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Zakhem to get P90 million windfall as Ministry ‘surrenders’

Publishing Date : 18 June, 2018

Author : AUBREY LUTE

ZAC Construction may soon smile all the way to the bank after the Ministry of Transport and Communications caved in after the contractor of Charleshill-Ncojane road lodged a dispute with the Dispute Adjudication Board (DAB) demanding compensation.


If successful ZAC Construction will get a possible P70 million award and another P20 million from an initial claim against the Ministry of Transport and Communications. Reports suggest that while ZAC has made compelling submissions before the Board, the Ministry is somewhat cold and submissive. An attempt by Department of Roads to submit a constructive written response was denied while ZAC Construction was allowed to supplement its earlier filing.


Nicholas Zakhem’s company has made three claims before the Dispute Adjudication Board, with the first dealing with “Costs for the initial delay”. In its response the Roads Department notes that “If and only if the DAB finds that the Contractor’s referral has merit, in order to save time the Employer has reviewed the Contractor’s computation of costs and confirms it is correct. “ Before stating as captured above the Department confirms that the Contractor (ZAC) has agreed to the extension of time granted and that this is not in dispute.


“The point of principle is should the Contractor be paid,” they write, while also stating that the Engineer, who they have since fired, determined the Contractor has no entitlement to compensation. In the second claim, ZAC Construction is querying the “Change to vertical alignment”. The contract is a design and construct contract. The Department of Roads notes that “the point of principle regarding claim 2 is whether the Engineer’s instruction to increase the vertical alignment is a variation.” Again, the Ministry states, “If and only if the DAB finds that the Contractor’s calculation of the extension of time and computation of costs and confirms it is correct.”


The third claim deals with the “Pre-collapse treatment. “The point of principle regarding Claim 3 is the Engineer’s time-barring. The Fidic contractual provision for time-barring is covered under clause 20.1. As is the standard response, the Department of Roads writes, “If and only if the DAB finds that the Contractor’s referral has merit, in order to save time the Employer has reviewed the Contractor’s computation of costs and confirms that it is correct.” The DAB is chaired by Mr Jeffrey Bookbinder of Bookbinder Business Law.


COURT BATTLES ONGOING

The dispute around the Charleshill-Ncojane road are also playing themselves out in the courts where the permanent secretary in the Ministry of Transport and Communication, Kabelo Ebineng is compelled to defend his 20 year friendship with businessman Nicholas Zakhem who convinced him to terminate a contract for a Consultant engaged in the construction of the Charles Hill- Ncojane road.


ZAC Construction, whose Managing Director is Zakhem is the contractor in the project. The two parties are throwing jabs of conflict of interest at each other and the permanent secretary has stated that he has even borrowed money from Zakhem, a red flag already observed by the consultant, Bothakga Burrow and other players in the matter. It not clear what the role of the Permanent secretary is in the current claim before the Dispute Adjudication Board and how the members of this Board are appointed because the Ministry had not responded to our questions by the time of going to print.


It is not clear as to whether the dismissed Consultant Engineer will be given a chance to respond to some of the claims made by ZAC Construction because Bothakga was responsible for some of the decisions in question. From the beginning of the project, Zakhem had flatly refused to work with the Consultant, Bothakga Burrow Botswana (BBB) accusing them of being difficult to work with and later alleging conflict of interest on their part – they had tendered for the same project, he said. BBB was awarded the Consultant contract by the PPADB with the Ministry of Transport and Communications as the procuring entity.


As of 16 February 2018 Bothakga Burrow Botswana has dragged the Ministry of Transport and Communications before court accusing it of unlawfully terminating its contract. Ebineng terminated BBB’s contract with effect from 16 February 2018 citing convenience on the part of the Employer or procuring entity. But Bothakga is arguing that the Ministry did not follow the correct procedure when terminating the contract and the Public Procurement and Asset Disposal Board (PPADB) agrees with Bothakga.


Zac Construction was awarded the Charles Hill – Ncojane tender on 26th November 2013 for an amount of P436 279 046. 45 to be completed in 36 months on a design and build basis. In January 2017, sixteen months after commencement of construction Zac or Zakhem complains to the Ministry of Transport citing conflict of interest on the part of the consultant, Bothakga Burrow. His views are such that the consultant has not been properly appointed and he threatens to stop taking instructions from the Consultant and requests that Bothakga Burrow be removed from the project.


Records show that in May 2017, one month after the appointment of Kabelo Ebineng as Permanent Secretary at the Ministry of Transport, Zakhem restarts work after a four week unauthorized stoppage of work, and reconfirms that they will not work with the Consultant, Bothakga Barrow, and again he requested the removal of the Consultant.


What has irked Bothakga Burrow directors before their contract was terminated is that the Permanent Secretary at a meeting held on 19th June 2017 he confirmed that “he and Mr Nicholas Zakhem know each other socially. He mentioned that he has even had the opportunity to borrow money from him because of their relationship and they continue to have a relationship.”  After this meeting Bothakga Burrow requested that Ebineng recuse himself from meeting dealing with the matter but he refused stating that there was no conflict of interest.


During the course of July 2017, construction was suspended by the consultant, because the contractor was no longer accepting project works to be tested, as per the contract, however the Contractor proceeded to construct 12km of road, whose quality could not be vouched for. Ebineng immediately requested Bothakga to withdraw the suspension and he instructed Zac Construction to proceed with construction work unsupervised. Records further show that by September 2017 the Parliamentary Committee on Communications, Works, Transport, and Technology, had visited the project site to understand the challenges on the project.


Shortly thereafter the Contractor on his own volition stopped construction on the project, and demanded to be paid for the 12km of road that he had refused to have tested. The Consultant was asked by the permanent secretary to certify payment for the 12km, and declined to do so without verifying the quality of works in accordance with the contract. Indications are that at some stage the Permanent Secretary to the President, Carter Morupusi intervened and advised that the project be executed in accordance with the signed contracts of all parties. In all meetings, Zac Construction requested that the Consultant be removed as a pre-condition to return to work on the project.


WeekendPost learns that by the end of 2017 the Ministry had paid Zac Construction for the 12km of untested road works; failed to test or verify the quality of the constructed work; acceded to the contractor’s request to remove the Consultant from the project; the permanent secretary has refused to recuse himself from dealing with the matter which he is said to be conflicted; the PPADB had notified him that his position is untenable.  


Ebineng’s defense of his relationship with Zakhem is a simplified one. He states that he knows most of the contractors, engineers, and consultants that deal with his Ministry. He states that most of them he went with them to school, met them at play grounds, socializes with them hence he wonders if he will recuse himself for almost everyone in town. On the other hand allegations of conflict of interest on the part of Bothakga were dismissed by the PPADB but the Ministry through Ebineng held that conflict was inherent.


The two parties are now in court with Bothakga Burrow Botswana pleading with the court to reverse the unlawful decision of the permanent secretary. Bothakga Burrow Botswana’s contract is worth P40 million. Judge Rannowane gave both parties an ear on 16th March 2018 and will deliver judgement next month.


Some in the Ministry are worried that Ebineng’s actions are setting a bad precedent that will have far reaching consequences for the entire construction industry where contractors can pick and choose who they want to supervise them. They also raise a concern for the role of PPADB in awarding and terminating contracts, where government can willfully undermine its own laws and institutions.

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