NetOne boss Kangai suspended

Lloyd Gumbo Harare Bureau
NETONE chief executive officer Reward Kangai has been sent on three months’ forced leave to pave way for a forensic audit at the parastatal, amid indications that the mobile phone operator could have lost millions of dollars through underhand dealings in procurement.

Board chairperson Alex Marufu confirmed the development last night saying Kangai would be on full time salary during his leave.

The new chief finance officer at the firm, Sibusisiwe Ndlovu, who was on probation, unearthed a number of irregularities in the manner in which finances were managed at the company.

This prompted Kangai to lobby the board not to employ Ndlovu on full time basis under the pretext that she went on maternity leave during her probation period.

Ndlovu presented her findings to the board in December last year.

“In compliance with a resolution by the NetOne board in December 2015, CEO of NetOne, Mr Reward Kangai, was today (yesterday) asked by the board to go on leave for three months to facilitate a forensic audit of the business,” said Marufu.

“This audit will be conducted by private forensic auditors under the direction of the Comptroller and Auditor-General.

“During this period, newly appointed Chief Operating Officer, Brian Mutandiro, will be the acting CEO.”

Other board members include Retired Brigadier-General Sidney Nyanungo – deputy chair, Nancy Samuriwo, Shepherd Tsomondo, Dorothy Mapimhidze, Thanks Mlobane and Georgina Chingonzo from the Ministry of Information Communication Technology, Postal and Courier Services.

Our Harare Bureau last month exposed the irregularities that were unearthed by Ndlovu.

Marufu recently wrote to Information Communication Technology, Postal and Courier Services Minister Supa Mandiwanzira advising him of the terms of reference for the audit.

The auditor will be expected to look into the integrity of the payment system, collection of debts, airtime distribution system, payment of salaries and allowances, acquisition and management of base station sites and suppliers of interest such as Bopela.

“Having received the report of the CFO, the board deliberated on actions to take going forward. With the concurrence of the minister, the board decided to undertake a forensic audit,” said Marufu.

He said the company had been lax in paying its suppliers.

“Payments made to suppliers were being made with little attention being paid to reconciliations, some suppliers were paid and there was no attempt made to ensure that the services they were paid for were delivered, suppliers were being paid in advance for services that in some instances would never be delivered,” Marufu said.

He cited some of the companies that benefited from the laxity in the finance department including a contract with Gemalto for the One Wallet system and Bopela that was into cellphone towers.

“The contract (Gemalto) was designed in such a way that the provider of the system earns four cents for every registered subscriber on the system even though very few, if any, were actually using the system.

“The system product was poorly marketed, an agent network was non-existent, the system itself did not work efficiently and as a result was bringing virtually no revenue to the organisation.”

On the other hand, NetOne was faced with demands from Gemalto to pay support fees adding up to over $500,000 compared to revenue generated of only $904 as at October 2015,” said Marufu.

On Bopela, Marufu said Ndlovu noted that several “rush” payments were being made to the company despite the fact that it had no contract with NetOne.”

The company was involved primarily in the construction of cellphone towers, but had also been paid two payments of $40,000 each for provision of service to sign up to 500,000 youths as NetOne subscribers, which service had not been delivered.

“Prior to the arrival of the CFO, suppliers would be paid on statement and no attempt was being made to reconcile these statements to invoices and in turn the invoices to goods delivered.

“The CFO insisted on a reconciliation of the statements for fuel delivery even though she was under pressure from the chief executive officer (Reward Kangai) to pay a supplier Redan Fuels, an amount of $183,000.

“On reconciling the amount, it was found that the amount due to Redan was only $87,000 which was duly paid. The balance would only be paid once invoices were provided and these reconciled to product received by NetOne,” said Marufu.

He said Ndlovu was also receiving several calls from PowerTel threatening to cut off services for the failure by NetOne to pay for services.

“Investigations showed that PowerTel was owed far less than the $400,000 they were claiming was due, after reconciliations were done and technical department confirmed which circuits were being leased compared to what was in the statement.

“This underlined the need to reconcile and confirm receipt of service before rushing to make payments based on statements and the threats of switching off.

“The CFO expressed concerns at payments that were being made for cellphone tower rentals. In some cases contracts were being backdated and in other payments were being made for rentals as far into the future as 2021.

“A payment of $14,400 was made to Richwood Sports Club for rental of a cellphone tower site from June 1, 2015 to June 1, 2021. In addition to this being a prepayment, an increase in rental was offered at a time when the organisation was looking at reducing the cost of site rentals,” said Marufu.

The board chairperson added that Ndlovu also noted bank reconciliations that were not being cleared on time with some dating back as far back as 2013.

He said this posed a financial risk to the organisation as there was risk of duplicate payments.

In the report, Marufu also confirmed earlier reports by our Harare Bureau that Kangai was against the employment of Ndlovu on a full-time basis after she gave birth during her probation.

He said after receiving the report, the board deliberated on actions to take going forward.

“The board is of the opinion that NetOne could potentially be the leading State-owned entity in terms of contribution of taxes and dividends to government. The organisation hasn’t been able to live up to this role as a result of a combination of ineptitude, incompetence, a lack of focus on the commercial aspects of the business and possibly criminal behaviour.

“The board is committed to getting to the root of all these and the restructuring of the organisation, which is now complete, has proved to be invaluable in providing the board with the information it requires to be able to act decisively,” said Marufu.