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Government probes procurement rot

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Staff Reporter

 MASERU — Lesotho has been losing millions through a procurement scam orchestrated by corrupt government officers, the Sunday Express can reveal.

Procurement officers are allegedly giving government business to suppliers they are linked to.

The corrupt officers either hand business to companies in which they have shares or are fronted by their relatives.

These companies then supply goods to the government at highly inflated prices.

The fraudsters are taking advantage of a government regulation that allows procurement officers to purchase goods and services under M100 000 without going through the normal tender process.

The finance ministry has appointed a forensic audit firm to investigate what sources say is widespread corruption by procurement officers.

Nexus Forensic Services, a South African firm, has already started investigating some government departments.

Finance Minister Timothy Thahane says the government will soon invite tenders from other forensic auditing firms to investigate other departments.

Nexus Forensic Services managing director Vernon Naidoo this week confirmed the company had been engaged by the ministry for the past three months but refused to say which departments they were investigating.

The forensic auditors are digging deep into the government’s supply chain for evidence.

They are likely to find a mess in the system, according to sources.

Investigations by the Sunday Express reveal that procurement officers are fabricating orders so the government can pay for goods and services it would not have gotten.

Some of the officers have opened briefcase companies which they use to supply the government.

These companies belong to them, their friends or relatives.

When a department wants to buy goods the officers will solicit quotations from companies in which they have links.

In most cases these companies are housed at the same building.

And in some bizarre cases some of the companies which supposedly provide quotations actually have the same phone and fax numbers.

Sources say some of the officers are so daring that they actually put their home phone numbers on the quotations.

The prices on the quotations are in most cases almost identical or within the same range. 

The companies sell the products at exhobitant prices.

Some put mark-ups as high as 400 percent on their invoices.

In one instance, a laptop that costs M4 700 was sold to a government department for M19 000.

A printer that costs M500 was sold to the same department for a massive M8 000.

But the rot does not stop there.

The procurement officers also forge the internal requisition forms to increase the number of goods sold so their companies can benefit.

For example, if a department requires five printers a procurement officer can change the number of units to six.

This normally happens when the company whose quotation would have been approved has links with the procurement officer.

The units are only changed when the requisition form has already been approved by the directors.

The same manipulation will be done on the government purchase order after it has been signed by the authorising official.

In most cases, the rule that specifications of products for which quotations are invited should be the same is disregarded.

The companies involved in the rackets are allowed to quote for the same product but with different specifications.

But because they are normally linked to the procurement officers no questions are asked.

In some cases government business has been given to companies that are not even registered with the Lesotho Revenue Authority. 

Yet such companies still include the VAT charge on their invoices to the government.

They then pocket the VAT fee instead of handing it over to the revenue authority.

The same officers use their positions to fast-track payments to companies they are connected to.

Normally their companies are the first ones to get paid.

Thahane said the Ministry of Finance was working hard to root out corruption in the government’s procurement system.

He said more forensic audit firms will be hired to investigate more departments suspected of involvement in the scam.

“The Criminal Investigation Department and the forensic department in the ministry are working closely to deal with the corruption,” he said.

Institutionalised corruption has become endemic in this country, he said. 

Thahane said the forensic audits will not be limited to the procurement departments only.

“We are looking at financial irregularities in general. This is an ongoing process,” he said.

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