The Chinese company Zhong Mei Engineering has taken legal action against the government to stop the award of a N$237 million tender for the construction of the new Namibia Financial Institutions Supervisory Authority (Namfisa) head offices in Windhoek.
Last year, the Namibia Revenue Agency (Namra) accused Zhong Mei of failing to pay corporate taxes in Namibia for five years – despite having a taxable income of around N$930 million.
Now, Zhong Mei is back in the spotlight, taking the Central Procurement Board of Namibia (CPBN) to court over a matter that involves allegations that their joint venture partner unprocedurally obtained a tax good standing certificate.
The CPBN awarded the N$237 million Namfisa head office tender to a joint venture between Adaptive Building Land Construction CC and China State Construction Engineering Corporation.
China State Construction Engineering Corporation has in the past teamed up with daughters of former president Hifikepunye Pohamba and Bank of Namibia governor Johannes !Gawaxab in government tenders
Zhong Mei, whose N$216 million bid was N$21 million cheaper than the winning bidder, filed documents at the High Court last week, challenging the national tender board’s decision on the Namfisa headquarters tender.
Zhong Mei, represented by lawyer Ndelitungapo Ndaitwah, is in a joint venture with Palladium Civil Engineering, run by Immanuel Uugwanga.
In its bid evaluation report, the CPBN said it disqualified the joint venture based on its tax good standing certificate.
“One of the joint venture partners, Zhong Mei, submitted a tax good standing certificate. Upon further due diligence and inquiry to Namra, the submitted tax certificate was confirmed to have been issued unprocedurally, thus it was revoked and the bidder was deemed non-responsive,” the CPBN’s bid evaluation report reads.
The Namfisa tender also brings to the fore ongoing concerns about state institutions spending taxpayers money on non-essential projects that subsequently increase in cost.
ZHONG MEI’S LEGAL STAND
On 27 December 2023, in an affidavit filed with the High Court on behalf of the joint venture, Zhong Mei’s deputy manager Zhu Zehua insisted that Namra is not authorised to revoke its certificate of good standing.
“It is evident that [Zhong Mei’s] disqualification stems from a purported decision made by Namra to revoke a good standing tax certificate that was issued to the company. Namra did not have statutory power to revoke the tax good standing certificate on the basis that it was allegedly issued procedurally,” Zhu said.
He questioned how Namra can revoke a good standing tax certificate issued by its own administrative officials.
“By virtue of Namra being a creature of statute and in accordance with Article 18 of the Namibian Constitution, Namra is an administrative body with administrative officials who are obliged to act fairly and reasonably and comply with the requirements imposed upon them by common law and any relevant legislation,” Zhu said.
Palladium Civil Engineering director Immanuel Uugwanga, who also filed an affidavit in support of their application, said they submitted an objection to the CPBN on 3 December last year but it was not considered.
Uugwanga said the CPBN issued the bid evaluation report on 28 December 2023.
“The fact that Zhong Mei only submitted its reconsideration on 3 December 2023, the notice of award stated that the decision would only be made within 14 working days after the standstill period ended, which was on 5 December 2023,” Uugwanga said.
He added: “By the morning of 28 December 2023, the applicant had still not received a response to its reconsideration. Therefore, Zhong Mei proceeded to submit its application via email for review.”
DISPUTED REVIEW OUTCOME
According to the law, a bidder who is not satisfied with the CPBN’s decision can seek a review from the Review Panel in the finance ministry.
Zhong Mei submitted its application to the Review Panel on 28 December last year.
However, the Review Panel rejected its application during its session on 19 January this year.
“The Review Panel refused to hear the merits of the joint venture’s review application on the grounds that the joint venture had submitted its application prematurely.
“I wish to point out that we contacted the secretariat for the review on 22 January 2024 and requested for the written order, but we were informed that it was not ready,” Uugwanga said in his affidavit.
“On 25 January 2024, we contacted the secretariat of the Review Panel again and she indicated that the order was still not signed by all the members of the Review Panel.”
Zhong Mei has previously won state tenders including one to build the road between Usakos and Karibib, and the construction of the second phase of the Windhoek to Hosea Kutako International Airport highway.
CPBN STANDS ITS GROUND
CPBN spokesperson Johanna Kambala said Zhong Mei was disqualified fairly.
“CPBN confirms receipt of court papers challenging its decision to award the bid in question. CPBN wishes to affirm its position that Zhong Mei was procedurally and fairly disqualified and that the bid was awarded to the successful bidder procedurally and fairly,” Kambala told The Namibian on Friday.
“The bidder in question was disqualified from the bidding process after one of the joint venture partners submitted a tax good standing certificate, which was found to have been issued unprocedurally when CPBN was conducting its due-diligence with Namra. Unfortunately, CPBN is not in a position to comment further on this procurement matter which is now sub judice.”
Around 13 companies competed for the Namfisa tender, including a joint venture between C.K Heydt Civils CC and Unik construction Engineering Namibia – a company that is constructing the Swapo headquarters in Windhoek.
Other bidders include iBuild Supplies in a joint venture with Jiangsu Zhengtai Construction Group, Octagon Construction in a joint venture with New Era Investments, and Candino Mining Construction in a joint venture with China Railway Seventh Group Namibia and Namibia Construction.
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