Zambian businesses have been cautioned to be more vigilant following Financial fraud involving about K400,000 which has landed Global Seal Zambia Limited a two year suspension from participating in public procurement activities in Zambia.
The remitting bank – Ecobank and the Financial Intelligence Centre – FIC were both engaged to recover the funds by the local company but have all failed to successfully corroborate with the receiving bank to remit back the stolen funds due to email hacking.
The Zambia Public Procurement Authority (ZPPA) has with immediate effect suspended Global Seal Zambia Limited from participating in public procurement in Zambia, for failing to substantially perform contractual obligations.
Global Seals Zambia was awarded a contract by ZESCO Limited to undertake rehabilitation works on the ZESCO water flowing system at Kafue gorge in 2019 at the total cost of K1.6 million. However, the company could not successfully undertake to works.
Global Seals Zambia technical services manager John Mushi said the company failed to fulfil the contractual obligations at that time because it was swindled during the transaction to procure materials from the suppliers in Sweden.
Mushi explained that ZESCO had paid Global Seals about K400,000 as down payment to enable the company procure the raw materials needed to start the project.
“We lost some money through some cyber security breach, the money was paid to us by the client who was Zesco. So as we were trying to send the money to our supplier Ramson Multi Filter Systems of Sweden, we ended up sending to a wrong account because they had penetrated the email system.
“When we lost the K400,000, we failed to raise money to work on the project, so that is why the client (ZESCO) complained and we have been suspended,” he said.
Mushi said, “We received correspondence from our clients in Sweden that we should use the different account from what we usually use to send the money not knowing that the email had been tempered with and the message was not from our clients, so we transacted.
He said when the company discovered that it had sent the money to a wrong account, they called their bank, ECO Bank to try to cancel and reverse the transaction but it was too late because the swindlers in Mexico had already withdrawn the money.
“I called Ecobank to reverse the transaction, it was about a week later that is when we received the news to say our clients didn’t receive the money.
The bank tried to help us recover the money but because the transaction happened like on a Thursday and we only discovered that we lost the money the following week on Tuesday and by then the money had already gone through and was in Mexico and the frausterd withdrew it,” Mushi said.
He said, “We gave the report to the Financial Intelligent Centre (FIC) who tried to recover the funds but they also said it was complicated to get the thieves arrested or get the money back.
“When we lost that money our financial situation was bad and we were trying to see how best we could get back the contract online and meet the requirement by ZESCO but it was difficult. At the time we had meetings with ZPPA we had someone who was willing to come in and finance the project on our behalf but I think it was too late,” Mushi said.
He said the company understands that ZPPA has suspended them because it did not meet the requirement by ZESCO Limited and that it did not respond to the notice by ZESCO on its intention to terminate the contract.
“This move by ZPPA is going to affect our business because we are not only involved with ZESCO but we understand, it happens,” he said.
ZPPA in a circular issued to all permanent secretaries and controlling officers, chief executive officers of parastatals and statutory bodies, all town clerks and council secretaries of local authorities, noted that the decision to suspend Global Seal Zambia Limited was pursuant to section 96 of the Public Procurement Act No. 8 of 2020 and regulation 167 of the Public Procurement Regulations, 2011.
ZPPA Director General Idah Chella advised all procuring entities to enforce the suspension by ensuring that they do not award contracts, sale or issue solicitation documents or in any other way invite bids from the company; and enter into any other dealings or communications with the company except in respect of existing contracts signed prior to this suspension.
She noted that the suspension includes any “successor in interest” including any entity which employs, or is associated with any partners, directors or other officers considered as successors in interest.
“The suspension does not in any way limit Global Seals Zambia Limited from performing outstanding contracts that were entered into before the date of the Circular,” Chella said. She urged procuring entities not to enter into any new contracts with the company after the date of the Circular and during the period that the suspension will be in force.
