Zimbabwe: Netone Scandal Deepens

Mergers, Acquisitions and Financial Results

More details have emerged of possible revenue leaks at mobile operator, NetOne where the inventory reveals that the firm could have been prejudiced of millions of dollars through dubious procurement of both hardware and software equipment.

Newly-appointed chief finance officer Mrs Sibusisiwe Ndlovu unearthed several irregularities before presenting them to the board in December last year.

This has seen her come under fire from her superiors who are understood to be against her employment on a permanent basis after the completion of her probation. A report seen by The Herald reveals some of the irregularities that Mrs Ndlovu picked during reconciliation. She said most of the bank reconciliations dated back to 2010 “presented a significant risk of fraud”.

“Foreign creditors payments are adversely affected by lack of supplier invoices and reconciliations. Previous payments were made based on the supplier statements. Outstanding payments date back to 2013 for some suppliers, for example, Gemalto.

“Critical foreign suppliers that have reconciliation challenges include Nokia Siemens, Gemalto, Convergys, Technotree and Huawei. All suppliers are reflecting higher balances owing than NetOne records.

“Suppliers’ reconciliation to statements were not being done. There is risk of double payments, or paying for services not received or product not delivered. Special areas are fuel — Redan supplier reconciliation is problematic,” said Mrs Ndlovu.

She also said there was need to investigate why some companies responsible for building base stations among them Masimba, Bopela and Essar were being paid in advance.

“A majority of sites do not have current lease agreements. Some of the rentals being paid are based on verbal agreements.

“Most new sites that are being presented for rental payments are coming with rental arrears of at least six months. Some Zesa meters, e.g. at Throgmorton House, have rental arrears appearing on the accounts of more than $50 000. No contracts with other suppliers are on file.

“There is need for review of contracts for IT service providers versus value for money as in the case of Gemalto contract. Why need to re-issue sim cards each time a new service is introduced? Competitors do not have to do this. This is costly to the business and inconvenient to customers who are not keen,” she said.

The Herald last week revealed some of the irregularities that were picked by Mrs Ndlovu among them the fact that the mobile operator made an advance payment of about $600 000 for its mobile money transfer platform-One Wallet, yet it only makes a profit of about $1 000 per month from the business venture.

It was also revealed that NetOne was paying its fuel costs to Redan based on invoices instead of actual consumption.

During reconciliation, it was to emerge that the mobile operator got an invoice of about $250 000 when its actual consumption was only about $90 000.

NetOne board chairperson, Mr Alex Marufu confirmed the irregularities cited by Mrs Ndlovu, saying the board was already investigating the allegations. He said they were fully behind Mrs Ndlovu.

Information Communication Technology, Postal and Courier Services Minister Supa Mandiwanzira said his ministry gave the board the mandate to reform NetOne.
Source: The Herald