Review Panel pushes N$340m tender to tax fraud accused Chinese firm

The review panel in the Ministry of Finance and Public Enterprises wants the government to award a N$340 million road construction tender to a Chinese company accused of failing to pay taxes on N$1 billion it made from public contracts.

The Roads Authority contracted Zhong Mei Engineering Group this month to build the road between Usakos and Karibib.

The company has been in the spotlight in recent months after the Namibia Revenue Agency (Namra) deducted over N$33 million from its bank account.

Despite the court battle, government institutions such as the Roads Authority (RA) are pushing for Zhong Mei.

Between 2013 and 2018, the company paid no tax, despite having made N$1 billion revenue from government projects.

The Public Procurement Review Panel, a body within the finance ministry, met last week and this week to confirm or reject a decision made by the RA to award the tender to Zhong Mei.

Now, the majority of the tender review panel is also pushing for Zhong Mei to win the contract.

The tender review panel consists of chairperson Browny Mutrifa (City of Windhoek), Kandali Iyambo (NamPower), Michaek Gawaseb, Mekondjo Nghipandwa (Namibia Institute of Pathology) and Ehrenfried Honga.

Mutrifa, Kandali and Honga are said to be supporting the recommendation to award the tender to the Chinese company.

Mutrifa referred questions to the ministry’s spokesperson.

“It is not finalised yet. It is also not my place to comment on these things. I think you should contact the spokesperson in the ministry of finance,” he said earlier.

Honga said the review panel’s discussions of the Review Panel are confidential.

“I am not the one you should talk to, but the chairperson. So I really can’t speak further on this,” Honga said.

Iyambo did not respond to questions sent to her.

BREAKING THE RULES

The decision to award the contract to Zhong Mei Engineering Group (Pty) Ltd has attracted objections from other bidders.

China Railway Seventh Group, one of the bidders, is calling for the review panel to cancel the award of the tender and to “correctly apply the evaluation criteria as per its rules”.

According to the company, the RA broke the public procurement law in that the reconsideration and standstill period has not been complied with.

“The RA failed to correctly apply the evaluation criteria as per clause 33.1, 2.2 and 4.8 of the pre-bid meetings minutes. Our company is the lowest responsive bidder,” Shungiang Ma of China Railway Seventh Group Ltd said in his affidavit.

The company relied on Section 55 (1) of the Public Procurement Act 15 of 2015, which states that: “The board or a public entity must award a procurement contract to the bidder having submitted the lowest evaluated substantially responsive bid which meets the qualification criteria specified in the pre-qualification or bidding documents.”

The company lodged its objection on 11 August.

The RA is also accused of not complying with the seven-day regulation for bidders who want to appeal.

Another concern raised by the objectors is that Zhong Mei’s bid is the most expensive.

China Railway Seventh Group Ltd tendered the least expensive bid with N$306 million.

Seven companies applied for the tender.

Others are: Shandong Luqiao Group Co Ltd, China Henan International Cooperation Group Co, Unik Construction Engineering, China Jiangxi International, as well as China Civil Engineering Construction Corporation.

ZHONG MEI RESPONDS

Zhong Mei managing director Kevin Jiang said Namibia’s regulations that compel bidders to be in goodstanding with Namra do not apply to the Usakos and Karibib road tender.

“This project is not funded by the Namibian government, but by the African Development Bank, and they do not require one to be in any good standing,” he said.

‘FRAUD AND FAKE TAX’

Namra commissioner Sam Shivute referred The Namibian to publicly available information from the ongoing court case between the government and Zhong Mei.

In his affidavit submitted in court on 25 July 2023, Shivute accused Zhong Mei of committing fraud by declaring false tax returns between 2013 and 2018.

“I point out that during the period under consideration, Zhong Mei Engineering Group (Pty) submitted false tax declarations from 2013 till 2018, declaring zero income received while it received income of N$927 million,” Shivute said.

To illustrate his point, Shivute used the example of a government cleaner paying more taxes than Zhong Mei, which won over N$1 billion in government contracts.

“I hasten to mention that an employee who holds a position of a cleaner in the government – for a tax period of 2013 to 2018 has to date paid N$36 498 in taxes to the fiscus in comparison to a corporate entity like Zhong Mei Engineering Group (Pty) Ltd, which has made and retained chargeable income of N$926 000 000 for a tax period of 2013 to 2018 but has [paid] zero taxes,” Shivute said.

‘NOT INVOLVED’

Central Procurement Board of Namibia (CPBN) spokesperson Johanna Kambala yesterday said the board cannot be drawn into the matter, because it was not involved.

“Unfortunately the CPBN is not in a position to comment on this matter. This procurement was not handled by us,” she said.

Head of the Public Procurement Unit (PPU) in the finance ministry Francois Brand said he is not sure whether the good standing concerns towards the awarded company are correct.

“We are not involved in the procurement, we are only a regulatory authority. I don’t know if it’s true that the awarded company is not in good standing,” Brand said.

Part of the PPU’s duties is to make sure public entities, such as the RA, comply with procurement processes.

*This article has been updated to remove references to businessman Jerry Muadinohamba.

An article by The Namibian titled “Review Panel pushes N$340m tender to tax fraud accused Chinese firm” published on 30 August 2023, we incorrectly referenced businessman Jerry Muadinohamba. The article did not intend to imply that Muadinohamba was involved in the tender or the tax fraud case. The Namibian apologises for any inconvenience caused by the error and withdraws any connection that may have linked  him to Zhong Mei Engineering.