Undenge admits to $5m ZPC boob• Chivayo payout ruled out of order • Experts demand immediate action Minister Undenge
Minister Undenge

Minister Undenge

Felex Share Senior Reporter
Energy and Power Development Minister Dr Samuel Undenge yesterday drew brickbats from corporate governance experts after he admitted that the Zimbabwe Power Company (ZPC) erred in paying convicted fraudster Wicknell Chivayo $5 million for the Gwanda solar project without getting a bank guarantee from his private firm.

The experts said an admission by the minister was not enough and action should be taken on the ZPC management considering that the $200 million project was key to the success of Zim-Asset.

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Dr Undenge yesterday issued a personal statement saying after engaging the ZPC management and its board, he found that the former was offside as the bank guarantee was an “inevitable” aspect in the contract.

The performance guarantee would have given ZPC room to recover its money in the event Chivayo’s Intratek Zimbabwe defaulted on the contract.

As it stands, the power generating unit has nothing in place to cover the risk.

Said Dr Undenge: “It is true that each time public funds are advanced to service providers, there is a risk that the goods or service, as the case maybe, may not be delivered.”

“To mitigate against this risk, it is a standard requirement that a bank guarantee is secured against possible failure to deliver.

“Such an inevitable requirement should have been considered in the case of $5 million advance payment to Intratek by the Zimbabwe Power Company.

“In this regard and noting the many energy projects that we are embarking upon, it was necessary for me to engage both management and the ZPC board chairman on this issue. Common ground has been established on same and in future, the relevant procedures and requirements shall be adhered to.”

He went on: “Given the above, it is highly improbable or unlikely that there will be any real prejudice to the Zimbabwe Power Company in respect of this particular advance. Thus, in this ministry’s assessment, whereas the risk was there, in reality, there will be no financial prejudice and this is in no way exonerating those who erred.”

Dr Undenge said ZPC had undertaken to put in place a “dedicated project management unit focusing on projects and complying with relevant requirements and rules”.

In his statement, which did not have the ministry logo as the norm, he failed to explain his reasons for directing Zesa Holdings subsidiaries to hand-pick Fruitful Communications to do public relations consultancy for the power utility.

The company, owned by Zanu-PF legislator for Highfield West Cde Psychology Maziwisa and newscaster Oscar Pambuka, drew thousands of dollars from the power utility despite it having a fully-fledged public relations department on full salary and benefits.

Zesa management has since stopped the illegal payments after parting with tens of thousands of dollars.

Asked yesterday to clarify whether or not his statement was personal, Dr Undenge said: “It is my personal statement setting the record straight. Chimboregai vanhu vaverenge statement yaMinister. Issuing a statement is a way of taking a rest from interviews.”

Corporate governance expert, Mr Canaan Dube said officials violating corporate governance tenets should be removed from office.

“We don’t hear people being suspended or taken to courts and wrong doers being punished,” he said.

“As a result people feel that even if they transgress the law or the principles of corporate governance, they go scotfree. You can’t correct behaviour if those who do wrong are not punished. We need to up our game and get wrong doers brought to book if the economy is to get where we want it to be.”

Mr Dube said by directly writing to the Zesa management, Dr Undenge had also violated the corporate governance process.

“To a corporate governance process, there are three parties—the shareholder (line Minister), the board and management,” he said.

“For the communication channel to be perfect and pure, it must always start from the shareholder to the board and management and vice-versa. Once you start having the shareholder communicating directly with management, by-passing the board, then there is a problem because management has no space to resist instructions.

“The Minister’s intervention is restricted to matters of policy not day to day management issues of that nature. There is no policy involved when it comes to what the Minister (Dr Undenge) did.”

Lawyer Mr Terrence Hussein said some Cabinet Ministers and heads of parastatals were turning institutions they oversaw into “petty cash entities.”

He said a central body which recommends the appointment of board members to parastatals should be put in place.

“This will free up the entities to applying strict business principles as they will not be taking direct instructions from the Minister responsible,” he said.

“Parastatals are subject to the management of boards but if the Minister appoints and if something wrong happens, how will that Minister take action? With all due respect, these parastatals have been turned into petty cash entities. Ministers cannot whip people they appoint into line because he or she will be dirtier.”

Another cooperate governance expert Mr Tinashe Mugombi said the behaviour by the ZPC management warranted suspension or sacking.

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