Parly recommends CMED forensic audit

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Fuel division yet to recover the $2,7m lost in botched fuel deal n Concerns raised over poor governance

Business Writer
Parliament has called for a forensic audit of the Central Mechanical and Engineering Department’s fuel business unit following a botched deal in which the company was prejudiced of $2,7 million after a contracted firm, First Oil, failed to deliver the commodity.

A report on CMED turnaround strategy done by a Portfolio Committee on Transport also said the company should actively pursue the recovery of the money through legal channels and to ensure anyone found guilty is brought to book “without fear or favour”. CMED’s fuel retail business urgently requires at least $24 million for recapitalisation.

“A forensic audit is required on fuel business unit before any funds to the tune of $24 million can be injected into the unit,” read part of the report published recently.

“The committee reiterates its clarion call for the ‘fuel gate scandal’ to be urgently concluded and for the culprits to be brought to book.

“It would have been prudent for all those fingered in the matter to be suspended from duty pending finalisation of the case.”

It expressed concern that some of the officials involved in the scam were still “an integral part” of the company’s structures and this did not augur well for the integrity and credibility of the organisation and was likely to put off potential investors. The committee noted with concern that the matter was taking too long to conclude.

“The fact that such a serious case had taken over three years to finalize was a matter of grave concern for the committee,” it said.

It is alleged that CMED management acted incorrectly when it authorised a deal with First Oil in February 2013 after a tender was issued for the supply of five million litres of fuel.

The management is alleged to have authorised a tender award to First Oil at a time the company did not have a valid import licence and was also not listed on the State Procurement Board’s list of bulk fuel suppliers.

CMED subsequently transferred $2,6 million to First Oil’s ZB Bank account. It is further alleged additional $100 000 was paid into the same account but no fuel was delivered to the State entity.

Following a transfer to ZB, Alex Kudakwashe Mahuni and Maxwell William Katunga — signatories to First Oil’s account — transferred $2,36 million to EBG Hong Kong Ltd’s in China. The committee noted that CMED’s internal controls needed to be instituted if the current management was to succeed in increasing the corporate governance index as envisaged in their strategic plan and successfully attracting both local and foreign investors.

“The committee remains unconvinced that sufficient structural and organisational controls have been put in place to prevent the recurrence of revenue leakages exemplified by the yet to be concluded fuel scam,” said the report.

Meanwhile, the committee recommended the company to pursue public-private partnerships in the importation of fuel in order to ensure that its 21 service stations are fully operational. The long-term objective would be to open service stations throughout the country.

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