01/08/2024
THE Anti-Corruption Commission is investigating the Zambia Army and Ministry of Defence for corruption and money laundering over a payment of US$5.3 million made to a Kenyan company.
The Ministry of Defence gave a contract worth US$21 million to DLS International Group Limited of Kenya, to supply equipment and upgrade Maina Soko Military Hospital, among other things.
However, it has been established that after the US$5.3 million was paid to the Kenyan firm last year, part of the money was sent back to some private Zambian business owners and Zambia Army officers, who received cash in their personal accounts.
An investigation has shown that the Ministry of Defence single-sourced the deal and it has been further established that there was a breach of contract as there was no bank guarantee or insurance bond provided by DLS International Group as agreed.
Information obtained shows that when DLS International Group received the money, Kenya’s Financial Reporting Centre (FRC) interrogated the company, demanding to know what the Zambian Ministry of Defence was paying for.
DLS International Group Limited was incorporated in Kenya on February 21, 2023 and it opened an account with ECO Bank Kenya on April 14, 2023 and the account was inactive until August 10, 2023 when the account was debited with US$5,300,000 from the Zambia Army. When the US$5,300,000 reflected in the company account, the Financial Reporting Centre of Kenya engaged DLS International Limited Group to establish the purpose of the funds from Zambia.
DLS International Group Limited availed FRC with documents showing that they had a contract in Zambia with the Ministry of Defence for the supply, installation, equipping and training of 2 level hospitals and upgrading Maina Soko Medical Centre to a UN Level IV referral hospital for the Zambia Army at a contract cost of US$21,200,000.
According to the contract advance payment indicated that 25 percent of the contract price would be paid within 30 days of signing of the contract upon submission of the claim and a bank guarantee or insurance bond for equivalent amount valid until the goods were delivered. However, there was no bank guarantee or insurance bond or equivalent amount provided by DLS International Group Limited.
An analysis of bank accounts also shows that the money paid to DLS International Group’s Eco Bank account in Kenya was distributed to some directors of the Kenyan company while part of it was sent back to Zambia and received by Zambia Army soldiers and businessmen in their personal accounts.
ACC has since engaged the Kenyan Anti-Corruption authority to assist with investigations into the matter, and possible prosecution of those involved in corruption and money laundering.
One of the case studies highlighted in the 2023 FIC Trends Report indicated that a foreign-owned company incorporated in February 2023 was awarded a US$21 million contract by a government institution in June 2023 to supply equipment, despite having no previous work experience.
The report indicated that in August 2023, Company DL actually received a credit of about US$5.6 million in its account from the Institution as an advance payment.
After the release of the FIC financial trends analysis, Ministry of Information Permanent Secretary Thabo Kawana dismissed the publication and described the report as fake.
Kawana took journalists on a tour of the UN Level 2 plus field Hospital in Lusaka for an inspection, and defended the company, saying the DLS Group of Companies had supplied 100 percent of the UN mission equipment, contrary to what the FIC report had suggested, that it supplied air.
Chief Government Spokesperson Cornelius Mweetwa also condemned the “misleading work” of the FIC, saying the institution was alarming the public without stating clear fact.
