The Government’s Love and Hate Relationship with Middlemen

Two newspaper headlines, which speak to the same issue, recently caught my attention.

The first one: ‘Govt’s Abandoned Projects’ – hospitals, schools, houses among delayed initiatives worth N$990 million. And the second one: ‘Tough Times Ahead for Blacklisted Tenderpreneurs’.

The government is apparently now waking up to a problem that has not only been there for ages but is of its own making – using middlemen.
They have already made millions from taxpayers’ money and will live comfortably forever.

Editorial upon editorial has been written about problems associated with the system of using middlemen.

The Namibian, for example, wrote: “Politicians often legalise the looting of state resources by using middlemen to supply the government with items such as medicine.”

It said further this often resulted in tenders being inflated. “However, the usefulness of middlemen is now commonly associated with self-enrichment schemes through milking taxpayers funds.”

An editorial in the Namibian Sun noted: “The obsession with middlemen has become so acute that even buying a pen for the office is outsourced to outsiders. One wonders why this only happens in public offices because the private sector seldom ever indulges in this wastage.”

Middlemen are said to “have become glorified vampire squid wrapped around the face of mankind, ceaselessly squeezing their blood tube into anything that smells like money”. To paraphrase author Matt Taibbi.

KEY QUESTIONS

But who is to blame for the shoddy jobs, work and abandoned government projects by bidders, contractors, suppliers, briefcase companies and tenderpreneurs who have crowded out real entrepreneurs?

I think ministers, their executive directors at the ministries and boards of directors at many SOEs and other public entities must shoulder most of the blame.

They often fail to exercise a high degree of due diligence in performing make-or-break functions/duties and decision making.

Many reckless decisions have been made by people high up in the system whether through awarding questionable tenders or wrong/flawed investment schemes.

For context, I will tease out a number of them here but without going into detail because most speak for themselves or are known to the newspaper-reading public.

Let’s start with this controversial one: ‘Tender to 5-Year-Old is Unethical’. “Namibia has reached the darkest depths of legalised corruption when the government gives a N$1,3 billion medicine business to a five-year-old.

“Apparently, the decision-makers at the Central Procurement Board of Namibia see nothing wrong with entrusting buying of medicine to Cospharm Investments – a company 51% owned by a five-year-old and 49% by the father,” reads the editorial in The Namibian.

After a national outcry: “The High Court has stopped the awarding of a pharmaceutical supply tender to Cospharm Investments.”

And here is the drama: ‘Boy (5) prevails in N$1,3 bn tender standoff’. ‘Fresh Court Bid to Stop N$1,3 billion Tender Award to Five-Year-Old’.

JOURNEYS THROUGH THE UNDERBRUSH

And guess who’s fighting this Cospharm tender? None other than Shapwa Kanyama who himself made headlines recently.

Here we go: ‘Kanyama’s Two-Year-Old Company Wins N$650m Tender’. And ‘Shapwa Condoms Made in Malaysia, Packaged in Namibia’; ‘Kanyama’s Associates Bag Another N$20m Health Tender’.

Then another outcry: ‘Pressure Mounts on Geingob to Cancel N$650m tender’. Response: ‘I Can’t Cancel Health Tender – Geingob’.

Let’s continue our journey through the underbrush of questionable and controversial tenders.

‘Board Questioned for Handpicking Fabupharm in N$458 Tender’; ’Mulunga’s Replacement Linked to N$1 Billion Namcor Tender’.

Mulunga was replaced after making a payment of N$100 million for an oil block in Angola through an entity called Sungara and the Angolan state owned oil company Sonangol, which has faced corruption allegations in the past.

However, the ACC not only cleared Mulunga of criminal intent in authorising the payment, but said Mulunga acted in the best interests of Namcor and the country.

Mark my words, those millions have gone down the drain.

‘Company With One Employee Wins N$222m Airport Fuel Tender’. ‘Namport Defends Choosing Swiss Firm to Run N$4 Billion Container Terminal’.

We are told Namibia does not have the local capacity to grow the planned volume for the new container terminal.

‘Family Ties and the N$48m Health Tender’; ‘Namcor Probes Botched N$60m Military Oil Deal’; ‘Military Company Defends N$255m Classroom Tender’.

‘The Darling of Agriculture Tenders’ – “Laban Kandume, the businessman who was involved in government contracts worth around N$700m, has developed a reputation of being close to government officials who are supposed to supervise his work.”

‘THE  DARLINGS OF GREEN HYDROGEN’

Here we have briefcase companies involved in a new and very complex field. We have no clue how they got involved in such a major project.

The project has not yet taken off but some people are already reaping the benefits.

We are told they’re providing consultancy services. I wonder what qualifications and expertise they have on green hydrogen issues!

Consultant Panashe Daringo’s firm, one of the beneficiaries of the Green Hydrogen Consortium, has also been contracted by the NPC to provide project management support to the government in executing the Harambee Prosperity II and NPD5/6 initiatives, which include green hydrogen.

Then there’s this gem of a story.

‘Alweendo Sues to Block N$200m Deal’. This is an attempt  by the minister to remedy the damage done by his controversial predecessor, Obeth Kandjoze, and former attorney general Sacky Shangala.

Kandjoze was demoted as mines minister following widespread allegations of corruption in his ministry but was appointed director general of the NPC.

Now he has resurfaced at the secretive green hydrogen project heading the Green Hydrogen Council and not without controversy.

Now, referring to the ‘darlings of the green hydrogen project, Kandjoze said: “The government has developed various systems, processes and institutions to deal with the involvement of all citizens in state programmes and projects.”

WHICH BEE?

Mr Kandjoze, which BEE are we talking about? Black Economic Empowerment, Black Economic Entitlement or Black Elite Enrichment?

While at the mines ministry, Kandjoze handpicked a sanitation outfit which was converted into a diamond valuator and handed a five-year contract without a public tender – C-Sixty Investment – for the multi-million-dollar diamond evaluation contract of state-owned Namdia.

This was a deal that enriched three politically connected individuals by around N$130 million.

Alweendo and the investigation report said C Sixty’s services were not needed and a waste of public funds.

Nor did the Namdia board approve of C Sixty Investments.

The investigation report claims the board saw “there was no need for it (C Sixty or any similar organisation) to perform Nadia’s internal valuation functions”.

Two similar cases come to mind.

One is our government paying N$35 million to United Kingdom-based lawyers, hired to assist Namibia with negotiations for reparations from the German government for the 1904-8 genocide.

The other is the Liquid Fuel Deal: In 2004, Shangala and two partners, trading as Hanganeni Investment Holdings, won a government contract to supply fuel to Namcor.

It was estimated that the deal netted them N$100 million in private wealth.

‘BANK ON IT’

Sometimes it is difficult to draw a line between middlemen and the much-hyped public-private partnerships.

The millions lost by our government over the years were from deals between private and public institutions.

The SME Bank was owned by the government with a 65% shareholding, 30% by the Metropolitan Bank of Zimbabwe, and another Zim company, Worldeagle Properties, held a 5% stake.

The bank lost more than N$200 million in dubious investment deals, leading to its closure.

The Zimbabweans were the ones running the show; the Namibian board of directors were mere spectators.

Then Namibia Tourism Board splashed N$23,5 million on the 2016 Kora Awards which never took place.

The Social Security Commission (SSC) was defrauded through an investment deal involving N$30 million by an untested entity called Avid Investment Corporation.

Here is a line in The Namibian declaring: “The Government Institutions Pension Fund (GIPF) has decided to give the financially ailing SME Bank a cash injection of about N$100 million.”

Was that a bail-out/in, loan, investment, an account or what? Whatever the case, those millions are gone with the SME Bank.

Still on GIPF. Remember GIPF’s investments in dubious black empowerment projects which amounted to N$650 million in losses to the institution and thus pensioners.

Many people became overnight millionaires just by ‘managing and investing’ GIPF’s money.

The loans and the millions given to all sorts of shady investment funds/individuals was never paid back.

The fund should have gone after the defaulters by seizing their assets/properties or laying criminal charges because what has been happening at the GIPF can be seen as nothing short of criminality.

THE BIZARRE AND THE ‘BRIEF’

Then N$3 million from the military and the weapons that never arrived – Pendukeni Iivula-Ithana declared the case closed when she was attorney general.

And, the most bizarre case of the ODC/NDC’s N$100 million ‘invested’ with a certain investor in Gaborone went that missing in the Kalahari Desert, disappeared in a ‘black box’.

Namibia has been losing money on an unprecedented scale through using middlemen and public-private partnerships deals and wrong investment schemes and no one is brought to account or held responsible.

And the people responsible for making those decisions remain happily employed in government institutions.

Perhaps politician Paulus Kapia is right to ask “why all directors in companies where money was lost have not been tried in court?”

Conclusion: How do you award a millions dollar tender to briefcase company with one employee operating from his backyard and expect to create employment?

• Alexactus T Kaure is a freelance writer