Dr Dennis Magaya
Lloyd Gumbo Herald Reporter—
Zesa Holdings’ alleged irregular appointment of chief strategist Dr Dennis Magaya to head a subsidiary, PowerTel Communications, in defiance of a State Procurement Board resolution, as well as the ministerial extension of the term of office of the utility’s chief executive officer Engineer Josh Chifamba have raised eyebrows in Government.
After being engaged to develop PowerTel’s business strategy between January and September 2012, Dr Magaya produced a strategy document, but the PowerTel Board, including Eng Chifamba, applied for condonation to go straight for implementation without going to tender.
The SPB turned them down and asked them to go to tender.
PowerTel then went to tender with Dr Magaya’s RubieM Technologies as one of the applicants.
The SPB told them that RubieM could not be part of the tender after which the PowerTel chair Francis Chirumhanzu and Eng Chifamba pulled a fast one on the SPB by unprocedurally transforming the tender into an employment contract which Dr Magaya has been enjoying to this day.
The recruitment saw Dr Magaya and four others earning nearly US$2 million in two years.
The Ministry of Energy and Power Development was aware of Eng Chifamba’s complicity in Dr Magaya’s irregular and expensive recruitment, but Minister Dzikamai Mavhaire went ahead to extend the CEO’s term by another three years in the absence of a board.
Under normal corporate governance procedure, the appointment of a CEO is the preserve of the board.
Zesa presently has no board because Minister Mavhaire dissolved it and unilaterally extended Eng Chifamba’s contract.
Eng Chifamba was at the centre of Dr Magaya’s irregular retention as chief strategist at PowerTel, where he and his firm earned huge
fees.
According to a contract seen by The Herald, in 2012 and 2013, Dr Magaya and four employees from his firm, RubieM Technologies, earned a combined US$1 859 128,20.
In 2012, the five were paid US$901 687,08 from PowerTel.
Dr Magaya’s contract gave him a salary of US$26 000 and a bonus of US$13 140,59 every month — or 0.77 percent of revenue — translating to US$469 687,08 in 2012.
The four employees he brought with him from RubieM were to get US$9 000 each monthly, coming to a cumulative US$432 000.
PowerTel’s revenue for that year was about US$20,2 million. This means five people – who were allegedly hired unprocedurally – took nearly one percent of annual revenue.
If RubieM had been awarded the tender, instead of PowerTell hiring its boss and four of his employees as indivuduals, the firm would have been paid about US$1,1 million in 2012.
For 2013, the four RubieM workers got an unchanged US$432 000.
Dr Magaya, that year, earned US$525 441,12 in salaries and bonuses. The total cost to PowerTell for the five was US$957 441,12.
In all, in 2012 and 2013, according to the contract, PowerTell paid Dr Magaya and his four employees US$1 859 128,20.
For 2014, Dr Magaya was contracted to earn US$532 512,12 in salaries and bonuses. The cost to Powertell for Dr Magaya and his team of four was to be US$964 512,12 for this year.
The State Procurement Board had turned down PowerTel’s request to have Dr Magaya’s RubieM implement strategic and business plans.
The procurement board disqualified RubieM saying it was conflicted because Dr Magaya had drawn-up the US$30 million five-year strategic plan that PowerTel wanted to implement.
However, the PowerTel board – on which Zesa CEO Eng Chifamba sat – went ahead and engaged Dr Magaya as an individual along with four of his employees by converting the rejected tender document into an employment contract.
Sources told The Herald that after engaging Dr Magaya and his employees, the PowerTel board signed a contract with him on the same terms as those in the initial tender application, essentially bypassing all the resolutions the SPB had made on the matter.
“The tender document was prepared by Dr Magaya’s company and when it was disqualified by the SPB, they withdrew it and the PowerTel board then turned him into an employee along with members of his staff on the terms of the tender,” said a source.
“This means what RubieM was going to earn and pay its employees had they been given the tender, was now earned by Dr Magaya and his staff as individuals. This translates to inflated salaries.
“You definitely cannot blame Dr Magaya for this because he was just a beneficiary of corruption at PowerTel and Zesa as approved and presided over by the current CEO of Zesa, Eng Chifamba. One wonders what the incentive was in flouting tender procedures,” said the source.
Another Government source wondered why Minister Mavhaire had then extended Eng Chifamba’s contract.
“The Ministry of Energy and Power Development, knowing that Chifamba transformed a tender into a contract, extended his contract by another three years without a board and said that it will be ratified by a board they are yet to appoint, which in itself is irregular,” said the official.
A document prepared by the Ministry of Energy and Power Development and seen by The Herald, claimed that although Dr Magaya was technically astute, his strategic initiatives were not proceeding as promised.
The document further claimed Dr Magaya had breached contractual obligations by securing a TelOne contract while working for PowerTel, thereby creating a conflict of interest.
Eng Chifamba yesterday said everything was above board and that it was the SPB that had erred by turning down RubieM.
“The board felt that it was prudent for Magaya to execute his strategy so we approached the SPB but they said no. The board felt that if we had gone to tender, competitors would have bought the document leaving us exposed.
“The board felt there was no conflict as had been suggested by the SPB so we thought it was proper to engage the same person. There was no flouting of tender procedures.
“Imagine if we were to engage someone else, if they failed to execute the strategy they would have told us that they were not the ones who drew it. The persuasion of the board was to let Magaya walk his talk,” said Eng Chifamba.
He said former Energy and Power Development Minister Elton Mangoma approved Dr Magaya’s appointment based on his “impressive strategic plan”.
Eng Chifamba ruled out any corruption in the recruitment. Efforts to get comment from Mr Mangoma or his successor, Minister Mavhaire were fruitless at the time of going to press.