Court stops tender to company with 5-year-old shareholder

The High Court has stopped the awarding of a pharmaceutical supply tender to Cospharm Investment Pty Ltd – a company of which the majority shareholder is a five-year-old.

The father of the minor, Cosmas Mukaratirwa, owns 49% of the company.

Judge Boas Usiku in his judgement said the contract should be put on hold pending a review process.

Cospharm, together with the Central Procurement Board of Namibia (CPBN) and other bidders, were taken to court by businessman Shapwa Kanyama through his company Africure Pharmaceutical.

Usiku ordered the CPBN and Cospharm to pay Africure Pharmaceutical Namibia (Pty) Ltd’s legal costs.

Kanyama approached the court last month to ask for a temporary order to stop new contracts from being put into action until the review process was completed.

Kanyama and Erongomed Health Distributors Pty Ltd last month took the CPBN to the review panel, claiming the awarding of the tender to Cospharm was irregular.

He said the company’s initial disqualification should stand.

Cospharm was among 22 bidders which were initially not selected for the tender on 23 April.

The company was disqualified for failing to initial next to an overwritten mistake in its bid and for not responding to the CPBN ‘s enquiries.

Cospharm applied for reconsideration, and the CPBN found merit in the application.

It was further discovered that Cospharm’s bid was the most economical in certain line items, leading to the reallocation of awarded products.

This decision affected other bidders who had initially been allocated those products but had offered higher prices than Cospharm.

Cospharm scooped a N$1,3 billion medical tender to supply pharmaceuticals used in the treatment of cancer and psychotic disorders for two years.

This has reduced Kanyama’s award to N$45 million from a substantial pharmaceutical goods supply contract worth approximately N$123 million.

The review panel on 29 August dismissed Kanyama’s and ErongoMed’s application and ordered the awarding of the tender to Cospharm.

“The public entity [CPBN] will provide proof of implementation of this order to the procurement policy unit within 30 days from the receipt date of this order. A copy of the proof should be sent to the review panel secretariat,” the review panel found.

At the time, the CPBN indicated that the bid was extended to 31 October.

Last week, the deputy minister of finance and public enterprises, Maureen Hinda-Mbuende, raised concerns over the moral implications of awarding a medical tender to a company in which a minor holds the majority ownership.

She questioned the basis on which the minor’s father obtained power of attorney over the child’s shares and how the company’s board of directors was appointed, given the majority shareholder’s minor status.