CAR RENTAL COMPANY DEMANDS E5M FROM GOVT

MBABANE - Government reportedly owes over E5 million in respect of car rental services.

African Hire Swaziland (PTY) Limited, trading as EUROPCAR, which is a company carrying its business as a car rental, has now taken the Government of Eswatini to  the High Court  where it is demanding  a total of E5 066 963.65. Some of the cars that were allegedly offered to government for rental were Toyota Fortuner, Prado SUVs eight-seater kombi, single and double cab vans with canopy, Mercedes Benz C Class, BMW 3  and 7 Series, to mention a few. Some of the owing departments, according to documents annexed to the court papers, are the King’s Office, Eswatini Government and Correctional Services.  

Vehicles

In its particulars of claim, the plaintiff (African Hire Swaziland (PTY) Limited trading as EUROPCAR) submitted that on July 9, 2019, it was awarded Tender No.12 of 2019/2020 for hire of vehicles by Eswatini Government, through the Ministry of Public Works and Transport.  According to the company, on or about August 12, 2020, the government, through a letter, allegedly granted an extension of Tender No.12 of 2019/2020 for the period from August 12, 2020 to March 31, 2021. The plaintiff further alleged that on April 14, 2021, it purportedly entered into a written car rental agreement with government.  It was the company’s contention that the aforementioned agreement was pursuant to the extension of Tender No.12 of 2019/2020. A copy of the agreement was annexed to the summons issued by the company’s lawyer from RJS Perry.

“At the conclusion of the agreement, the plaintiff was represented by Thandi Bhembe in her capacity as Regional Manager, while the Eswatini Government was represented by Khangeziwe Mabuza in her capacity as principal secretary,” reads part of the combined summons. Mabuza is now with the Ministry of Tourism and Environmental Affairs. The material terms of the agreement, according to the plaintiff, were that; the government through the Ministry of Public Works and Transport would hire vehicles as described by the tender award list on behalf of various ministries, departments or any other government offices.

Agreed

It was also one of the plaintiff’s submissions that according to the agreement, the extension of the rental period was deemed to have commenced on August 12, 2020 to March 21, 2021. Government is alleged to have agreed to pay the plaintiff’s rates in terms of the price list attached to the tender awards.  As per the agreement, the parties allegedly agreed that payments were to be made in terms of clause three of the agreement. These are allegations contained in an affidavit whose veracity is still to be tested and the defendant (government) is yet to file its papers in the event it is disputing the claim against it.

The plaintiff  averred that pursuant to the award of Tender No.12 of 2019/2020,  dated July 9, 2019 and to the extension  of  same on  August 12, 2020 and the written contract, it  hired out vehicles for use to the following renters; His Majesty’s Correctional Services (HMCS), King’s Office, Ministry of Finance, Ministry of Foreign Affairs and International Cooperation, Ministry of Information and Technology, Ministry of Justice and Constitutional Affairs, Royal Eswatini Police Service, Eswatini Government and the Ministry of Defence. Through its attorneys, the plaintiff alleged that the aforesaid renters failed to pay the rental fees for the cars. The plaintiff claimed that in terms of the agreement, it sought to engage the government to pay all outstanding amounts, which failed to result in amicable settlement. The plaintiff alleged that on October 1, 2021, it duly made a demand to the attorney general and despite same, the Eswatini Government failed and/or ignored to settle such due amount. The matter is still pending in court.

Meanwhile, in his Financial Audit Report for the year ended March 2021, the Auditor General (AG) Timothy Matsebula, noted what he termed exorbitant expenditure of close to E20 million on vehicle rentals.

Expenditure

In the report, the AG stated that he drew the attention of the controlling officer that he observed an exorbitant expenditure in respect of vehicle rentals (cars) amounting to E18 919 074.10 incurred by the Ministry of Public Works and Transport instead of procuring new vehicles since the ministry had an adequate budget. Matsebula said he was concerned about the fact that the ministry opted to spend the aforementioned amount on car rentals instead of procuring new vehicles with the value equivalent to the leasing price. “I am not aware of any constraints by government to the ministry for procuring the cars other than leasing them, and the justifications on why the controlling officer opted to hire vehicles as some of them incurred extra costs, damages costs and exceeded the authorised kilometres, which increased the prices even more and drained more of the public funds.

“I am not aware of whether the option to buy new vehicles was weighed against the option to rent them. This would enable the ministry to identify the best balance of cost, benefits and risks, and consider value for money,” he stated in his report. The AG lamented that ‘value for money’ was one of the key considerations of any decision involving the use of public funds across government. He explained that the ‘Five Case Model’ was a decision-making tool used by developed governments to make informed strategic, economic, commercial, and financial and management decisions. In terms of ‘value for money’, the AG said he did not think that the costs of the rentals would be sustainable and affordable in the foreseeable future due to the declining trend in government revenue streams.

He said he, therefore, considered that ‘value for money’ was not exercised by the controlling officer when making the rental decision. “This rental decision was a violation of Section 0401 of the Financial and Accounting Instruction, which states that; “Money must not be spent merely because it has been authorised by Parliament. Controlling officers should encourage economy recovery by the careful distribution of funds,” the AG said.

Concerned

Matsebula said he was extremely concerned about such non-economic behaviour of the ministry in such trying times whereby the government was trying to revive the economy as it had been impacted immensely by the COVID-19 pandemic. “This was a clear indication of wasteful and fruitless expenditure incurred by the ministry. I advised the controlling officer that in all procurement activities, value for money and competitive prices should be opted for, especially in the use of public funds. “The controlling officer should ensure that wasteful and fruitless expenditure is avoided at all cost,” he stated. Matsebula also mentioned that he reported that after re-calculations of the invoice summary sheets attached to some of the payment vouchers, he discovered that there were overpayments of invoices amounting to E66 891.45 made to Woodford Car Hire and Capital Car Hire. Such an act, he said, was a clear indication of negligence and wasteful expenditure.

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