SUSPENDED NetOne chief executive Reward Kangai allegedly aided local contractor Bopela Group, which was engaged by the telecoms firm to work on a US$3,7 million base stations installation project, to evade tax after the company was hit by a garnish order for failing to pay taxes, an ongoing probe has unearthed.
This is revealed in the first draft of an audit report on NetOne titled Provision of Comprehensive Forensic Investigation Services to NetOne Cellular Services compiled by PriceWaterhouseCoopers Zimbabwe (PwC) on behalf of the Auditor-General seen by the Zimbabwe Independent.
Kangai was sent on forced leave in March after the company’s board sanctioned a forensic audit into the affairs of the country’s second largest mobile phone operator.
The audit shows that following a garnish order on Bopela by the Zimbabwe Revenue Authority (Zimra), the company’s managing director Agrippa Masiyakurima approached Kangai seeking approval to sub-contract the installation of 70 base stations to a firm which was part of the Bopela Group. This apparent conflict of interest was meant to bypass Zimra from freezing the company’s funds.
The audit says that Huawei then advised Masiyakurima to amend his tripartite agreement and appoint one of his sub-contractors as the recipient of the outstanding fees.
Macharawanda Group, a unit of the Bopela Group, was selected as the sub-contractor and a new agreement was entered into.
The Bopela project, which involved installing base stations for NetOne, is part of the multi-million-dollar equipment deal with the Chinese technology firm, Huawei.
In 2012, government partnered Huawei in rolling out NetOne’s national mobile broadband (NMBB) project as competition in the telecoms sector intensified on the back of massive growth in data and overlay services.
“We had sight of an adjustment to the Bopela Tripartite Agreement. The amendment was done on 23 November 2015. The contract price was changed from US$3,7 million to US$1 110 000. The site quantities had also been changed from 100 sites to 30 sites,” reads the draft report.
“On the same date, 23 November 2015, a Tripartite Agreement was signed between NetOne, Huawei and Macharawanda Group. The contract value was US$2 590 000 and the quantity of sites was 70 sites. Mr Masiyakurima (Agrippa Bopela) informed us that Macharawanda Group was a sub-contractor to Bopela Group on some of its projects, such as the NMBB project.
“He (Masiyakurima) informed us that his brothers, Dennis Masiyakurima, Fungai Masiyakurima and Clever Masiyakurima, were Machawaranda directors. He further stated that at the time the Bopela Tripartite agreement was amended, about 90 base foundations had been constructed.
“At the same time, Zimra had garnished the Bopela Group bank account. He informed us that had he continued to receive money into the Bopela Group bank account, he would have failed to pay his sub-contractors. As a result, he wrote a letter to Huawei presenting his case.”
The auditors, according to the probe, noted a letter from Agrippa Masiyakurima dated November 10 2015, addressed to Kangai requesting for Bopela Group to cede 70 of its 100 sites to Macharawanda Group to enable sub-contractors to be paid “while he dealt with his Zimra issues.”
“We enquired with Mr Kangai on how Macharawanda was appointed as a contractor of Huawei under the NMBB project. Mr Kangai confirmed that Macharawanda were part of the Bopela Group. He further stated that when Bopela ‘ran into trouble’ with Zimra, Bopela then recommended the use of Macharawanda Group to ensure that the project progressed according to plan.
“Mr Kangai stated that this decision was made in the best interests of the NMBB project. The intention was to ensure that the project progressed according to plan and faced no delays,” the report states.
PwC also revealed that Huawei country manager Xiaohui Bao informed the auditors that the Bopela tripartite agreement was amended and Macharawanda was entered into because Bopela could not catch up with construction progress.
“We noted a letter from Huawei addressed to Bopela Group. The letter dated 21 October 2015, and was requesting Bopela Group to submit a tax clearance certificate and invoices for 21 pine towers which had been completed by Bopela under the NMBB project. The letter also notes that the pine tree delivery progress for Bopela was very slow,” the report reads.
“Mr Bao further stated that as a result of this, NetOne recommended Macharawanda as a replacement sub-contractor for Bopela. Mr Bao said Bopela was delivering slowly and NetOne wanted things to be done faster. He informed us that the contract was changed as Bopela was approaching the completion of almost 30 base stations.
“Mr Bao informed us that to date Macharawanda is left with four base stations to complete the contracted 70 sites.
Mr Kangai confirmed that he had recommended Macharawanda to Huawei as a replacement for Bopela under this NMBB contract.”-AMH