High-level corruption alleged in Tsabana tender

Claims of corruption and favouritism are rocking tenders to supply fortified food for babies worth millions of pula. The allegations were made by one of the millers, Ultimex Holdings, in a letter addressed to the Ministry of Local Government and Rural Development about concerns regarding some amendments made to a template of a contract by officials at the ministry. [ihc-hide-content ihc_mb_type="show" ihc_mb_who="1,2,3,4" ihc_mb_template="1" ] Dated 26 June 2023 and titled “Proposal to Amend the Terms of the Draft for the 24 Months Work Contract for the Manufacture, Supply and Delivery of Sorghum Soya Weaning Foods (Tsabana) for the Government of Botswana”. The letter was in response to one from the ministry dated 15 June 2023 characterised as “unhelpful” by Ultimex. “First you send us on the 9th June 2023, a different template of the contract to the one you sent us on the 15th June 2023. Both these two versions were a complete departure from the template used or contemplated on the ITT,” says the letter from Ultimex in part. “While you maintain that the 2002 template is to be maintained, you have now introduced the requirement of a performance bond under a new clause 31, which states that the performance bond must be in place on the signature date. Your letter is dated 15 June 2023.” It said the signing is scheduled for 16 th June 2023. “This means you expect us to: Have met with our financiers, applied for performance bond, complied with the requirements of the financial institution, the financial institution having done their internal process and approvals and the performance bond documentation prepared and signed by the financial institution and we collect the performance bond ahead of the signature meeting, in less than 24 hours from you adding a performance bond provision,” Ultimex wrote. The company expressed concern that “the consequence of failure to provide a performance bond is cancellation of the contract.” Favouritism and corruption claims “If we were ever in doubt that the Department of Government of some corrupt cabal is determined to bring about the failure of this country even before it begins, this unreasonable conduct on your part, as borne out by your letter, the new performance bond requirement, insistence on an old template without any sound reason and the timelines, is clear,” said the letter. “Your letter does not only introduce a classic case of impossibility of performance but it demonstrates the worst case of administrative unfairness, unreasonableness, bad faith and illegality. “It goes against all the tenets of empowerment of citizen contractors as borne out in part XI (sections 72 to 81) of the Public Procurement Act, 2021 and general government policies on this topic, and it is not difficult to know which contractor is being favoured at the expense of Ultimex Holdings.” Ultimex said the 2002 template, which the ministry insists must be used, had no performance bond requirement. No one has complained and requested inclusion of a performance bond, certainly not Ultimex Holdings, the letter pointed out. “You have not justified the introduction of this requirement in the contract document at the twelfth hour, therefore, there is no lawful reason why this provision must be introduced. On the other hand, Ultimex has made out a very commercially sound case for the use of 2020 templates, which you have refused, save for the dispute resolution clause. You should not introduce anything new that Ultimex has not complained about, if you are to maintain the 2002 template,” the company said. It added that there were other problems with the wording of the contract “to sign this morning” and calls for its redrafting. The company took issue with Clause 9 of the amended contract. “Removal of rejected products within 1 day is extremely unreasonable and clearly contradicts the practicality of Clause 10,” Ultimex said. “While Clause 9 provides that rejects should be removed within 1 day, Clause 10 provides that the contractor may contest the rejection within 8 days and once the notice to contest is given the rejects shall now be removed (contrary to Clause 9).” “Clearly, the draftsmanship here is so legally bad and contradictory that it creates an ambiguity in the contract or such vagueness such the rejection system may become impossible to enforce or implement. One can clearly imagine a dispute arising from government relying on Clause 9 and the contractor relying on Clause 10 and a question arising as to which clause takes precedence. “Please redraft Clause 9 to indicate that removal of rejected goods occurs only after the 8 days has lapsed. To allow reasonable transport arrangements, allow 14 days for the contractor to remove the rejected products, failing which the government will remove them.” Ultimex also expressed concern about “Clause 12 wording (whether greater than the appropriate contract price or not) does not make legal sense, than the appropriate contract price) does not make legal sense,” said the letter. “The measure of damages should be the difference between the Ultimex price and the higher price charged by a replacement contractor. If the prices are equal there is no loss that would be same price that would have been paid to Ultimex but for the breach.” The Permanent Secretary’s office intervened as evidenced by a letter dated 21 June 2023 addressed to the Director of the Department of Finance and Procurement. “We note that we have perused the attached letter of complaint by Ultimex Holdings in terms of which our considered view is that except for paras 3.5-3.8 the rest are technical issues for client to decide on,” it says. “We consequently request to have client’s views on those to enable the legal office to consider the legal soundness of same. “It is further advised that there is need for open-mindedness in addressing issues raised in that what Ultimex requires is to negotiate certain terms of contract which is permissible to the extent that such would not amount a derogation from requirements of ITT.” A letter from the Director of the Department of Finance and Procurement addressed to the Permanent Secretary’s office states: “As per the advice rendered (given) to our department we have thus responded to Ultimex Holdings (Pty) LTD, the areas which we had to account for as the client.” In the letter responding to Ultimex concerns, the ministry’s Department of Finance and Procurement states that the concerns raised against Clauses 9,10,12,28 and 30 are noted but have been addressed as follows: “The argument concerning Clause 9 and 10 is noted and the timeframe has been amended. Clause 12 remains unchanged as it is addressing losses not price only, we note your suggestions but they are only limited to one variable hence excluding other factors that can contribute to a loss,” the letter says. Regarding corruption and favouritism claims made by Ultimex, the letter points out: “Clause 28 is maintained as it does not show any evidence of corruption implied. “Clause 30 is maintained and the suggestions are noted and are considered whenever it becomes evident that the presumed challenges. There are provisions for amicable settlement and there is opportunity to discuss and address issues during contract execution where some areas might be negatively either party.” It further says the government is committed “to timely payment of supplier and the same will apply to this contract and if by any means the 30 days proves not to be working or it is disadvantaging either are further clarities concerning the contract.” [/ihc-hide-content]

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