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RENTED COPIER SOLD TO YOUTH FUND FOR E226 000

05/05/2019 08:15:00 BY WELCOME DLAMINI

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MBABANE – More dirt has come up on the company that was at the centre of the looting that took place at the Youth Enterprise Fund.

The Times SUNDAY today exposes that Classic World Stationery allegedly leased a photocopying machine from a leading office automation company and went on to sell the equipment to the Fund.
As confirmed by the office automation company, which has asked to remain anonymous due to its brand’s sensitivity, the machine was leased to Classic World on a five-year contract at a rental charge of E1 998 per month.
This means that the machine was going to cost Classic World E119 880 over the 60 months lease period.

However, Classic World allegedly sold the photocopier to the Fund for E226 508.72, which, according to the then Auditor General, Phestecia Nxumalo, was an ‘exorbitant’ price.
The price was E198 691.98 plus Value Added Tax of E27 816.74.

Sources within the Fund said they had all along believed the photocopier belonged to the Fund, but were shocked out of their wits when the office automation company told them the machine was leased from it and should, therefore, be returned, because the period had since lapsed.

Relating how they found out about the lease, the sources said all along they would go to Classic World whenever the machine’s toner cartridge needed to be replaced and the latter would provide it.
“However, Classic World later referred us to the office automation company whenever we wanted to have the toner cartridge replaced.

“This went on for a few times until the automation company refused to help us with the toner cartridge and told us that we should in fact bring back the machine because the lease period lapsed. This shocked us. When we told them that we had bought the machine from Classic World, we were told that Classic World had leased the machine from them,” said an impeccable source within the Fund.

The source said they later realised that when Classic World referred them to the office automation company for the toner cartridge, the lease period had ended and were therefore afraid of being caught out.
According to the source, they told the office automation company that it had to deal with Classic World and not the Fund if it wanted its machine back. “The Fund has receipts to prove that the machine was bought and not leased. So this machine belongs to the Fund, not anyone else,” said the source.

Photocopier worth E45 000
The source, who claimed that their own enquiry had ascertained that the machine was worth around E45 000 when it was leased from the office automation company, wondered why Classic World did not buy it outright once it received payment from the Fund.

“Classic World would have still made a huge profit because they sold the machine to the Fund at a highly inflated price,” the source said.
This publication understands that the automation company has received no response from Classic World when it tried to have the photocopier returned.
As a result, a senior manager of the company said the “client (Classic World) was handed over to legal and engaged lawyer to recover debt”.

The manager said Classic World had not fulfilled the terms and conditions of the lease agreement.
Youth Fund CEO Bhekizwe Maziya said as far as he was concerned, the photocopying machine fully belonged to the Fund as they paid for it in full.

“I am aware that the office automation company says the machine was leased from it, but we also know that we bought the photocopying machine from Classic World and we are its owners. I can’t speak of issues between the two companies because I don’t have proof whether there is any dispute between them regarding the machine,” he said.
Efforts to get a response from Classic World have been futile. The Times SUNDAY started seeking responses from the company’s director Lomasontfo Zwakele Mazibuko four weeks ago but to no avail. Each time Mazibuko was telephoned on her office number, we would be told she was out of the office.

Ex-AG’s investigations

Investigations by Nxumalo, the then AG, indicated that on January 29, 2014, the Fund’s Board took a resolution to the effect that as an interim measure, since there were some challenges with resources, an option of renting the machine should be adopted.
“In this resolution the Board resolved that management should obtain quotations for both buying and renting options, for them to decide the best option in terms of value for money,” Nxumalo wrote in her report.
As it turned out, the option to rent was discarded in favour of buying the machine, but, as the then AG found, a lot went wrong when this was done.

Nxumalo found that the Board approved the buying of the photocopying machine without scrutinising the three quotations that were submitted by suppliers.
The other two quotations were for E243 960 and E213 481.18 – both of which were inclusive of VAT.

She also noted that the quotations were themselves incomparable because the machine that was eventually purchased produced 20 pages per minute yet the one of the other quoted machines produced 45 pages and the third one 50 pages per minute.
Nxumalo said the three quotations had different specifications in terms of descriptions, features, size and capacity.

She said the quotations were also not obtained from recognised dealers of photocopying machines and, therefore, the quotations were only meant to deceive the Board members and other stakeholders.
“A formal Board meeting was not convened, but the procurement request was approved by Board members individually through email,” revealed the then AG.

While Nxumalo, in her report, said an average market price for a machine with comparable capacity to the one that was sold to the Fund was quoted for E69 052.00, the office automation company from which the photocopier was leased told this publication that it was worth ‘approximately E90 000’.

In her valuation, Nxumalo said a financial loss was made by the Fund to the tune of about E129 640 (E198 691 less E69 052), which was about 187 per cent above the average market price of E69 052. “This exorbitant high price cannot be justified by any increase in the consumer price indices,” she said.

She stated that on top of this, government also lost an amount of E27 816.74 as a result of VAT evasion. “The matter should be referred to the police, Swaziland Revenue Authority and the Anti-Corruption Unit for further investigation,” the then AG recommended.

Besides having sold the photocopying machine to the Fund, Classic World also supplied the government entity with other goods that included conference clusters, leather high back chairs, branded clock watches, an air conditioner, an HP machine and a steel cabinet.

In total, Classic World was paid an amount of E339 859.45 by the Fund within a space of four months.
This was the highest amount paid to a single company by the Fund and this raised a red flag with the then AG, who noted that there was an ‘unusually close association’ between the Fund and Classic World.