Home » Industry » CMED Loses U.S.$3 Million in Fuel Scandal

CMED (Private) Limited lost US$3 million in a fuel deal that went sour after failing to adhere to procurement procedures, legislators heard in Harare yesterday. The firm circumvented tender procedures to secure fuel from an unregistered supplier on whom no due diligence had been conducted.

Former CMED loss control manager, Mr Kipinai Chigogo – who has been demoted for allegedly refusing to play ball in the deal – told the Parliamentary Portfolio Committee on Transport and Infrastructural Development that managing director Mr Davison Mhaka unilaterally picked First Oil to supply fuel worth US$3 million without going through the State Procurement Board.

He said First Oil’s import licence had expired three months before its engagement and no prior information had been gathered about its credibility as required by law.

Mr Chigogo joined CMED in 1974.

He said efforts to engage Mr Mhaka on the circumstances surrounding the deal had cost him his job after he was transferred and now earns a salary for doing nothing except “reading newspapers and making his tea”.

He said Mr Mhaka could also be in conflict of interest as he ran a bus hire firm while CMED ran a vehicle hire service.

Contacted for comment, Mr Mhaka denied he owned a bus company and that no tenders were floated for fuel procurement.

“Mr Chigogo was not victimised but has no academic and professional qualification and could not perform to the barest minimum. The decision to remove him from that post was a board decision and not my decision,” said Mr Mhaka.

The parliamentary committee chaired by Epworth MP Cde Amos Midzi (Zanu-PF) invited Mr Chigogo to shed light on what happened in the US$3 million deal.

“They tried by all means to kill the message by killing the messenger through transferring me from an active post to a non-existent post. As a loss control department, we were supposed to be aised and do a Deeds search of the company’s directors, infrastructure in terms of property they own for us to have a fall back position. We were supposed to check for trade references on who they had done business with previously,” said Mr Chigogo.

He said First Oil’s import licence expired in December 2012 but the firm was engaged in March 2013.

Mr Chigogo also questioned why CMED borrowed US$3 million from a commercial bank to pay for the fuel.

“What was the justification in the first place to go and borrow the money if we had the capacity to repay it in so short a time?

“It is those questions that have cost me my office and my job.

“They opted for my subordinate who would say ‘Yes’ and not ask questions,” said Mr Chigogo.

Asked if he had reported these anomalies to higher authorities, Mr Chigogo said he used to do so, but stopped after he realised that Mr Mhaka was in close contact with those offices and thus he lost confidence.

CMED, he said, lost a fortune after losing labour disputes because Mr Mhaka victimised subordinates who questioned his authority.

He said several managers had been suspended for years and after winning the labour disputes were awarded huge sums as compensation.

Mr Chigogo said the police had never engaged him since the fuel deal was reported to them.

He said the parent ministry once appointed an inquiry led by former Attorney-General Mr Sobuza Gula-Ndebele but he did not know what became of that.

Mr Chigogo recommended an independent committee probe the fuel deal.

Sources at CMED said Mr Mhaka had instructed that Mr Chigogo be effectively demoted from loss control manager to a workshop stores support manager.

Last Friday, Mr Mhaka referred all questions related to this to company secretary Mr Oliver Chirongoma, who said the transfer was part of a restructuring exercise and never made reference to yesterday’s claim by the MD that it was because Mr Chigogo was not qualified.

“The new CMED board requested the company in 2012 to restructure in order to cut costs.

“So that restructuring exercise looked at the loss control department and it was felt that department be restructured,” Mr Chirongoma said.

Source : The Herald