Geiger deal opens can of worms . . . Firm a ‘handbag’ company . . . Costs allegedly inflated . . . Minister Gumbo insists everything above board

13 Apr, 2018 - 00:04 0 Views
Geiger deal opens can of worms . . . Firm a ‘handbag’ company . . . Costs allegedly inflated . . . Minister Gumbo insists everything above board Special Advisor to the President, Christopher Mutsvangwa

eBusiness Weekly

Hebert Zharare
The cancellation of the Geiger International road dualisation deal has exposed that incompetence and corruption abounded in Government corridors amid revelations that the Austrian company is just a “briefcase” firm with no financial muscle to mobilise the required funding for the dualisation of the Beitbridge-Harare highway.

According to the Special Advisor to the Ppresident, Christopher Mutsvangwa, who was part of the delegation that accompanied President Mnangagwa to China, Geiger is just a briefcase company with no capacity to fund a $1 billion project.

He said Geiger officials had spent the past two years, since getting the deal, knocking on Chinese construction firms’ doors begging for funding.

“Geiger does not even exist, it’s a handbag company…it’s a briefcase company and does not have capacity to do such a project. They wanted to sell the project to Chinese companies. They do not have capacity, so they went to a company called China Harbour Technology, which is a subsidiary of one of the bidding companies.

“But remember this is Chinese policy money from policy banks; they are not commercial banks and this is money given under statutory obligations and provisions by the Chinese Government. So you cannot go and compete one state company against the other. They will refuse because the shareholder is the same,” said Mutsvangwa.

The alleged flaws on the Geiger deal, according to some observers raises questions on competences of some Government officials entrusted with adjudication of such huge national projects that cost billions in tax payers’ money because how can a firm with little capacity end up landing a billion dollar project?

Fresh details also reveal the cost of the project, $1 billion, could have been inflated to accommodate numerous middlemen and kickbacks as Geiger hunted for finance from different potential funders.

It also emerged that ever since winning the contract, Geiger has not invested anything into the project with revelations indicating Government, through the Ministry of Transport and Infrastructure Development superintended by Joram Gumbo, bankrolled all project activities done so far.

Mutsvangwa said corruption by the previous administration had reached unprecedented levels and was becoming a threat to national economic interests.

“The Chinese President (Xi Jingping) actually wanted to sign for the project in 2015. That is one of the reasons why he came to Zimbabwe in 2015 and (former president Robert) Mugabe refused and said he wanted to give the project to Geiger.

“Then Geiger went to look for money from the Chinese, which included the cost of corruption which was factored in, saying we won the project and were given some kickbacks. The Chinese Government said, No, our companies can go straight to Zimbabwe and it will be cheaper.

“The Chinese refused to underwrite the corruption. That is why the project has taken that long. The President wants the project done. He is keen about it. He is just going through the process of making sure that if there are any legal hurdles, they are overcome,” said Mutsvangwa.

However, fed up with delays and unsatisfactory excuses, President Emmerson Mnangagwa announced, while in China last week, that Cabinet had resolved to cancel the Geiger contract and open it to other bidders after giving the firm a 60 day notice of intention to terminate the deal.

As it stands, Government is now only waiting for the 60 days provided for in the contract, contrary to insinuations by Minister Gumbo that the 60 days were a reprieve given to Geiger to implement the project.

Gumbo, however, declined any wrongdoing on the Geiger deal, saying the winning company was forwarded to his ministry by the State Procurement Board (SPB), adding it only worked with IDBZ as an advisor.

He said after AFECC which was also marked to land the road project was declined because of its previous dealings in diamonds in Chiadzwa, Geiger won the re-advertised job because of its favourable terms.

“Geiger charged 2 percent interest on the $2 billion Beitbridge-Harare highway, the Harare Ring road, and the Harare-Chirundu highway, while other firms including the Chinese charged between 6 and 8 percent interest. The cost of Beitbridge–Harare highway is $984 million, Harare Ring Road $368 million and Harare to Chirundu highway because of the mountains along the way was charged $868 million.”

Gumbo said Geiger and China Harbour Technology jointly won the Beitbridge to Chirundu Road but they split the sections into two. The Austrian firm took the Beitbridge-Harare highway to be handled under a Public Private Partnership, while China Harbour Technology took the Ring Road and the Harare-Chirundu highway to be constructed under a loan facility.

Minister Gumbo defended Geiger’s failure to mobilise money saying the changeover of Government in November last year resulted in the financiers developing cold feet.

“The banks would not give the money up to January resulting in Cabinet giving Geiger a 60 day notice that also demanded them to provide proof of availability of money within that period,” he said.

The Ministry of Transport in most countries breeds a lot of controversy as it controls some key money spinning facilities such as toll gates, air, road and rail transport, vehicle and driver licensing.

Of late all has not been well in the ministry and administratively Minister Gumbo has been accused of side-lining his permanent secretary Engineer George Mlilo and most key decisions have been done by road engineer Eric Gumbie and legal director to the ministry Angeline Karonga and himself.

Although Minister Gumbo has previously defended his decisions, he has, however, been accused of reversing suspensions of senior managers in parastatals such as Zinara, CAAZ and CMED for alleged personal gains.

Eng Gumbie’s company, Turncroft, and former police chief Augustine Chihuri’s construction company, Kidsdale, have been fingered in many reports as some of the biggest unprocedural beneficiaries of road funds.

In senior management meetings, some minutes of which were shown to Business Weekly, Gumbo was quoted as saying: “It’s time for Gumbie and Karonga to make money now.”

Ironically, the two senior ministry officials are the ones who make key decisions for the ministry including funding the projects.

Minister Gumbo, however denied the allegations saying: “All this has nothing to do with Gumbie and Karonga. Gumbie is sick and is always out, while Karonga is just a legal advisor. I have no problems with (Eng George) Mlilo our secretary and we have been working together very well. If the SPB awarded companies tenders, we have no role to play,” he said.

However, Government insists the Geiger deal is now history and the Beitbridge-Harare project is now open to any company in the world.

Chances are however high that the deal will go to a Chinese company as the Asian country boasts of more than 20 companies with vast experience in construction, given the growth trajectory in infrastructure development the economic giant has adopted.

Some observers say the Chinese are building massive projects at home but if European companies are to win the tender, they have to start recruiting labour because they are no longer building roads and railways.

China is already doing those kind of jobs and other countries likely to provide competition to the Chinese are India and maybe Indonesia.

Said Mutsvangwa: “There are so many companies that can do the job because China is building a lot of infrastructure, they are legends in that area. Remember China is building roads like it has never been done in history. There are so many companies in China that can do that project.

“Many Chinese companies have expressed interest over the years. There are more than 20 Chinese companies that are capable of doing that project. Structures in Greece are being built by the Chinese.

“The fast trains in Albania are being built by the Chinese. The connection between China and Pakistan, everywhere the world over, China is getting the contracts. Our road is a small and petty project to the Chinese. They are building railways into Tibet and the Himalayas.”

The decision to terminate the deal was announced by President Mnangagwa while in China last week while briefing the Anhui Foreign Economic Construction.

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