NSSF headquarters in Dar es Salaam. Accusations have been rife that certain social security funds are being influenced by key public figures to sink members’ funds in dubious investments. Picture: Leonard Magomba
The Tanzanian National Social Security Fund is in the spotlight yet again for selling its property irregularly — this time to a firm which was registered three weeks before the tender was floated.
A report obtained by The East-African indicates that the property, apartments at Ada estate in the posh areas of Kinondoni district in Dar es Salaam were sold under a dubious contract.
The $6.5 million sale, which involves property measuring 4.6 acres has raised a number of yet to be answered questions. For instance, what is the track record of Seven Anchors Properties and Services Company Ld, the company which purchased the property?
The new revelation by the Controller and Auditor General (CAG) points at just how pension funds can be manipulated to benefit a few powerful individuals contrary to the Procurement Act 2004.
The report has indicated that Seven Anchors was incorporated on October 11, 2006, three weeks before the advertisement of the sale of the apartments was made on November 2, 2006.
The tender evaluation committee comprised six members, contrary to Regulation 90(1) of the Procurement Act 2004 which requires the procuring entity to establish an evaluation committee comprising not less than three and not more than five members.
Further, the evaluation committee was appointed by the director of human resources and administration but not recommended by Procurement Management Unit and approved by the chief executive officer as per section 33(e) of the Public Procurement Act.
The Fund acquired property comprising of a site measuring 4.6 acres on plots 80/1 and 90/2 located at Ada estate in Kinondoni on December 6, 2000 from the Tanzania Zambia Railway Authority for Tsh1.4 billion ($1.3 million).
Plan to develop the plots started in 2002. The construction kicked off on September 1, 2004 and was completed on June 20, 2006 at a total cost of Tsh5.94 billion ($5.6 million).
The tender for the sale of the property — eight blocks each with four apartments — was subsequently advertised on November 2, 2006. On January 10, 2007 the tender was awarded to Seven Anchors Properties and Services Company Ltd.
Controller and Auditor General Ludovic Utouh said that after a review of the documents availed, irregularities were noted in tender evaluation documents, tender evaluation committee, opening ceremony register and bidder documents.
In the tender evaluation documents, auditors failed to obtain the original evaluation report. The report was said to be with the Prevention and Combating of Corruption Bureau.
“Though a photocopy of the report was available, it was not dated, hence we could not ascertain whether the evaluation was done as required by section 33 of the Public Procurement Act of 2004,” said Mr Utouh.
During the opening of the tendering process, the register signed by both the Fund’s representative and bidders’ representatives was not made available to auditors despite several requests.
Further, original bid documents could not be read since they were damaged by water.
“Therefore, some of the important information contained therein, such as bidders’ names and the corresponding prices could not be established,” the CAG noted in the report.
The Fund’s action contravenes a regulation which requires records to be kept for a period of not less than five years from the date of completion of the contract and may be made available within a reasonable time during that period to the Minister and the Controller and Auditor General or any other officer authorised by the accounting officer.
The CAG charged that on December 18, 2006, the NSSF Board of Trustees approved the award of this tender to the named bidder to purchase the executive apartments contrary to section 30(d) of Public Procurement Act of 2004 which specifies that the Tender Board shall be responsible for approving procurement and disposal by tender.
“It is our opinion that by virtue of the above section there is interference between the Tender Board and the Board of Trustees in discharging their mandatory responsibilities,” auditors noted.
On the profile of the property buyer, Seven Anchors Properties and Services Company, the report says: “We are of the opinion that the Fund did not consider the company’s profile in terms of experience and existence in business in such a short time. Thus, casting doubts as to whether the company was formed specifically to undertake this transaction.”
The auditors found that rules were further flouted when it came to the signing of the sales agreement. One, the agreement was not signed in the presence of both parties and witnesses at the same time.
Two, the downpayment — $100,000 — was made three months after the award, instead of 15 days as per the signed agreement. Three, payment of the balance was delayed for almost 17 months, way past the 90 days stipulated in the contract.
“We could not tell why the Fund did not terminate the contract despite that massive failure by the buyer to honour payment within the prescribed period of 90 days,” said the report.
This comes hot on the heels of the Auditor-General’s criticism of some pension funds for mismanaging public funds. Accusations have been rife that certain social security funds are being influenced by key public figures to sink members’ funds in dubious investments and give large, unsecured loans to politically connected individuals and companies.
The CAG report cites a loan of $535,000 granted to GK Hotels $ Resorts by the Local Authorities Pension Fund in the 2003/04 financial year, whose balance as at June 30, 2008 was $722,000 while the firm’s outstanding rent was $1.127 million.
LAPF and the NSSF were among six public authorities censured by the CAG through a “certificate of unqualified opinion with emphasis of matter” in 2007/08. NSSF was taken to task for paying bonuses to staff who registered members of the fund since the staff were only doing their job.
Also, some defaulters of investment loans totalling $58.7 million had not complied with the terms and conditions of the loans granted to them.
