Govt lost US$10m due to contract with Mikalile 

Written by on December 1, 2022


Government lost about US$10 million as charges and arrangement fees in the contract it entered with Mikalile Trading Limited of Hong Kong to supply police uniforms and other equipment, The Parliamentary Accounts Committee (PAC) has heard.

Ministry of Home Affairs and Internal Security Permanent secretary Josephs Akafumba expressed shock that the Secretary to the Treasury could enter in a contract without confirming the availability of funds.

Mr Akafumba submitted before the PAC that on August 4 2016 the Ministry of Finance entered into a contract agreement with Mikalile worth about US$60 million to supply uniforms and other equipment to be delivered in a period of six to eight months.

He said as of December 2021 US$34 million was paid to the supplier.

Mr Akafumba said due to none availability of funds after the signing of the contract on June 27 2019 they signed a credit supplier agreement with Mikalile at the total sum of about US$ 70 million which included that the interest of US$8 million and arrangement fees of $989, 952 which meant that the purchase would make first payment of 25 percent. He said 25 percent which was US$ 17 million of the three months after delivery of goods amounted to 40 percent of the contract sum the balance of the contract US$52 million was to be effected in six months by the end of the contract.

Mr Akafumba said the first sum was due and payable on the last business day of the month.

The supplier delivered equipment valued US$58 million and US$57 were delivered between 39 and 42 months of the expected date.  The committee also noted that the period that was given to the supplier was unrealistic, especially that there was a need to inspect the goods before they were delivered.

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