Tuesday, 21 June 2016

CMED IN $3 MILLION BOOB

CMED (Pvt) Ltd was prejudiced of more than $3 million after it failed to collect service charges that it was supposed to levy Government ministries and departments when procuring vehicles on their behalf, an audit has shown.


In her 2016 Value For Money Report, Auditor General Ms Mildred Chiri noted that CMED under-collected five percent service fees from Government departments and 2,5 percent from Treasury for the procurement of vehicles valued at $38 million.
“An amount of $1,9 million could have been collected as five percent service charges during the period 2010 to 2013.

“There was also no evidence that CMED Pvt Ltd collected 2,5 percent service charges from Treasury when it procured 349 condition of service (vehicles) for senior Government officials during the period 2010 to 2014,” read the report by Ms Chiri.

In its response to the audit, CMED acknowledged the boob. “The observation is noted. CMED has taken corrective action by adopting an effective way of levying the service charge, which entails incorporating the service fee on the quotation.

“By so doing, CMED is assured of getting its administration fees the moment customers pay for the vehicles,” reads the response. Ms Chiri also noted that broken down vehicles were being “cannibalised” without authority nor documentation.

“From a sample of 749 cannibalisation authority forms reviewed at the four provincial depots visited, 300 of them had not been approved by the managing director as required by the policy.
This represents 40 percent of vehicles that were cannibalised without authority,” she said.
‘If cannibalisation is left to happen without authority and proper documentation, accountability for vehicle spare parts might be compromised.”

In its response, CMED admitted their blunder. “As observed by audit at times there is noncompliance. The Acting MD has done a circular to all Regional Managers reminding them to adhere to the cannibalisation policy,” read the response.

Turning to the board composition, Ms Chiri said there was need to have skills mix.
She said the board lacked someone with automobile engineering and information technology expertise.

“If individuals appointed to a board do not possess varied skills mix, the Board’s oversight role might not be effective as the company might not get appropriate guidance to accomplish its mandate,” said Ms Chiri in her report.

Turning to the $2,7 million that CMED lost to First Oil in a botched 3 million litres fuel deal, Ms Chiri observed that there were a number of irregularities, one of which she said was that the tender was awarded by one person instead of a committee.

“The contract was also signed on March 5 2013 after payment had already been made to the supplier on March 1, 2013.
“The person who awarded the tender was the same person who also drafted the contract and did not provide the contract to the lawyers through the corporate secretary for scrutiny as per company procedure,” said Ms Chiri without naming the individual. herald

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