti who they accused of not taking their concerns. Mr Mulongoti’s annoyance was their allegation that the K1.4 trillion was stolen when even the technical and forensic audit proved untrue. Despite the audit findings that revealed the truth, some donors insisted on trumpeting the K1.4 trillion.

[pullquote]Are the recent changes made to the road sector by President Rupiah Banda related to all this? Are some quarters fearful that the good activities happening in the road sector, through the RDA, may bring political fortunes to President Banda?[/pullquote]

The road sector is a key driver in the development of this country. This sector gobbles up to $350 million annually.

It is cardinal that the projects carried out are of lasting value to the country and open up the country to more economic activity.

But there appear to be sinister activities of some donors campaigning for the abolition of the Roads Development Agency (RDA). Are these calls justified?

What about the allegations that RDA had caused Zambia’s biggest corruption scandal amounting to K1.015 trillion in 2008? What are the findings of the forensic, technical and financial audits carried out since its creation?

Are the recent changes made to the road sector by President Rupiah Banda related to all this? Are some quarters fearful that the good activities happening in the road sector, through the RDA, may bring political fortunes to President Banda?

Is there cause to sabotage funding and close the tap to the sector until after 2011?
Members of Parliament who sit on the Public Accounts Committee (PAC) are familiar with various stakeholders and lobbyists persuading them to take certain stands when they are performing their oversight duties.

But when senior members from the donor community of Danida and the European Union (EU) made it clear that the committee should recommend the abolition of the RDA because of a ‘‘damning audit report’’, the MPs were alarmed.

It has now become fashionable for members of the donor community to campaign for the abolition of model and autonomous institutions created to a large extent by themselves.

In recent times, the Central Board of Health (CBOH) stands as a classic example of a model, autonomous and highly efficient body which was abolished for petty, political and corrupt reasons.

While CBOH was a body admired in the region and credited as an efficient vehicle to deliver health services, the body was dissolved with the help and collusion of politicians and some members of the donor community.

In fact, the dissolution of the CBOH cost the country K400 billion which was funded by cooperating partners. Today, the health sector is suffering the effects of that abolition.

Other social service delivery and social programme bodies that have suffered a similar fate are Zambia Social Investment Fund (ZAMSIF), Micro Projects Unit (MPU) and the five bodies that were abolished and merged into the Zambia Development Agency (ZDA).

Over the years, the World Bank has imposed structural reforms of Government.
Donors have convinced people that Government ministries cannot deliver social services and this power should be ceded to autonomous bodies so that Government ministries are left with policy and supervisory functions.

It is for this reason that autonomous bodies have sprung up being run by professionals and performing better than former Government departments.
It is for this reason that members of PAC were shocked by a proposal from the EU for the dissolution of RDA.

Since then, a concerted campaign has been underway with opposition members of Parliament calling for the entire abolition of RDA.

Road Development Agency (RDA)

In 2002, far-reaching changes were made in the road sector with the abolition of the National Roads Board (NRB) and creation of three bodies: The RDA, the Road Transport and Safety Agency (RTSA) and the National Road Fund Agency (NRFA).

Zambia and the cooperating partners comprising the World Bank, European Commission, DANIDA, Japanese International Cooperation Agency (JICA), Nordic Development Fund, Africa Development Fund (ADF) and Germany Development Bank (KFW) launched the ROADSIP I&II programmes to construct, rehabilitate and maintain a core road network by 2013.

RDA was mandated with the construction, rehabilitation and maintenance of the country’s roads infrastructure.

RDA is also mandated with the tendering and awarding of road construction deals. It is also in charge of the construction of bridges and other crossings.

The NRFA is mandated with managing funds mobilised by the Ministry of Finance and National Planning, locally and from the donor community. NRFA is also in charge of supervising and implementing the ROADSIP.

The RTSA implements policies on road safety, traffic management, registration of vehicles and educational programmes.

NRFA reports to the Ministry of Finance and National Planning, while the other two report to Ministry of Works and Supply, and Ministry of Transport and Communications.

The core agency is RDA which manages the 40,000-kilometre core road network in the country. Only 22 per cent of this road network is now paved. Roads are a key driver of economic development and economic growth and RDA is at the centre of this need.

In its short life, RDA has scored milestone achievements and has in its short time built, paved and in some cases completed very important and political projects.

Some of the major road works that RDA has handled are roads such as the Choma-Chitongo, the Bottom Road (Sinazeze), Mutanda-Chavuma, Lusaka-Chirundu, Lusaka-Kabwe, Mongu-Senanga, Chipata-Lundazi, Mumbwa-Kasempa, the Mwanawasa Bridge, and the installation of computerised weighbridges in Kapiri, Livingstone, Kazungula, Mpika and Solwezi.

RDA corruption allegations

The road sector in Zambia has an annual budget of $350 million. Its projects are multi-billion Kwacha ventures and the industry is expected to attract corruption and corruption allegations.

The huge works have mostly been done by a few contractors with capacity for such works. These are Raubex, China Henan, China Geo, China Jiangxi, Sable Transport, and Roads and Pavings.

Raubex, a South African company, has done the Lusaka-Luangwa Bridge, the Livingstone Airport, the Kafue-Mazabuka, the Lusaka- Kabwe, the Chipata-Lundazi and numerous feeder roads.

Shortly after the death of President Mwanawasa in 2008, NRFA which is headed by Raphael Mabenga, issued a detailed complaint to donors (uncharacteristic) that RDA had overprocured contracts of up to K1.6 trillion (in excess of the limit of K600 billion in 2008).

Upon completion of works, RDA issues certificates to NRFA to pay. This has been the problem. NRFA has instead hijacked the powers of RDA and insists on re-inspecting projects before the fund can pay rendering the process provided for in the law for RDA, useless.

Correspondence shows that NRFA has assumed the role of a ‘’whistle-blower’’ and constantly forwarding the details of ‘’suspect’’ payments to donors.

If there are suspected payments, a detailed report should be sent to NRFA supervisors- Ministry of Finance and not donors!

When the audits were commissioned, NRFA quickly circulated draft findings to road sector donors!

In fact the NRFA is reported to have taken RDA chief, Watson Ng’ambi to the Drug Enforcement Commission (DEC) Money Laundering Unit, alleging that Mr Ng’ambi had made a double payment to a contractor amounting to K2.4 billion.

Upon thorough investigations that saw Mr Ng’ambi suffer a highly publicised arrest, DEC found that the so called double payment was, in fact, an administrative error caused by a new junior who duplicated certificates for payments. Mr Ng’ambi was cleared.

Rwanda, the country that is among states in the region that are learning from Zambia on its road sector quickly poached Mr Ng’ambi for his expertise.

DEC discovered that NRFA had actually made similar errors. In their case, actual funds in excess of K3 billion were released to the contractor doing the Chirundu Road and reversals had to be done, only upon discovery many days later yet the NRFA boss was never arrested.

But tables turn, two years later, Mr Ng’ambi is the new Permanent Secretary at Works and Supply.

The Audit

NRFA’s allegation that RDA had overprocured road contracts in excess of K1trillion has set a vicious process in motion with donors demanding a three-year audit of RDA fearing that Zambia had suffered another grand corruption case involving $250 million.

Since then, Government were made to commission a forensic audit spanning the period 2006-2009.
The audits have involved technical and engineering auditors by teams from Europe and Tanzania.

Following the audit findings, the boards of NRFA and RDA were dissolved and Mr Ng’ambi has been recalled from Rwanda to replace Colonel Bizwayo Nkunika as permanent secretary.

Despite the pressure, President Banda has not yielded to the campaign to abolish RDA and fuse it into NRFA.

The Audit Report
The auditor general has commissioned a three-year financial and technical audit of RDA as demanded by DANIDA and the EU.

The Audit was commissioned to ascertain whether procurement procedures were followed in the awarding of contracts, if road projects were administered in accordance with contract provisions and whether the expenditure adhered to the law.

In conducting the audit, the auditors tested accounting records kept at the Ministry of Works, NRFA and at the RDA.

The preliminary draft findings and inspection culminated in a 300-page query. After examining documents, contracts and payment vouchers, the audit has reduced the report to a 99-page final draft.

The audit report shows that documents were not properly filed and were not produced for audit or were tendered to her team after the audit.

Her major findings include the issue that RDA overcommitted Government on road contracts in excess of money appropriated by Parliament. The overcommitment amount is K1,015,817,097,718 (K1 trillion) in 2008. This resulted in cash flow problems for the year 2009.

The audit also established that RDA signed contracts that exceeded the funds provided for resulting in delayed payments and stalled works or incomplete works.

The audit also questioned procurement procedures, failure to supervise the works, poor contract administration, irregular payments, and failure to provide progress reports.

The audit established that from the 18 sample projects it inspected, contractors provided shoddy, poor or below-grade works.

The audit also established that RDA is encumbered with a debt of more than K300 billion carried over from works done earlier by the NRB.

The K300billion was taken up by Ministry of Finance yet the auditors chose to reflect it in the books of RDA.

The works done under the defunct NRB were not properly documented and the board operated under a defective accounting system.

The audit also dealt with minor issues such as conditions of service for staff and the sale of personal-to-holder motor vehicles.

It also shows an outstanding unretired imprest totaling K19 billion. This amount reflects monies released by NRFA for RDA’s regional engineers across the country to carry out withholding maintenance work.

The retirement of this imprest has been rejected by NRFA because RDA chose to buy tools and equipment such as compactors. NRFA insists this is among the breaches in RDA’s mandate.

In some cases, payments to casual workers have been rejected by NRFA.
Donors had decided to strip RDA of all equipment and tools, insisting that road construction and works will be outsourced from independent contractors.

But there are limited and small works such as patching up of potholes and peripheral works that arise time and again and might not require RDA’s rigorous procurement process.

For example, the works for the Pedicle Road tenders showed that it would cost RDA more than K8 billion. However, RDA chose to use their regional engineer to do the gravel works and it only cost the institution K300 million.

Over-procurement of K1.2 trillion

Following the complaint filed by NRFA and circulated to donors, that RDA had over-committed Government to road works totaling K1.2 trilion, this amount excited many and caused the commissioning of the audit of funds from the EU and DANIDA.

In 2008, Parliament budgeted and appropriated for road works a total amount of K685billion, while RDA signed contracts totaling K1.643 billion (K1.6 trillion) resulting in an over-commitment of K1.015trillion.

This over-commitment was caused by RDA being directed to do unbudgetted for roads and bridge works such as Luansobe, Mpongwe, Nansanga Farm Bloc roads and upgrading of selected Lusaka township roads as directed by president Mwanawasa or his committee of ministers.

It also included works such as the Zimba-Livingstone Road when the road became almost impassable. The committee of ministers directed RDA that a 30 kilometre section which had presented the worst patch be done as an emergency case which cost more than 28 million euros.

RDA was directed to construct and finish the Mwanawasa Bridge in Luapula costing the agency more than K48 billion.

The over-commitment is normal in the industry as some road works that are in the annual work plans can be overturned or new projects included as directed or as a result of emergencies such as the wash-away.

Contracts are signed based on the total contract value for the project and not based on the amount appropriated by Parliament in that particular year.

For instance, the Executive has directed RDA to attend to such roads as Kabompo-Chavuma (K300 billion), Mumbwa-Landless (K300 billion), Senanga-Sesheke (K600 billion), Chipata-Mfuwe (K190 billion), and Lundazi-Chama-Muyombe-Isoka (to help the important link of Eastern and Northern Provinces) and sign contracts.

Most works planned for in the annual work plan and submitted to Government and the donor community will always spill over into the next year.
New huge road works require completion time of 18 months to two to five year period.

The process is designed to promote accountability but is heavily cumbersome.
When a project has been earmarked for construction, RDA comes up with cost estimates and advertises for eligible contractors. The adverts have to run for a period of one month as required by the law.

When bids are received, they have to be evaluated and then submitted to the Zambia Public Procurement Authority (ZPPA). ZPPA also has to sit and approve the winning bid.

Then contracts are entered into between RDA and the Contractor. Upon approval and contract signing, the contractor has to be given a period to set camp, mobilise equipment and workers before commencement of the works.  All this might take up to six months.

And then there is a window period for construction as contractors have to contend with disruption of a rainy season especially for road construction projects.

Donors have always complained about this process. It is for this reason that even the Budget cycle has been changed from October to January to attempt to mitigate difficulties of implementing the annual Budget.

But NRFA and its senior officers have not helped matters choosing to put spanners in the works and scandalising the process as corrupt.

Correspondence between NRFA and sent to the donor community (DANIDA, EU and the World Bank) but not shared with Ministry of Works and Supply, RDA and Ministry of Finance and National Planning (the parent and reporting Ministry for NRFA), shows that NRFA reported the so called over-procurement and sent a summary sheet of road works and projects procured in 2007-2008 and spilling over to 2009/10.

Correspondence also shows that NRFA has chosen to guide donors before any donor/Government meeting.

For example, the answer given by RDA on the K1.2 trillion over-procurement was dismissed by NRFA insisting to the donors that RDA’s explanation of over-procurement as being the result of the multi-year commitments was not credible.

In NRFA ‘dossier’ to donors, they guided the cooperating partners to use provisions of Zambia’s own Finance Act and Appropriation Act which prohibits any controlling officer to commit Government to expenditure beyond one year, and beyond totals provided for in the Budget.

Yet Government has mid-term and long-term plans that also help provide an important guideline for the president beyond the one year RDA work-plan.

For its projects, RDA receives funding from cooperating partners, Government, through its fuel levy, and other charges slapped on road users. The road fund receives and disburses this money and manages the fund as a basket resource.

Zambia has a road network of 67,000 kilometres and its core road network totals 40,000. The work that lies ahead is huge and the criteria on which roads should be done in priority differ from the president, business, agriculture and trading sectors. And all these stakeholders are competing for limited funds in the basket resource.

The audit, however, ignored road works procured by DANIDA directly without tendering. DANIDA gave Raubex $1 million contract (single sourced) to do Luena Bridge in Western Province.

Raubex went on the site, changed the design of the bridge, and changed the scope of work.

DANIDA also hired Zulu Barrow as supervising engineers. The bridge is now showing serious signs of tear and wear, yet the auditor refused to include such works in their sample projects to be audited.

The Mongu–Shoprite Road was also directly procured by DANIDA but was not subjected to or included in the audit.

Cancellation of Advance Payments

RDA operations were disrupted and complicated when advance payments to contractors were banned.

Contractors were forced to begin to secure expensive financing from banks to complete road works.

This meant that road construction works became more expensive as contractors have to factor in the cost of borrowing.

This also resulted in difficulties for small and medium-scale contractors who had to pledge their personal assets to secure bank guarantees.

Why should private banks pay for the construction of budgeted for public works with secured local and foreign funding?

The construction industry is now regulated with the formation of a peer statutory regulator in the National Council for Construction (NCC). If contractors have acted dishonestly, why not let the NCC takes action and de-register such contractors and not punish the whole industry?

Conclusion

Clearly, the road sector is important. This sector is key to the re-election of President Banda in 2011.

It is, therefore, strange that donors appear to use the audit to attempt to close the taps on funding for the sector and use it to abolish RDA.

The startling allegation that a $250 million corruption scandal had occurred at RDA in 2008 as peddled by the donors has turned out to be a mere cold fact of over-commitment and out-of-work-plan contracts.

The measures taken so far by President Banda appear adequate, but will they forestall the administrative and operational lapses exposed by the Audit?

Any attempts to abolish RDA will bring serious confusion and disruptions to current road projects and the efficient systems designed to deliver successful and gradual construction of a sustainable core road network in the country.

The Government should learn from earlier actions made to abolish bodies such as CBOH that have left both Government and cooperating partners puzzled by their own actions.

The establishment of RTSA, NRFA and RDA was a good move that requires perfection through implementing regular reviews.

Since the road sector handles contracts worth billions, it is important that the audit findings as revealed and recommended are carried out.

However, any attempt to use this audit to deny the sector funding or use it to abolish RDA will be totally misguided as the audit report at both technical and financial level is not as damning as sensationally portrayed.

[Times of Zambia]