Home » Governance » CMED Lost U.S.$7 Million in Botched Fuel Deal

GOVERNMENT transport enterprise, the Central Mechanical Equipment Department (CMED) lost nearly $7 million in a botched fuel deal last year, more than double the initially reported amount, workers told Parliament on Monday.

A parliamentary committee summoned former members of CMED’s workers’ committee, whose term has since expired but which was in office at the pertinent time, as a probe into the fuel scam continues.

In March 2013, CMED paid $2,7 million upfront to First Oil, a local company for the supply of four million litres of diesel through an offshore account belonging to a Hong Kong-based company Micro-Petroleum, on the recommendation of two state-owned companies, Petrotrade and the National Oil Infrastructure Company.

Petrotrade and Noic reportedly told CMED that they were holding First Oil fuel at their depots. But First Oil failed to deliver the fuel, prompting CMED to report the matter to the police in June. The case is now before the courts.

Presenting oral evidence before a parliamentary portfolio committee on transport and infrastructure development, former CMED workers’ committee members said apart from losing out on the ill-fated fuel transaction, the parastatal had lost more in repaying funds it had borrowed to finance the deal.

“We felt as a committee is that it was not fair that this $3 million went down the drain and the executive communicated to us that they serviced the loan they got from the bank (ZB Bank) to the same tune (of $3million) and it ended up being close to $7 million with interest,” former workers’ committee member, Eddie Bangwaya told Parliament.

The workers, who were initially reluctant to testify on the fuel scam, were offered protection by the committee chaired by Zanu PF Epworth legislator, Amos Midzi, in terms of parliamentary privileges.

The workers said fuel supplies to CMED had become erratic since the botched deal.

CMED finance executive Lysias Kunaka, who appeared before the committee separately, said he was off sick when the payment was made. Kunaka said managing director Davison Mhaka and fuel manager Brian Manjengwa, who has since been suspended, had signed the document.

Lawmakers asked him why he did not query the anomaly when he returned to work.

“To what extent were you involved in the fuel procurement? From what you are saying it appears you are distancing yourself from the processes,” Midzi said.

Kunaka said he was not responsible for procurement and that the MD had powers to bypass him and authorise payments.

“Any payment above $1,500 is authorised by the MD and in this case he is the one who authorised the payment. He saw it fit to authorise payment,” Kunaka said.

“When I came back, I queried why such a large sum of money was paid without all the documents. He went through the papers he had and said everything was in order.”

Midzi asked Kunaka whether he was satisfied with the answer he got from the MD to which he said: “I was not satisfied, but the money had already gone.”

Kunaka said the ZB Bank loan, which was to be paid over six months and attracted 11 percent interest per annum, was repaid through earnings from hiring vehicles during elections where the company billed the Zimbabwe Electoral Commission $7 million.

Source : New Zimbabwe

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