The People v Able Katongo and Ors (2SP-F-146-2009) [2012] ZMSUB 1 (1 November 2012)

-Jl- IN THE SUBORDINATE COURT OF THE FIRST CLASS 2SP-F-146-2009 FOR THE MANSA DISTRICT · ·.. . ,,_.: HOLDEN AT LUSAKA (CRIMINAL JURISDICTION) BETWEEN: ,.,_ THE PEOPLE : COMPLAINANTS VERSUS ABLE KATONGO ANTHONY MWILA ROYD ONDE JUSTINE JASPER PHIRI : 1ST ACCUSED (Al) : 2ND ACCUSED (A2) : 3RD ACCUSED (A3) : 4TH ACCUSED {A4) NOBERT PELETI . : 5TH ACUUSED {AS) ZUKAS MUSONDA KAOMA : 6TH ACCUSED (A6) HENRY KAPOKO MULENGA NGOSA : 7TH ACCUSED (A7} FREDY CHILESHE : 8TH ACCUSED {AS) CHRISTOPHER MAYENGE : 9TH ACCUSED {A9) CORAM: Mr. Kenneth Mulife, Senior Resident Magistrate. For the Prosecution: Mr. Dennis Simwinga, State Advocate - Anti Corruption Commission. For Al: For A2: For A3: For AS: Mr. Katupisha - Messrs Milner Katolo and Associates. Mr. Besa - Messrs Douglass and Partners. Mr. B. Soko - Messrs Ferd Jere and Company. Mr. Mutale - Messrs Lisimba and Company. For A6-A8: For A4 and A9: Mr. Kelvin Bwalya - Messrs K. B. F. and Partners. Mr. Chizu - Messrs Chanda Chizu and Associates. l -J2- SIATUTES REFFERED 1. Section 33(1)(4) of the National Payments and Systems Act'No.1 of 2007 2. Section 7 of the Prohibition and Prevention of Money Laundering Act No. 14 of 2001 3. Sections 2,20,57, 75,81 and 82 of the Public Procurement Act No.2 of 2008 4. Section 272 and 277 of the Penal Code, CAP 87 of the Laws of Zambia. CASES REFFEREP 1. SALONE ABAKA V. THE STATE SC.27~005 2. JOHN NYAMBE LUBINDA V. THE PEOPLE (1988-89) ZRll0(SC) 3. JOSEPH MULENGA AND ALBERT JOSEPH PHIRI V. THE PEOPLE (2008) ZR 1 BOOKS REFEREP 1. Osborn's Concise Law Dictionary, Seventh Edition. 2. Oxford Advanced Learner's Dictionary, New ih Edition. 3. Cabinet Communication Guide (GOVERNMENT OFFICE INSTRUCTIONS). JUDGMENT In this matter, the Accused persons stand charged as follows: under the first count, it is Al, A2, A3, A4, AS, A6 and A9 who stand charged with the offence of theft by public servant contrary to sections 272 and 277 of the Penal Code, CAP 87 of the laws of Zambia. The particulars of the offence are that Al-A6 and A9, between 1st December 2008 and 28th February 2009 at Lusaka in the Lusaka District of the Lusaka Province of the Republic of Zambia being persons employed in the public service namely Ministry of Health as Head Procurement and Supplies, Senior Procurement Specialist, Accountant, Internal Auditor, Assistant Director-Administration and Principal Accountant respectively jointly and whilst acting together with A7 and AB and other persons unknown, did steal Kl,980 billion the property of the Government of the Republic of Zambia which came in their possession by virtue of their employment. Under the second count, it is A7 and AS who stand charged with the offence of theft -J3- contrary to section 272 of the Penal Code, CAP 87 of. ~he Laws of Zambia. The allegation here is that A7 and AS between 1st December 2008 and 28 February 2009 th at Lusaka in the Lusaka District of the Lusaka Province of the Republic of Zambia jointly and whilst acting together with Al-A6 and A9 and other persons unknown, did steal Kl,980 billion the property of the Government of the Republic of Zambia. Regarding the third count, it is A7 who stand charged with the offence of issuing ct)eques on an insufficiently funded account contrary to section 33(1)(4) of the National Payments and Systems Act No. 1 of 2007 of the Laws of Zambia. The allegation being that A7 between 1st February and 1 ih February 2009 at Lusaka in the Lusaka District of the Lusaka Province of the Republic of Zambia with intent to defraud willfully and dishonestly issued cheques No. 000241 and 000242 in the amount of K99,000,000 respectively on Kahekam Limited Account No. 0064136140010 to Goldman Insurance on an insufficiently funded account. Under the fourth count, AS, A6 and A7 stand charged with the offence of money laundering contrary to section 7 of the Prohibition and Prevention of Money Laundering Act No. 14 of 2001 of the Laws of Zambia. The particulars of the offence are that AS-A7 on dates unknown but between 1st January 2009 and 17th February 2009 at Lusaka in the Lusaka District of the Lusaka Province of the Republic of Zambia, jointly and whilst acting together with other persons unknown, did engage directly or indirectly in a business transaction that involved Kl,980 billion property acquired from an illegal activity, whereby the said property was concealed or disguised in Kahekam Limited Account No. 0064136140010 held at Finance Bank Zambia Limited. Under the fifth count, it is A7 who stand charged with the offence of money laundering contrary to section 7 of the Prohibition/ and Prevention of Money Laundering Act N.14 of 2001 of the Laws of Zambia. The allegation here is that A7, on dates unknown but between 1st January 2009 and 1 ih February 2009 at Lusaka in the -J4- Lusaka District of the Lusaka Province of the Republic of Zambia, jointly and whilst acting together with other persons unknown, did enga~e directly or indirectly in a business transaction that Involved Kl,980 billion property · acquired from an illegal activity, whereby the said property was concealed or disguised in Kahekam account number 006136140010 held at Finance Bank Zambia and thereby used part of the money to purchase a motor vehicle, namely Toyota Nadia Engine No. 35-1815566 and Chasis No. SXN 10-0040187, property acquired from proceeds of crime. Regarding the sixth count, A7 stand charged with the offence of Money Laundering contrary to section 7 of the Prohibition and Prevention of Money Laundering Act No. 14 of 2001 of the Laws of Zambia. Particulars of the offence are that A7 on dates unknown but between 1st January 2009 and 17th February 2009 at Lusaka in the Lusaka District of the Lusaka Province of the Republic of Zambia, jointly and whilst acting together with other persons unknown, did engage directly or indirectly in a business transaction that involved Kl,980 billion property acquired from an illegal activity, whereby the said property was concealed or disguised into Kahekam Account number 0064 136140010 held at Finance Bank Zambia and thereby used part of the money to develop property No.13949 situated in Roma Township in Lusaka, property developed using proceeds of crime. And, under the Seventh count, A7 stand charged with the offence of Money Laundering contrary to section 7 of the Prohibition and Prevention of Money Laundering Act No. 14 of 2001 of the Laws of Zambia. The allegation here is that A7, on dates unknown but between 1st January 2009 and 17th February 2009 at Lusaka in the Lusaka District of the Lusaka Province of the Republic of Zambia, jointly and whilst acting together with other persons unknown, did engage directly or indirectly in a business transaction that involved Kl,980 billion property acquired from an illegal activity, whereby the said property was concealed or disguised into Kahekam account number 0064136140010 held at Finance Bank Zambia and thereby diverted K250,000,000 which he deposited in Best Home Lodge Finance Bank Account No. 0004173670002 belonging -JS- to property No. 13947 situated In Roma Township in Lusaka, property developed using proceeds of crime. The Accused persons pleaded not guilty to the respective counts under which they stand charged. 1 warn myself at the outset that the onus is upon the prosecution to prove its allegations beyond all reasonable doubt. There is no onus on the Accused persons to prove their innocence. If, after considering all of the evidence in this case there is any doubt in my mind as to the guilty any of the Accused then such an Accused mu~t be given the benefit of that doubt. In order to establish the guilty of the Accused persons the prosecution must satisfy me upon each and every ingredient of the offences cl1c1rged. Turning to the first count, the prosecution must establish that without claim of right, Al-A6 and A9 took the subject K1980 billion belonging to their employer, the Ministry of Health, with the intention of permanently depriving the owner thereof. Under the second count, the prosecution must prove that A7 and AS took the subject K1980 billion belonging to the Ministry of Health with the intention of permanently depriving the owner thereof. Regarding the third count, it must be established that intending to defraud, A7 willfully issued the two cheques ( exhibit P29 and 30) onto the Kahekam Bank Account knowing that the account had insufficient funds and that as a result the two cheques could not be encashed. Under the 4 th - 7th count, the prosecution must establish that using proceeds of crime, the Accused persons named in the said counts acquired property named therein or concealed property derived from an illegal activity. The foregoing are the ingredients that constitute the subject offences. I will now consider the evidence in this case. The prosecution called forty-one witnesses. Mwila I -J6- George Mulenga (Pwl), was at the material time, a procurement specialist responsible for the HIV Global Fund at the Ministry of Health. His testimony is as follows: during the year 2009, he saw an advertisement in a newspaper for procurement by the Ministry, of Mother-baby kits using HIV Global Funds. He was subsequently asked by his superior, A2 to sit on an Evaluation Committee (hereinafter called the "Committee'') that would evaluate tenders for the supply of fifty thousand mother-baby kits. The evaluation that began on 17th January, 2009 comprised the preliminary, technical, commercial and post qualification stages. Amongst the 16 or 17 bidders, Melcome Marketing and Distributors Limited (herein after called "Melcome''), was recommended to the Ministry Tender Committee (MTC) to be awarded the contract. A2 wrote the evaluation report ( exhibit P2) which Pwl, alongside other members of the Committee, signed. Eventually, when he was summoned for interviews by the Anti- Corruption Commission (ACC) in connection with his role in the Committee, he was shown two memoranda (exhibit P3 and P4) prepared by A2 for consideration by the MTC. He observed that exhibits P3 and P4 erroneously included Kahekam Limited (hereinafter called " Kahekam") in the Post Qualification stage of the Committee. He maintained that only Melcome was evaluated in the post-evaluation stage for the supply of the fifty thousand mother-baby kits which the Committee evaluated. Under cross-examination, Pwl brought the following to light; that the MTC is not bound by recommendations of the Committee, that he was not aware that the end-user had requested for fifty thousand extra mother-baby kits whose contract of supply was awarded to Kahekam; that the Committee recommends the lowest bidder to the MTC for the award of the contract; that it had just come to his attention that Kahekam was the second lowest bidder after Melcome. He further stated that the lowest bidder communicates in wriliny if they are unable to supply extra goods and Melcome communicated to that effect on 22nd January 2009, but that the MTC, as per requirement, did not revert to the Committee for technical advice regarding Melcome's inability. -J7- Brigadier General James Simpungwe (Pw2) was, at the material time, Director for Clinical Care and Diagnostic Services at the Ministry of Health. H~ testimony is as follows: on 21st January 2009, he was delegated by Pw4 to chair the MTC meeting that discussed the procurement of fifty thousand mother-baby kits requested for by the Directorate of Public Health and Research. The tender for the supply of the kits was awarded to Melcome and no other bidder was discussed. The question of procurement of extra kits arose but was suspended until the end-user had advised the MTC about the actual requirements. Amongst those in attendance were Al, AS and A9 who was th'e Secretary of the MTC. The MTC examined the Committee's evaluation report. After about thirty minutes after the meeting, A9 gave him a memorandum from the MTC ( exhibit P3) to sign at Pw2's office. It was also signed by all the attendants. The memorandum indicated that the kits would be procured by Melcome. A few minutes later, A9 re-imaged with another document (exhibit P4) which he said was a replica of exhibit P3 and to be kept for record purposes. He asked Pw2 to sign and that was done. Five months later, he discovered that the documents were in fact different from each other and both contained falsehood as they indicated that Kahekam was awarded the contract alongside Melcome yet Kahekam was not agreed upon in the MTC. Exhibit P4 further indicated that Kahekam was to supply the extra kits. He added that written approval by the then Acting Permanent Secretary at the Ministry of Health for the ~curement of extra mother-baby kits and the letter from Melcome signifying its inability to supply the extra kits, which he was shown by law enforcement officers, were neither discussed nor shown to the MTC. Regarding the letter from Melcome, Pw2 added that it was in fact dated a day after the MTC meeting. Under cross-examination he stated that there were written minutes of the MTC meeting only that they could not be found later but that he saw them at the offices for the ACC; that the basis of a subsequent contract is the MTC Paper. Doctor Victor Mukonka (PW3), was at the material time, Director in the Directorate of Public Health and Research. His testimony is as follows: on 25th December 2008, he -JS- wrote a letter to the Permanent Secretary in the Ministry of Health requesting for approval for his Directorate to· procure, in addition to the initial fifty thousand mother baby kits, one hundred and fifty extra mother-baby kits. This letter is part of e~hibit P4. The request was approved by the Acting Permanent Secretary( Pw2'ij through an endorsement written on the same letter. The approval was received on 29 th December 2008. The following day, it was forwarded to the Prevention of Mother to Child HIV Transmission (PMCTC) specialist, Dr. Bweupe, the initiator of the request, who further forwarded it to the Procurement unit for tendering. The kits were to be procured using the Global Funds. Under cross-examination, Pw3 stated that the letter of approval he had subsequently forwarded to Dr. Bweupe, reached the Procurement unit on 15th January 2009. He further stated that he did not attend the MTC meeting for 21st January 2009. '---- Dr. Velipi Catherine Mtonga (PW4)at the material time, was Director for Technical Support Services in the Ministry of Health. She stated that she partially chaired the MTC meeting held on 21st January, 2009 but eventually handed over the seat to PW2 since she had some commitments elsewhere. She later re-joined the meeting as an ordinary member. She stated that following recommendations of the Evaluation Committee, the MTC awarded the contract to Melcome to supply fifty thousand mother-baby kits. A discussion regarding the procurement of extra mother-baby kits arose but was deferred to an unknown date after the MTC urged the user department to undertake an assessment of the actual requirements. The MTC further requested the procurement unit to write to Melcome to find out if they are able to supply the extra kits. Under cross-examination, Pw4 stated that the letter in exhibit P4, dated 25th Dece~ber 2008, in whlch the acting permanent secretary in the Ministry of Health approved the procurement of extra mother-baby kits, was not brought to the attention of the MTC. She added that the second lowest bidder after Melcome, was Kahekam and that in the • I -J9- event that the lowest bidder is unable to undertake the assignment, the MTC would award the contract to the second lowest bidder. Kamoto Reuben Mbewe(PwS) was, at the material time, a Deputy Director in the Directorate of Public Health and Research in the Ministry of Health. He stated that on st January, 2009, he attended the MTC meeting on behalf of Pw4, his superior. It is his testimony that the MTC awarded the contract for the supply of fifty thousand mother-baby kits to Melcome. He stated that the MTC further deliberated on procuring extra mother-baby kits but deferred the resolution until PwS would with inquire with Dr. Bweupe regarding the quantity of the extra kits. The general membership of the MTC further opted for Melcome to supply the extra kits. However, Al who was also a participant in the MTC suggested that the second lowest bidder, Kahekam, should be awarded the contract to supply the extra kits indicating that he was aware that Melcome did not have the capacity to supply the extra kits. He added that other members of the MTC wondered how Al had such manner of information because the increase in the kits was being discussed for the first time.· Nonetheless the MTC asked Al to provide a written denial from Melcome. When PwS consulted with Dr. Bweupe, the latter told him that a request for the increase in the kits had already been written and would follow it up with the procurement unit. He maintained that the MTC did not discuss any other company apart from Melcome yet to the contrary, exhibits P3 and P4 indicate that Melcome and Kahekam were awarded contracts for the supply of mother-baby kits. Sadik Ahmed (Pw6) at the material time was Managing Director for Melcome. His testimony is as follows: Melcome tendered for the supply of fifty thousand mother-baby kits to the Ministry of Health. On 22nd January 2009, he was summoned at the offices for the Ministry's Procurement Unit where he was told by Al that Melcome had been awarded the contract to supply the fifty thousand mother-baby kits. Further, in the presence of A2 and other officers in the procurement unit, Al invited Melcome to supply ( • -JlO- fifty thousand extra mother-baby kits. Pw6 declined the offer. Pw6 was asked to put the decline in writing which he did and delivered the letter the same day (22nd January, 2009) in the afternoon to Al (the said letter is part of exhibit P4). PW6 thus only signed the contract ( exhibit P15) for the supply of the fifty thousand kits which his company had tendered for. He added that the kits have been procured and are kept at Melcome's warehouse because there is no space at the Ministry of Health. Maximilian Bweupe(Pw7) at the material time was a PMTCT specialist in the Ministry of Health. He stated as follows: on 26th December 2008, he wrote to the Director in the Directorate of Public Health and Research, requesting for the procurement of one hundred thousand extra mother-baby kits comprising one chitenje material, four baby napkins, four safety pins, a baby shawl, a treated mosquito net and two tablets of soap. The request was supported whereupon Pw3 wrote to the Permanent Secretary seeking authority to procure the extra kits. The request was supported by the Acting Permanent Secretary (Pw 27) who endorsed on the same request (the request (is part of exhibit P4). Eventually, Pw7 gave the written approval to A2 in the Procurement Unit. During the month of January 2009, when PwS told him that the MTC that sat during that month had proposed to procure extra kits in addition to the initial fifty thousand, Pw7 told him that he had already responded to the increase. Carolyne Katota (Pw8) was, at the material time, a Re- Insurance Assistant at Goldman th Insurance Limited (hereinafter called "Goldman". Her testimony is as follows: on 5 February 2009, her General Manager introduced to her A7 and AB, Director and Operations Manager of Kahekam, respectively. The General Manager further gave her a written request for an advance payment guarantee (exhibit P.16) in the sum of K980,000,000 from Kahekam signed by A7 and addressed to the chief executive officer, an original certificate of title (exhibit P17) in respect of a property called Best Home Lodge situated in Roma Township and an evaluation report in respect thereof(exhibit P18). She verified the existence of the said property. Further, a memorandum of deposit of the certificate of title ( exhibit P20A) signed by A7 and AB and a letter of •Jll· consent for the Best Home lodge to be used as collateral in the advance payment request signed by one Luka Special Mwanza, were deposited with Goldman by AS. The request for the advance payment was accompanied, as per requirement, with a total payment of K198,000,000 by way of two post-dated cheques . Finally, an Insurance policy (an advance payment bond - part of exhibit Pl 1) guaranteeing payment of a sum of Kl,980,000,000 in respect of the supply of fifty thousand mother-baby kits to the Ministry of Health, was issued by Goldman in favour of the Ministry of Health. The guarantee was for the period 22nd January 2009 to 31st March 2009. On 19th March 2p09, Kahekam applied to renew the bond but the request was rejected because the collateral, the Best Home Lodge, had been collected by the ACC on 7th May 2009. However, she lent later that the two cheques were dishonoured by the bank on which they were drawn. Under cross-examination, when shown Kahekam's statement of account at Finance Bank showing the transactions which led to the bouncing of the two cheques, Pw8 stated that the cheques, according to the statement bounced because the bank acknowledged having wrongly posted them adding that Kahekam had an overdraft facility with the Bank capable of providing sufficient funds in order for the cheques to be drawn at the material time. She added that the Ministry of Health has not demanded from Goldman, for the guaranteed sum of Kl,980,000,000 because it did not lose the money. Neither did Goldman claim the K198,000,000 from Kahekam nor lodge a complaint to that effect with the law enforcement agencies. Edrix Simwanza (Pw9) and Tobias Hanyimbo Mulambo (Pwl0), at the material time, were General Managers for Goldman Insurance. Their testimonies are similar to that of Pw8. For obvious reasons I shall not recite them. Nellasi Mulenga Mwale (Pw12) was at the material time, an Accounts Assistant stationed at the headquarters for the Ministry of Health. Her testimony is as follows: during the month of February 2009; A3, her supervisor, gave her some documents and -J12- directed her to prepare a payment voucher in favour of Kahekam in the sum of Kl,980,000,000. Amongst the documents A3 gave her was a contract between the Ministry of Health and Kahekam for the supply of fifty thousand mother-baby kits, an MTC paper No. 022 which awarded the contract to Kahekam, a letter from Melcome addressed to the Permanent Secretary in the Ministry of Health declining to supply fifty thousand mother-baby kits, an advance payment bond in the name of Kahekam for purposes of guarantying the said sum of Kl,980,000,000. She finally prepared the payment voucher, which together with the documents outlined above, form part of exhibit Pll. Eventually, she passed the voucher to the next person for onward procession. Under cross-examination, she stated that the documentation given to her coupled with the Permanent Secretary's approval to pay, had no problems and therefore that there was nothing irregular with the payment. Muriel Mbulo Bonani(Pwl2),at the material time, was a banker with Finance Bank. Her is as follows: Kahekam Limited had opened bank account No. testimony 0064130140010 at her branch, whose signatories were A7 and one Kalikeka. On 16th June 2009, state security personnel approached her to inquire about what went through the Kahekam Bank Account on lih February 2009. She inspected the account and leant that two cheques, each in the sum of K99,000,000 endorsed " refer to drawer" and drawn in favour of Goldman Insurance, had passed through the account. They were cheque numbers 000241 and 000242 (herein marked exhibits P.29 and 30, respectively). The endorsements on the cheques meant that the Bank could not honour them because the account for Kahekam did not have sufficient credit. Regarding exhibits P. 29 and P.30, she informed A7 the reason why the bank could not honour payment. During the course of the day, A7 made two deposits but it was after exhibits 29 and 30 had been dishonoured. She added that it was not the first time, based on the relationship Finance Bank had with Kahekam, that Pw12 could converse with A7 or AB in the event that Kahekam had cheques but its account had insufficient credit. -J13- Pw12 further added that on 17th February 2009, the account received a sum of K1,980 billion from the Ministry of Health Headquarters which was however withdrawn from the account by either A7 or AS so that by the time exhibits P29 and 30 hit the account, the account had already been overdrawn. She added that none of such withdraws had been directed to A1-A6 or A9. Under cross-examination, Pw12 stated that during the month of February 2009, Kahekam was granted an overdraft facility in the sum of three hundred million by her bank for which the bank had an obligation to honour all cheques drawn on the account within the limits of the overdraft. The account showed that on 10th February 2009, the Bank had allowed overdrafts on the account which were recovered from the sum of K 1980 billion kwacha when it hit the account. This trend was also evident for many other transactions during the month of March 2009. She attributed this trend to the confidence which the Bank had in Kahekam. Pw12 further told the Court that during the month of March 2009, there was an addition of K 100,000,000 on the initial overdraft facility. The facility was only withdrawn on 1st June 2009. She added that at the time exhibit P. 29 and P.30 hit the Kahekam account, the account balance was in the sum of -K 393,971,000 which was within the overdraft facility of K400,000,000. Gfven Masamba(Pw13) is an Immigration Officer in charge of data base at Immigration Headquarters. He stated that he confirmed to the Anti-Corruption Commission (ACC) that A7 and AB had left Zambia during the month of February 2009 and arrived back during the month of March 2009. Under cross-examination, Pw13 stated that he does not know the reason why Pws7 and 8 had left Zambia. Paul Mwila (Pw14) was, at the material time, an Assistant Branch Manager at Zambia Indo Bank. He stated that during the month of June 2009, officers of the ACC asked from him, for a bank statement for Goldman Insurance with particular interest on Finance Bank cheques (cheque Nos. 241 and 242- exhibits P.29 and 30, respectively) .• -Jl4- that were deposited on 16th February 2009. He printed out and gave them the statement for the period 1st January 2009 to 30th May 2009 (exhibit P.67). He added that the cheques were not honoured for payment after they were deposited by Goldman Insurance and consequently surrendered back to Goldman. Under cross examination, Pw13 stated that he is not aware if Kahekam, the drawee of the cheques, had an overdraft with Finance Bank at the material time. Justina Chenge (Pw15), was at the material time, a banker, in the position of credit officer at Finance Bank. At the material time, she was based at the Long Acres Branch. She stated that the branch has an account with Kahekam and that at some stage, she had processed a bank overdraft application in the sum of K300 million on behalf of the said Kahekam. It is her testimony that the Director of Kahekam, A7, pledged a house situated in Olympia Park as security. The application was successful. Later, Kahekam applied for and was granted an additional overdraft of Kl00,000,000 operative during the month of April 2009. Pw15 further recalls that Kahekam had applied for a payment to guarantee a sum of K1980 billion, money to be received from the Ministry of Health for purposes of procuring 50,000 mother-baby kits. Kahekam pledged as security, a property called Best Home Lodge, apparently owned by a Mr. Luka Mwanza Special, situate in Roma. However, a letter addressed to the Bank, from Mr. Special Luka Mwanza, indicated that the owner of the property was A7 and that change of title in that respect would eventually be effected. PwlS further stated that A7, withdrew the title deed after she sought certain clarifications from Kahekam touching on the application. The Bank did not effect payment for purposes of guaranteeing the sum of K1980 billion sought by Kahekam from the Ministry of Health. She further stated that two cheques (exhibits P29 and 30) in the total sum of K198,000,000 drawn on the account by Kahekam in favour of Goldman Insurance could not be honoured for payment because there were insufficient funds in the account. Under cross-examination, PwlS stated that at the time Kahekam was applying for the guarantee, the Best Home lodge, which was valued at KS billion existed; that even prior -JlS- to the approval of the overdraft facility, Kahekam used to be allowed to overdraw funds from the account and that even after the overdraft faclllty was effected, Kahekam used to draw funds exceeding the faclllty; that at the time the two cheques ( exhibits P29 and 30) could not be honoured for payment, funds In the overdraft facility were enough to cover payment for one cheque but that the Bank could not make payment on one cheque because Kahekam recalled both cheques from the bank. Nichol Kombe (Pw16) was at the material time an Accounts Clerk at Goldman I11surance. She stated that on 5th February 2009, she Issued a receipt in favour of Kahekam in respect of a guarantee bond pursuant to which Kahekam was expected to pay a security deposit In the sum of K198 million. On 6th February 2009 a representative of Kahekam gave her the payment in the form of two cheques( exhibits 29 and 30)post dated to 13th February 2009 ( each amounting to K99 million). The cheques were subsequently deposited in Goldman's account held with Inda-Zambia Bank. She latter collected the two cheques from the bank because they could not be honoured for payment due to insufficient credit in the Kahekam Bank Account. Under cross examination, Pw16 stated that Kahekam was not consulted by Goldman as per practice, before the cheques were deposited; that she was not aware that Kahekam had an overdraft facility of K300 million which could have provided sufficient cover for the two cheques. Mwanza Luka Special (Pw17) stated that between the years 2005-2006, he sold to A7, the plot on which the Best Home Lodge is situated in Roma Township. However, change of ownership has not yet been effected. He added that during the month of February 2009, he wrote a letter (forming part of exhibit P68) to Finance Bank touching on the plot he had sold A7, as guarantee for the Bank to give A7 a loan. He denied ever having authored or signing a letter addressed to Goldman (exhibit p.19) in which it was indicated that he had allowed Kahekam to use the title to the plot he sold A7 as security for a guarantee bond to be obtained from Goldman. Under cross-examination, Pwl 7 -J16- stated that according to the letter he authored In exhibit P68, he had no claim over the plot and therefore that the purchaser, A7, could deal with It In any manner he wanted. Rebecca Zeko Kalondo (Pw18) was at the material time a Receiving Controller at the Receiving Department of the Medical Stores. He stated that on 21st May 2009, AS indicated that he had brought for inspection, a sample of the mother-baby kits to be delivered to the medical stores by Kahekam. The sample comprised a nappie, a baby . shawl and a two-meter chitenge material, wrapped in a transparent plastic bag. It is further his testimony that medical stores only accepts consignments parked in carton boxes and accordingly instructed AS Kahekam to package the baby kit in the prescribed manner. On 26th May 2009, AS told him that the prescribed manner of packaging was not included in the contract and would thus constitute an extra cost on the part of Kahekam. He added that to date, neither kahekam nor Melcome has delivered the mother-baby kits to the Medical Stores. Vivian Nene (Pw19), at the material time, was Pharmacy technologist at the Medical Stores Limited. He testified as follows: During the month of March 2009, A2 gave him some contracts from the Ministry of Health. On 11th May 2009, he refused to receive a consignment of nappies brought by truck from the Republic of South Africa. The man delivering the consignment from Kahekam indicated that his company had won a contract to supply mother-baby kits. The nappies were rejected because they did not constitute a complete kit, namely nappies, shawl, safety pin and other items which the witness could not recall. She also added that in terms of practice at the Medical Stores, the consignment should have been packaged in carton boxes but the representative of Kahekam indicated that such packing would be costly for Kahekam. To date, the kits have not been delivered at the medical stores. Annie Zulu (Pw20), at the material time, was a Director for Pharmaceutical Services at the Medical Stores. Her testimony Is similar to that for PWS18 and 19 and for obvious reasons, I shall not recite it. -J17- Mweemba Hikalu (Pw21) at the material time was an Accountant at Handyman's paradise. He testified as follows: that a group of sister companies (Best Home Lodge, Kahekam and Yesaka) holds one common account with Handyman's paradise. According to company records i.e. cheques and invoices (exhibits p76-79) Kahekam used to pay for building materials supplied to the Best Home Lodge. Lloyd Musonda (Pw22), at the material time was an Assistant Inspector of Companies at the Patents and Registration Office. He stated that according to records kept at his office, the Directors for Kahekam are Mr. Mwila Kalikeka and Mr. Henry Kapoko and that each one of them holds 5 million ordinary shares in Kahekam. Inayat Vally (Pw23) was at the material time a production/sales manager at Crosset Investment Limited. He stated that he identified a photocopy of a Finance Bank cheque (exhibit p 84) in the sum of K12.l million produced to him by investigative officers of the state, as an advance payment made to his company by Kahekam for seventeen door frames. However delivery of the doors had not yet been completed. Agyness Phiri Mporokoso (Pw24) at the material time, was a Senior Lands and Deeds Officer under the Ministry of Lands. The witness could not lay adequate foundation regarding her role in this matter. Consequently, her testimony is not worthy reciting. Mabvuto Ngula (Pw25) was acting head of manufacturing at TAP(Z)Limited. He testified that on 11th June 2009, he confirmed to officers of the Anti-Corruption Commission (ACC) that his company had supplied Kahekam with 36 building columns worthy K9,310,934.88 and that Kahekam had paid for the goods using a Finance Bank cheque. Dr. Simon Miti Kamwendo (Pw26) was Permanent Secretary in the Ministry of Health at the material time. He began by testifying on the procedure of procuring goods and services in the Ministry. Here, Pw26 stated that the MTC can only allow for an increase l -Jl8- or decrease of 15-20% in the goods or services to be procured. Beyond that margin, there must be an addendum to the tender to run for a period of at least fourteen days prior to the close of the tender. If an addendum is not possible, Pw26 stated that the only option is to re-tender the procurement. He added that letters or communications which have not been endorsed by the permanent Secretary cannot be introduced in the MTC meeting. He stated that when he was shown exhibit Pl 1 at the offices for the ACC, he noticed the following anomalies: that the letter therein from Melcome, on the basis which the contract for the supply of extra mother-baby kits was awarded to Kahekam, hed not been acted upon by the Permanent Secretary; that the said letter was dated a day after the MTC had taken place; that the authority for payment of the advance was not granted; that the advance paid was supposed to be in the range of 10% and not 90% because the goods were being procured from outside Zambia and that the procurement of the 50,000 extra mother-baby kits was not evaluated as there was no evaluation report to that effect. Pw26 stated that he did not attend the MTC meeting that led to the award of the contract for the supply of mother-baby kits to Kahekam because he was out of office for other official duties at the time but when he reported into office he signed the Kahekam contract based on the decision of the MTC. He concluded by stating that he was misled by Al into signing the contract allowing Kahekam to supply the Ministry of Health, 50,000 extra mother-baby kits. Under cross-examination, Pw26 stated that Kahekam was one of the bidders that had been evaluated by the Evaluation Committee in respect of the tender for the supply of the initial mother-baby kits pursuant to which the contract was awarded to Melcome. He added that the application by Kahekam for an advance payment bond passed through the office of the Permanent Secretary in the Ministry of Health because the Permanent Secretary endorsed the words "F. Y. A", thereon for the attention of the head of the procurement unit and that the advance payment guarantee bond supplied by Goldman Insurance provided cover for the period ending 31 st March, 2009 in respect of the sum of K1980 billion herein paid as an advance to Kahekam by the Ministry of Health for the supply of the 50,000 extra mother-baby kits and that the MTC meeting ·' -Jl9- was tied to the availability of funds but that he was not aware about the expiry date for use of the Global Fund (from whence the subject K1980 billion was paid to Kahekam) by the Ministry of Health. Pw26 added that the Ministry of Health paid Kahekam the sum of K1980 billion pursuant to the contract which he signed on behalf of the Ministry but maintained that the payment was illegal because it lacked the letter from Melcome declining to supply the 50,000 mother-baby kits; that the head of the procurement unit has no power to authorize payment in the sum of K1980 billion ; that there was no commitment requisition and that there was no instruction from the Permanent Secretary to the Chief Accountant for the Finance Manager to pay Kahekam the K1980 ' billion; that the subject MTC did not approve the purchase of the extra 50,000 mother- baby kits but that he could not tell what the MTC had discussed because he did not attend the meeting. Pw27 (Davies Makasa Chimfwembe) testified as follows: as at 29th December 2008, when he was Acting Permanent Secretary for the Ministry of Health, he received an internal memo (part of exhibit P.11) dated 26th December 2008 from the Director of Public Health and Research requesting to increase the number of mother-baby kits to be procured by the Ministry of Health from fifty-thousand (50,000) to one hundred and fifty thousand (150,000). He approved the request by endorsing on the memo, the words "supported" provided that tender procedures were complied with during the procurement process. The memo was sent back to the initiator of the request who in turn was to liaise with the Procurement Unit in order to commence the procurement process. The next time he saw the memo was at the offices for the ACC where he was summoned by investigators. He noticed through an endorsement that the memo was received in the Procurement Unit on 15th January 2009. He further lent that the said procurement had been concluded. Again, on 4th February 2009, when he operated from the office of the Permanent Secretary, he saw a letter dated 26th February 2009 from Kahekam ( part of exhibit P.11) in which Kahekam was requesting to be paid an advance sum of up to ninety (90%) of the contractual sum. The letter did not provide sufficient information on whose basis the advance payment was being requested. -J20- However, because it referred to contract no. 0SMOH/ORB/GFATM/006/08 (between Kahekam and the Ministry of Health, also part of exhibit Pll) which at the material time was being kept by the Procurement Unit, Pw27 referred it to the Head of the Procurement Unit with the letters " F. Y. A." by which he meant the letter was being referred to the Head of the Procurement Unit for his further attention and subsequently to advise the Permanent Secretary, through an internal memo, on the inadequate information. Pw 27 received no feedback from the Head of the Procurement Unit. The next time he saw the letter was at the offices for the ACC where he was summoned and was surprised to learn that Al, the Head of the Procurement Unit had directed A2, the Procurement Specialist in the Ministry of Health, to process payment after getting an advance payment bond. Pw27 was surprised because the directive to pay is the preserve of the Permanent Secretary only. Mushimbei Mubita (Pw28), at the material time was a teller at the Mulungushi Branch of the Finance Bank. He confirmed that he had paid out to Kahekam through Fred Chileshe (A8), a sum of ninety million kwacha (K90,000,000) on a Finance Bank cheque number261 (exhibit P.40). Similarly, Juliet Kunda Mudenda (Pw29) who was at the material time, a Manager for the Industrial Branch of the Finance Bank, confirmed that a sum of one hundred million kwacha (Kl00,000,000) on a Finance Bank cheque number 273 (exhibit P.56) was paid to AS out of the Longacres Finance Bank Account belonging to Kahekam. Isiah Chaikutisha(Pw30) at the material time was a banker with Standard Chartered Bank. He confirmed that pursuant to the instructions of Zukas Kaoma (A6) and Nobert Peleti (AS), signatories of the Ministry of Health Account No. 0100112345200, on 10th February 2009, a sum of K1980 billion was transferred from the said account to the Kahekam Bank Account held at Finance Bank. ·' -J21- Mwila Mutale(Pw3 1) was at the material time an Investigations manager for Total Zambia. He stated that Henry t<apoko (A7), as at 24th April 2009, was running Kabulonga Total Fllllng Station as a dealer for Total Zambia. He further stated that A7 had bought from Total Zambia for his Kabulonga FIiiing Station, various products using i.e cheque no. 256 dated 1ot11 February 2009 three cheques K99,000,000.00; cheque no. 257 dated 10th February 2009 K99,000,000.00 and cheque no.269 dated 13th February 2009 In the sum of In the sum of In the sum of K40,000,000.00. Shawa Shadreck (Pw 32) was at the material time an Acting Director of Purchasing goods and services at the Zambia Public Procurement Authority (ZPPA). He stated that the ZPPA has an oversight role on publlc procurements for public institutions in Zambia particularly procurements which are in excess of the threshold for public institutions. He outlined the procurement procedure applicable to public institutions. He stated that according to regulations, the procurement entity is empowered to increase or decrease a procurement request only by a margin of fifteen percent (15%) but added that as by January 2009, the said regulations which were supposed to guide the Ministerial Tender Committee at the Ministry of Health, had not yet reached the Ministry adding that they have not yet been published by the Ministry of Justice. Therefore, when the subject Ministerial Tender Committee sat at the Ministry of Health, It had no regulations to guide it. Under cross-examination, Pw32 stated that if the second-best evaluated bidder has to be awarded a contract, the best-evaluated bidder must first advise the procuring entity that it is unable to supply the sought goods and services. Namata Kalaluka(Pw33) at the time she testified, was acting as Chief Accountant at the Ministry of Health having been transferred there on 2i11 April 2009. She outlined the process of effecting payment and that only the controlling officer or in his absence, his delegate, can authorize payment at the Ministry of Health. She stated that on 28th May 2009, she provided information to state Investigative officers regarding payments made by the Ministry of Health to Kahekam, among other companies. The information she ✓ -J22- gave out included the contract for the supply of 50,000 mother-baby kits between Kahekam and the Ministry of Health, payment vouchers and supporting documents and the Electronic Money Transfer regarding the subject amount of Kl 980 billion paid by the Ministry to Kahekam through standard chartered bank. She stated that the payment was initiated through a request made by Dr. Mukonka to procure extra mother-baby kits and that the request was supported by the permanent secretary. A contract between the Ministry and Kahekam was subsequently signed and eventually payment of the K1980 billion as advance payment on the contract. She stated that before she went to· the Ministry, a senior accountant was authorized to sign a payment voucher. She changed the system allowing only heads of departments to sign. She added that the procedures of making payments are contained in financial regulations. Eunice Banda (Pw34) is a business lady. She confirmed that on 11th February 2008, she sold a Toyota nadia motor vehicle (exhibit P.96) to Notulu Maboshe, a lady who was employed by Inda-Zambia Bank. It was sold at a price of K45,000,000.00 and the money was paid through a finance bank cheque signed by. the lady's husband, A7. The money was coming from the Kahekam Account. Lydia Munsamvu (Pw35) is also a business lady. She confirmed having sold roofing planks amounting to K 45,000,000.00 to A7. Payment was made by way of cheque (exhibit P.53) by A7. The planks were off-loaded at plot no.13949 situated in Roma Township in the Lusaka District, allegedly belonging to A7. Margaret Namoya Banda Kapili (Pw36) at the material time was a Director of Human Resource in the Ministry of Health. She testified on the occupations for the accused persons in this matter. This is the position as reflected on the charge. Sether Zambala (Pw 37) runs a business called City Cement Block Limited situated in Lusaka. She stated that on several occasions during the year 2009, she had sold A7 building blocks and that payment was made to her by way of cheques. Pursuant to the -J23- said transactions, she issued out seven Invoices; six being in respect of Kahekam (Id . 100-105) and one being in respect of the Best Home Lodge (Id 106). Thomas Phiri (Pw38) is a handwriting expert in the Zambia Police Service. After his analysis of the various documents that were brought to him by investigators, he found as follows: 1. that Luka Special Mwanza did not sign on exhibit P.19 as purported on the document but that he signed the title deed for the Best Home Lodge ( exhibit P.114); 2. that Al signed the Evaluation Report (exhibit P2); 3. that A2 signed the Post Qualification Evaluation Report which is part of exhibit P.4; 4. that Royd Onde (AJ) signed the payment voucher in exhibit Pll; 5. that Nobert Peleti (AS) signed the ~FTA (exhibit P91); 6. that Zukas Kaoma (A 6)signed the payment voucher which is part of exhibit Pll; 7. that Fred Chileshe{AB) signed the letter from Kahe!fam dated dh February 2009 and the payment voucher (both being part of exhibit Pll); 8. that Christopher Mayenge (A9) signed the Post Qualification Evaluation Report(exhibit P4); and, 9. that Jasper Justine Phiri {A4) signed the payment voucher which is part of exhibit Pll. Paul Antonio Sapaulu (Pw 39) is one of the Arresting Officers in this matter. His testimony is similar to those for Pwl-Pw38 in his investigations, he found that members of the Evaluation Committee only evaluated Melcome whom they recommended to the MTC that sat on 21 st January 2009 for the award of the contract to supply the initial consignment of mother-baby kits and thus nodded the contents of MTC paper A ( exhibit P3). He stated that the MTC refused having evaluated Kahekam for the award of the contract to supply the 50,000 extra mother-baby kits. The members of the Evaluation Committee thus nodded the contents of MTC paper A ( exhibit P3) and disputed the .) -J24- contents of MTC paper B (exhibit P4). Similarly, he found that members of the MTC that sat on 21 st January 2009 denied having awarded the contract to supply the subject extra mother-baby kits to Kahekam adding that although Dr. Simpungwe (Pw2) signed Exhibit P4, he was misled by A9 to believe that he was signing a copy of exhibit P3. He further found that Dr. Miti signed the contract document between the Ministry of Health and Kahekam (which is part of exhibit Pll) because Al had erroneously attached an internal memo statiry~ that the MTC of 21st January 2009, had awarded the contract to Kahekam. It is PwJ/s testimony further that in order for Kahekam to access the subject advance payment of the sum of K1980 billion from the Ministry of Health, A7 had to obtain an Advance Payment Bond from Goldman guaranteeing the advance payment. However, the manner by which A7 acquired the bond was flawed because the letter dated 5th February 2009 (exhibit P19) which he presented to Goldman Insurance, pledging the Best Home Lodge as security for the bond, had a forged signature of Luke Special Mwanza, the owner of the plot upon which the Best Home Lodge is built. Additionally, the two cheques, each in the sum of K99,000,000 (exhibits P.29 and P.30) which A7 presented to Goldman, were not honoured for ·payment due to insufficient credit in the Kahekam Bank Account upon which they were drawn. Pw 39 charged Al-A6 and A9 with the offence of theft by public servant because in their capacities of public officers under the Ministry of Health, they all participated in the payment of the subject sum of K1980 billion kwacha from the Ministry to Kahekam. He charged A7 with the offence of issuing a cheque on an insufficiently funded account because the two cheques ( exhibits P.29 and P30) which he presented to Goldman Insurance bounced. He charged A7 and AS with the offence of theft because AS made the request to the Ministry of Health for Kahekam to be paid the K1980 billion whereas A7 signed the cheques pursuant to which the money was withdrawn from the Kahahem Finance Bank Account. Under cross-examination, P41 stated that Kahekam was purportedly evaluated and rated the second lowest evaluated bidder after Melcome , according to exhibit P4; that -J25- ' {J Cf had the subject money not been utilized by the Ministry of Health by 24th January 20}( it could have been taken back by the Global Fund; that there were minutes for the MTC of 21st January 2012 but that he did not come across them but added that they were sought by, one Oscar Chipoka, Pw41 through a warrant of access (exhibit Pd2); that A6 was a cheque signatory under panel A at the Ministry of Health and that he was not a member of the Evaluation Committee or MTC , that he did not request the Permanent Secretary in the Ministry of Health to pay Kahekam the subject money and that there was not any portion of the subject K1980 billion paid to _him in his capacity as an ind,ividual. Similar answers were given in respect of A7 and AS. He added that according to the advance payment bond granted by Goldman Insurance in favour of Kahekam, the subject sum of Kl 980 billion was secured when it was paid out to Kahekam by the Ministry of Health. He added that Goldman has not lodged any complaint against Kahekam regarding its security (the Best Home Lodge) pledged for the issuance of the Advance Payment Bond in this matter. He added that because of the over~aft facility which Kahekam was enjoying with Finance Bank, the cheques (exhibits P~and P30) issued in favour of Goldman Insurance by Kahekam could not have bounced. Pw39 further stated that before attending the MTC meeting of 21st January 2009, Al first consulted with a Mr. Sedat (Pw 6) regarding the ability of Melcome to supply the Ministry of Health with the extra mother-baby kits and that there is no information indicating that Al personally benefited from the said sum of K1980 billion. He added that during investigations into this matter, he lent that AB had attempted to deliver a consignment of the mother-baby kits at Medical Stores but was turned back because of non-compliance with packaging specifications. In response to Counsel for A2, Pw39 responded that A2 is obliged to effect Al's instructions since he is answerable to him; to prepare Evaluation Reports and MTC papers and that in this case, A2 was instructed by Al to pay the subject sum of K1980 billion to Kahekam after receiving an advance payment bond, an instruction which A2 executed but Pw39 nonetheless maintained that Al had no authority to authorize -J26- payment and added that A2 did not receive any portion of the sum of K1980 billion paid out to Kahekam by the Ministry of Health. Pw39 similarly stated that no portion of the said sum of Kl 980 billion was traced to A3 but that he was not empowered to pay out the said money to Kahekam because he was not supposed to receive the instructions to pay (as he did in this matter) from A2, his junior. He should have received such instructions only from the controlling officer via the chief accountant. Similarly, A3 was not supposed to receive instructions to pay from A2 because the latter has no authority to give such manner of instructions. Regarding AS, Pw39 stated that he did not trace any portion of the K1980 billion in his favour. Pw39 stated that he arrested A9 because in his capacity of secretary of the MTC meeting of 21 st January 2009, he thereafter misled Dr. Simpungwe (Pw2) into signing exhibit P4, which according to Pw39, was fraudulent because it was not authorized by the MTC of that day. Kabwe Ng'andwe Moyowanyambe (Pw40) was at the material time, an Investigations Officer under the Anti-Money Laundering Unit of the Drug Enforcement Commission(DEC). Her testimony is similar to that for Pw39 whereupon, based on the findings similar to those for Pw39, she concluded that the subject contract between the Ministry of Health and Kahekam was fraudulent and that the ensuing movement of the subject sum of Kl 980 billion from the Ministry of Health to Kahekam, facilitated by AS and A6, was also fraudulent. Her role under the circumstances, was to inquire into the manner in which the said money was utilized. She discovered beneficiaries from the Kl 980 billion as follows among others: Best Home lodge- K250 million kwacha; Eunice C. Banda - K45 million in respect of the Toyota Nadia motor vehicle (exhibit P.96) bought from her by A7; Lydia Musavu - K45 million in respect of the planks bought from her by A7 and offloaded at plot no. 13949 situated at Roma Township in Lusaka. -J27- And, that A7 and AS also benefited in various amounts. She thus charged A5-A8 with the offence of money laundering mentioned under the respective charges outlined above and applied to the Court for the forfeiture to the state, of the property mentioned above which were acquired using the K1980 billion as it was Illegally obtained from the Ministry of Health. Oscar Chlpoka (Pw41), at the material time, was an officer under the Anti- Corruption Commission (ACC). His testimony is similar to that for Pw39 and 40 save to emphasise that, in his investigations, Pw41 found that the Best Home Lodge (exhibit P.114) benefited a sum of K250 million from the K1980 billion allegedly illegally obtained by Kahakam from the Ministry of Health although the lodge was already in existence by the time Kahekam was paid the K1980 billion. The foregoing is evidence tendered on behalf of the prosecution. Regarding the Defence, each Accused person testified on oath. Only Dwl (A2) called one witness, Dw2. A2(Dwl) at the time the subject allegations arose, held the position of senior procurement specialist under the Ministry of Health in charge of procurements funded by the Global Fund. He stated that during the month of December 2008 he received an approved written request made by Dr. Victor Mukonka the Director of the Directorate of Public Health and Research in the Ministry of Health, for the procurement of 50,000 mother-baby kits. He showed it to his superior, Al, who instructed him to commence the procurement process which he did. The tender was to close on 16th January 2009 whereas the deadline for the use of the money from the Global Fund intended for this purpose was 24th January 2009 as reflected on exhibit Pd 1, the letter from the Global Fund addressed to the Ministry of Health. On 15th January 2008, Dr. Bweupe (Pw7), the th Ministry's PMTC specialist, gave him another approved written request dated 26 December 2008 (a document forming part of exhibit P 11) signed by Dr. Victor Mukonka for the procurement of 100,000 extra mother-baby kits. The procurement of -J28- the extra mother-baby kits would ordinarily require an addendum to the tender relating to the procurement of the Initial mother-baby kits which would in turn extend the closing date of the tender by a minimum of one week from the initial date of 16th January 2009. Realizing that the addendum would result into the Ministry loosing the grant, he consulted with Al who, in the interest of time, advised him not to issue an addendum but to allow the tender to close on 16th January 2009 in view of the fact that under the Public Procurement Act, a statute which provides procedure for procurements, there were no regulations which strictly prescribed for an addendum. Al further advised that Dwl would instead make a recommendation to the MTC for the ' bidder who would be rated the best in the evaluation of the initial 50,000 kits, to be awarded as well the contract for the procurement of extra mother-baby kits since he is empowered by the Public Procurement Act to make such manner of recommendations. Regarding the extra mother-baby kits, Dwl consulted with Al and not the Permanent Secretary because the latter had already approved the procurement of the extra kits. Owl adopted Al's advice. The tender closed on 16\h January 2009 and the 17 bidders including Kahekam were evaluated by the Evaluation Committee consequent to which he prepared an evaluation report ( exhibit P2). Melcome and Kahekam were evaluated the best and second best evaluated bidders, respectively. This evaluation was only in respect of the supply of the initial 50,000 mother-baby kits. Regarding the extra mother baby-kits, Al had advised Dwl to withhold the recommendation until he consulted with Melcome in order to ascertain if it had the capacity to procure the extra kits. Melcome declined to supply the extra kits and thus Dwl as empowered under sections 20 and SO of the Public Procurement Act conducted a post evaluation of the seconded lowest bidder, Kahekam whom he recommended to the MTC to be awarded the contract to supply the extra kits. He maintained that it was not necessary for the Evaluation Committee to have evaluated the procurement of the extra kits because that process had already been undertaken on the initial kits which were the same items as the extra kits. He however informed the MTC that the extra kits .. -J29- were not evaluated in the initial tender on account of limited time. Dwl 's recommendations in respect of both Melcome and Kahekam were authorized by Al to be discussed by the MTC. Dwl did not take part in the deliberations of the MTC because he is not a member thereof but after the deliberations, he received a memorandum from the secretary of the MTC to the effect that his recommendations had been approved by the MTC. Consequently, he prepared contracts in favour of Melcome and Kahekam among many others which he handed over to Al for onward transmission to the Permanent Secretary which he was given back after they were signed by the Permanent Secretary, Dr. Simon Miti (Pw26) and Al. Next, he was given a letter by Al from Kakekam (part of exhibit Pll) requesting to be paid an advance payment of up to 90% of the contractual sum in accordance with clause 16 of the contract because Kahekam was a Zambian registered company. It was endorsed by Dr. Simon Miti with the following words: Head PSU- "FYA". Further, Al wrote the following words on the letter: "Mr. Mwila pay after getting the advance payment security". Owl obtained the security bond (part of exhibit Pl l) from Kahekam valid from 22nd January 2009 to 31st March 2009 pursuant to which he wrote a memo to the Finance Manager for Global Fund to effect payment. The bond was issued by Goldman Insurance in which Goldman Insurance undertook to pay the Ministry of Health the advance payment in the event that Kahekam violated the contract. As a requirement, he conveyed all the contracts to Medical Stores wherein goods were supposed to be delivered at Medical stores. He denied having received any portion of the advance payment as the entire money was given to Kahekam. During the month of March or April 2009, he was phoned by Kahekam to the effect that Medical Stores could not accept part delivery of the mother-baby kits on account of packaging. Owl followed up the complaint with Medical Stores who confirmed that the goods were rejected because they were not packaged in boxes. The testimony of Dw2, the witness for A2, is immaterial since it only touched on the absence of the original of exhibit Pl. I shall thus not recite it. ., -J30- Al (Dw3) at the material time was the head of the Purchasing and Supplies Unit at the Ministry of Health. His testimony is similar to that for Owl save to add as follows: regarding the procurement of the extra mother baby-kits, he first consulted with the best evaluated bidder in the procurement of the initial 50,000 mother-baby kits, Melcome, if it were capable of procuring the extra kits. This, Dw3 did, during the morning of 21st January before the MTC which among other items, discussed the procurement of the initial 50,000 mother-baby kits, could sit. Melcome declined thereby prompting him to direct A2 to conduct a post-evaluation. A2 complied and arrived at the second best evaluated bidder. He maintained that the post-evaluation process is only conducted by the Procurement and Supplies Unit and not the Evaluation Committee. Dw3 then advised A2 to prepare two MTC papers; one in respect of Melcome for the supply of the initial 50,000 mother-baby kits and the other in respect of Kahekam for the procurement of the extra mother- baby kits (i.e. exhibits P3 and P4, respectively). Dw3 authorised both papers to be discussed by the MTC which sat on 21st January 2009 at 14:00 hrs. The MTC paper in respect of Kahekam attracted debate since members of the MTC wanted to know the reason why -Kahekam was awarded the contract despite being more expensive than Melcome. Dw3 told the meeting that this was because he had contacted Melcome who had declined to procure the extra kits and that Melcome would write to the Ministry of Health regarding its inability and that letter would be availed to the members of the MTC on 22nd January 2009. On that account, the MTC paper was approved and accordingly signed by the Chairperson and Secretary of that MTC (Pw2 and A9, respectively) in the presence of other members of the MTC. He saw A9 take minutes of the deliberations of the MTC. However, the said minutes were taken by officers of the Anti-Corruption pursuant to a warrant of access - exhibit Pd2. Consequently, A2 prepared the contract between Kahekam and the Ministry of Health fo_r the supply of the extra mother-baby kits (i.e. a contract document which is part of exhibit Pl 1) which Dw3 forwarded to the Permanent Secretary for signature, together with the letter from Melcome in which it declined to supply the extra mother baby kits. -J31- The contract was duly signed and was forwarded to A2. Later, through the office of the Permanent Secretary, Dw3 received a letter from Kahekam in which Kahekam was asking to be paid in advance a sum of up to 90% of the contract price. For the consumption of Dw3, the official (Pw 27) who was then acting as Permanent Secretary for the Ministry of Health endorsed on that letter as follows: "F. Y. A". Dw3 understood this endorsement to mean that he was expected by the acting Permanent Secretary to respond to the request by Kahekam. Against this background, Dw3 endorsed on the same letter, for A2 to pay Kahekam the requested sum of money after obtaining an advance payment bond because the contract provided for such a payment. The advance payment bond was intended to secure the money that would be paid out. The bond, valid from 22nd January 2009 to 31st March 2009, was secured and under the custody of the Permanent Secretary. Later, Kahekam wrote the Ministry of Health to be allowed to be making part deliveries at Medical Stores. The request was granted on exhibit Pd18, signed by Dw3. It is his testimony that Kahekam began to make the part deliveries but could not be accepted by Medical stores on account of packaging. He maintained that the contract is still valid and that it provided for penalties against Kahekam in the event of delayed deliveries. He added that he diligently performed his duties as contract manager in line with section 57 of the Zambia Procurement Act and the Circular on Procurement (exhibit Pl) and that on 6th February 2009 when the subject Kl 980 billion was paid out to Kahekamm, it was secured by the advance payment bond. Under cross-examination, Dw3 stated that he did not care how Kahekam obtained the advance security bond because the Ministry of Health was not privy to the contract between Kahekam and the insurer regarding the advance payment bond. A9 (Dw4) at the material time was a Senior Purchasing and Supplies Officer at the Ministry of Health. He stated that he was the secretary of the MTC meeting of 21st January 2009 and thus took the minutes of the deliberations. He maintained that the MTC debated the MTC paper ( exhibit P4) touching on the procurement of extra mother- -132- baby kits for the Ministry of Health by Kahekam. His version of the events of that MTC meeting is similar to that for Al. It is his testimony that the MTC approved the MTC paper whereupon it was signed by himself and Pw2, the secretary and chairperson, respectively in the presence of all the members of the MTC. He thus denies ever misleading Pw2 into erroneously signing exhibit P4. He added that on 22 nd January 2009, he collected a letter from Al in which Melcome declined to procure the extra mother-baby kits. He attached this letter to the MTC paper before circulating it to members of the MTC. The minutes of this meeting were read and adopted in the sulJsequent meeting in whir.h Dw4 was again secretary. He however told the Court that the minutes were collected by the ACC and he even saw them at their offices when he was summoned for purposes of investigations into this matter. A4 (DwS) at the material time was an internal auditor at the Ministry of Health. He stated that according to the practices adopted in the Ministry of Health, the letters "F. Y. A" means "approved" and the usual response to such an endorsement is to deal with or to process the course of action required. During the· month of February 2009, he audited among other files ear-marked for payment, the file for Kahekam in respect of the payment of a sum of K1980 billion. He concluded that the file met the internal audit controls namely that there was authority from the MTC for the award of the contract, there was the contract between Kahekam and the Ministry of Health for the supply of the 50,000 mother-baby kits, the contract was compiled by Ms. Nelas Mulenga(Pw 11) in accordance with the provisions of the Accounting Guide so too was the payment voucher which was checked by Mr. Thomas phiri and approved by A3 and passed for payment by a Mr. Emmanuel Chileshe. DwS was therefore satisfied that there was segregation of duties as required by the various financial regulations in processing the payment. He also noted that the procurement of the extra mother-baby kits was supported by the controlling officer, Pw 27 the acting Permanent Secretary at the time the request for the procurement was made. The same Pw 27 also approved payment of the sum using the words: " FYA". He also noticed the presence of the security payment bond on the file in accordance with clause 16 of the contract thereby securing the .. -J33- money. All these documents were contained in exhibit Pll. However, the file was not brought before court by the state which got it on the basis of exhibit Pd 2, the warrant of Access. A3 (Dw6) at the material time was the Finance Manager for the Global Fund. He stated that during the month of February 2009, he received a bunch of documents for purposes of processing payment of the subject sum of K1980 billion to Kahekam. He forwarded the documents to his accounts section so that they can prepare a payment voucher. That was done. It was prepared and checked by different officials and taken . back to Dw6 for verification as to the correctness of the processes. In the due course, he saw a memorandum from Dr. Victor Mukonka requesting for the procurement of the mother-baby kits, an approved MTC paper regarding the mother-baby kits, a contract between Kahekam and the Ministry of Health to procure the kits, a memorandum from A2 and Kahekam requesting for payment of the subject money, and an advance payment bond securing the money. There was also authority from the Permanent Secretary for the payment to be effected. These docume~ts form part of exhibit Pl 1. Finally, Dw6 signed the payment voucher because he was satisfied with the correctness of the preparation process. He is therefore surprised to have been arrested and charged with an offence relating to the voucher more especially that it was signed at various stages by many other officials who however have not been arrested. He did not sit in the MTC that gave birth to the MTC paper touching on the supply of the extra mother baby kits. A6 (Dw7) at the material time was a Principal Accountant at the Ministry of Health. He _stated that he belonged to panel "A'1 of the EFTA and cheque signatories at the Ministry of Health. His duties as a member of Pannel "A'' are enshrined under the Public Finance Act No.15 of 2004, the Financial Regulations of 2006, Regulations No.59 supplemented by the Government Accounting Guide. His role before signing an EFTA or cheque was to ensure that supporting documents for the payment are original and are marked "pay", that the payment voucher bears the EFTA or cheque number and is processed by ·J34- different people and that the EFf A or cheque Is duly completed. Regarding this matter, during the month of February 2009, he came across the file for Kahekam among others. The file had an approved MTC for the procurement by Kahekam of 50,000 mother-baby kits, an advance payment bond securing the requested sum of Kl 980 billion, a payment voucher, a contract between Kahekam and the Ministry of Health, an EFf A In favour of Kahekarn franked by the Permanent Secretary and other documents supporting the payment of a sum of Kl 980 billion by the Ministry of Health to Kahekam. He signed the EFfA after concluding that the requisite documents passed the required test. Dw7 stated that on 5tt, May 2009, based on the warrant of access (exhibit Pd 2) he handed over to investigative officers of the state, all the documents which were mentioned In the said warrant of access. He added that he did not attend the MTC meeting of 21st January 2009. AS (Dw8) at the material time was an Assistant Director In charge of Administration and Parliamentary Affairs at the Ministry of Health. He was a member of the MTC which sat on 21st January 2009. He stated that the MTC discussed and finally awarded the contract for the procurement of the 50,000 extra mother-baby kits to Kahekam but on condition that Al obtains written correspondence from the Best evaluated bidder, Melcome to the effect that the latter was unable to procure the extra kits indeed as Al had advised the MTC regarding the reason why A2 had recommended, Kahekam to be awarded the contract in exhibit P4. He added that in the subsequent MTC meeting, he leant that Melcome had actually submitted the letter indicating its inability to procure the extra kits. He maintained that exhibit P4 was signed by the chairperson of the MTC (Pw2) in the presence of all the members of that MTC. Dw8 stated that as an EFf A and cheque signatory at the Ministry of Health, he eventually signed an EFfA in the sum of K1980 billion in favour of Kahekam regarding the contract for the supply of the 50,000 extra mother-baby kits. This, he did after satisfying himself that all the control safeguards had been complied with. -J35- AB (Dw9) at the time of the subject allegations, was the operations manager for Kahekam, the Best Home Lodge and Yesaka Limited. These are sister companies. He confirmed that there Is a contract between Kahekam and the Ministry of Health for the supply of 50,000 mother-baby kits subsequent to which Kahekam requested to be paid an advance sum of K1980 billion by the Ministry of Health. This money was paid on 6th February 2009 after Kahekam provided an advance payment bond valid from 22nd January 2009 to 31st March 2009. On various occasions, he withdrew varying portions of ,the said K1980 billion as an agent of Kahekam and used them to manage the operations of the three sister companies. It Is his testimony that pursuant to the said contract, he began the process of procuring the kits from Hong Kong, South Africa and Congo as Indicated on a copy of his itinerary (exhibit Pdl0p). Subsequently, he received a copy of a letter (exhibit Pd l0e) written by Dr. Velepi Mtonga (Pw4) addressed to the Ministry of Finance for purposes of enabling Dw9 to obtain a VAT certificate in respect of the mother-baby kits. He also came across correspondence from the Ministry of Finance addressed to the Zambia Revenue Authority (ZRA) urging the latter to clear the kits (exhibit Pd l0(d). Finally ZRA released the goods to Kahekam's agent via a Release Order ( exhibit Pd 10a and g). He stated that the kits he had procured from China arrived in Zambia on 16th March 2009 but due to the process of bonding by the ZRA, they were released to Dw9 during the month of April 2009. On that account he wrote a letter (exhibit Pd 26) to Goldman Insurance, asking the1latter to extend the validity of the bond which secured the K1980 billion with the Ministry of Health. Goldman Insurance wrote back via exhibit Pd27 declining to extend the security bond because the title deed of the property that was used by kahekam as collateral to obtain the bond had been withdrawn by the Anti-Corruption Commission. The insurer was thus asking Kahekam to furnish alternative collateral but it was such that every property which Dw9 wanted to pledge as alternative collateral had a restrictive notice placed on it by the state. -J36- A component of the mother-baby kits which had been shipped from China were safety pins as reflected on exhibit Pdl0a. He procured another component of the mother baby kit, baby napkins, from the Republic of South Africa but because the supplier could only provide half the required quantity, Dw9 again wrote to the Ministry of Health requesting to be allowed to make part- deliveries of the mother-baby kit. Dw9 procured vitenge materials, and baby shawls from Congo and Botswana, respectively. He could not produce documentation regarding the procurement of napkins, vitenje materials and shawls because they were confiscated by officers of the ACC during investigations into' this matter. On 8th April 2009, the Ministry of Health Dw9-through Al wrote a letter (exhibit Pd 20) in which it allowed Dw9 to make part-deliveries of the mother-baby kits which personnel at Medical Stores rejected because the kits were not packaged in boxes. However Dw9 noted that such a requirement would entail an extra cost on Kahekam because it was not initially part of the contractual terms. He registered his protest with A2 who spoke to the personnel at the Medical Stores. A2 . later advised Dw9 to utilize the boxes in which the kits were packaged from the manufacturers to package as many kits as possible. Dw9 stated that the development demanded for more time to enable him do the packaging but in preparing himself for that exercise, the state interrupted so that he spent his time visiting offices of the ACC for purposes of responding to querries. Finally, he was arrested and remanded in custody during the month of March 2009 during which period, he even lost custody of the mother-baby kits. He maintained that the contract between Kahekam and the Ministry of Health is still valid. Under cross-examination, Dw9 stated that although the mother-baby kits were procured from outside Zambia, Kahekam was nonetheless entitled to be paid tne advance of up to 90% of the contractual sum in accordance with clause 16 of the contract in exhibit Pl 1 because Kahekam is a Zambian registered company as such, the Ministry of Health was not procuring the kits from outside Zambia. -J37- A7 (Dwl0), he is one of the proprietors of the sister companies called Kahekam, Yesaka Enterprises and the Best Home Lodge situated on plot No. 13947. During the month of December 2008, he tendered a bid on behalf of Kahekam for the procurement of mother-baby kits for the Ministry of Health in which finally, it came out as the second best evaluated bidder. At that time he was working under the Ministry of Local Government. He had no relationship whatsoever with Evaluation Committee that evaluated the bids or the MTC that sat on 21st January 2009. Eventually AB informed him that Kahekam had been awarded a contract (which is part of exhibit P11) by the Ministry of Health to procure mother-baby kits for the Ministry. He signed the contract at A2's office. Subsequently, he directed AB to apply for an advance payment of up to 90 % of the contractual price in accordance with clause 16 of the contract which A8 did in writing but before payment could be effected, the Ministry had asked Kahekam to provide a security bond in accordance with the same clause in order to secure the money. Dwl0 approached Goldman Insurance which demanded for a premium of K49,000,000 and collateral in form of property worthy twice the K1980 billion, the sum of the bond. Regarding the premium, Kahekam paid a cash sum of K49 million and pledged the Best Home Lodge for collateral. Because title with respect to plot No. 13947 on which the Best Home lodge is situated had not changed into Dwl0, the property's vendor, Mr Luka Special Mwanza (Pw17) wrote a letter (exhibit P19)to Goldman authorizing DwlO to use the property as collateral since he has no claims over the land having sold it to Dwl0. Subsequently, Goldman issued kahekam with the security bond valid from 22st January 2009 to 31st March 2009. The Best Home Lodge, at the material time was valued at KS.8 billion. Dwl0 stated that the validity of the securi~bo was not affected by the bouncing of ('(\l two cheques (exhibit P29 and P30) in this ner because the cheques were not in any way connected to the security bond. Each cheque was in the amount of K99 million. Furthermore, Dwl0 stated that the two cheques were not supposed to bounce and therefore that the allegations under count no.3 indicating that he had issued the two cheques on an insufficiently funded account, were not supposed to arise. Dwl0 stated -J38- that on 13th February 2009 when the two cheques were dishonored, the Kahekam Bank Statement (exhibit P32) on which they were drawn had a credit balance of K254, 828,154.06 which exceeds the amount of K198 million, the combined sum of the two cheques. In addition to the said surplus bank credit, Dwl0 stated that the same Kahekem bank account was enjoying an overdraft facility of up to K400 million at the time the two cheques were presented for payment. This facility entailed that the account could be overdrawn by a sum of K400 million. In mathematical terms, Dw10 stated that when the two cheques were dishonoured for payment, paradoxically the Kahekam had a balance of K454,828,154.06 in excess of the combined value of the two I cheques. He stated that the overdraft facility was only withdrawn by the bank (via a letter - exhibit Pd12) on 1st June 2009, after the state had withdrawn Kahekam's collateral it had pledged for the facility. Regarding the sum of Kl 980 billion that was paid to Kahekam by the Ministry of Health, Dwl0 stated that it was withdrawn on various occasions by either himself or AS in order to facilitate the procurement of the mother-baby kits or to be utilized in the manner Dwl0 deemed fit because part of it was profit. It is on that account, Dwl0 maintained, that he was at liberty to use the money to buy any property he wanted including the Nadia(exhibit P 96) which is subject of the allegation touching on money laundering under Count no.5. Be that as it may, Dwl0 still maintained that based on the balance of the credit in the Kahekam bank account as indicated on the bank statement, he could still have bought the Nadia even without utilizing the K1980 billion received in this matter. This he maintained was because based on the contract between Kahekam and the Ministry of Health, the latter was only interested in Kahekam supplying the mother baby kits but not in how they acquired them or how the K1980 billion was being utilized by Kahekam. In a similar vein, Dwl0 maintained that the K1980 billion was not used to develop property situated on plot no.13949 and the Best Home Lodge because the properties existed long before the money was paid to Kahekam. -J39- He stated that he started performing the contract on 22nd February 2009 when he bought air tickets for AB and other directors for Kahekam to travel to China to procure the safety pins, a component of the mother-baby kits. Other components of the kit i.e. baby shawls, nappies and vltenjes were bought from Botswana, the Republic of South Africa and the Democratic Republic of Congo, respectively. Dwl0 stated that allegations In this matter arose because he was a target of the p~evious Movement for Multlparty Democracy under former President Rupiah Banda who mistook him for a supporter of his then political opponent, President Michael Sata prior to the 2008 Presidential Bye-election. This was because President Sata's Patriotic Front (PF) political party had launched Its politlcal campaigns for the position of Republican President at Dwl0's Best Home Lodge whereat Dwl0, on account of the similarity In names, was mistaken for a party cadre who openly supported Mr. Sata to contest for the position of President on behalf of the PF. Dwl0 maintained that none of his co-accused persons benefited from the K1980 billion. The foregoing is total evidence in this case. Only the Defence submitted towards this judgment. I have given the submissions my serious consideration and out rightly I must register my indebtedness to the industry that has been exhibited in the submissions. Further, it must be put on record that the prosecution shall not be disadvantaged by its failure to submit because I have equally adequately examined the entire evidence. The critical points of submission by the Defence can be summarized as follows: 1. Regarding allegatlons of theft by servant and theft under count no.1 and count no.2, respectively, it has been submitted that the K1980 billion In this case was not stolen from the Ministry of Health because: (a) It was paid to Kahekam, pursuant to a consensual contract between the Ministry of Health and Kahekam for the procurement of the extra mother baby kits. On that basis, Kahekam had a claim of right over the Kl 980 billion; -J40- (b) The said contract was discussed and approved by the MTC that sat on 21 st January 2009; (c) The disbursement of the K1980 billion to Kahekam was authorized by the Permanent Secretary for the Ministry of Health and that subsequently the payment was administered lawfully by the various officials including A1-A6; ( d) The Kl 980 billion was secured by a security bond at the time it was paid to Kahekam. Therefore, the Ministry was at liberty to encash the bond in the event that Kahekam failed to perform the contract. (e)Kahekam had started supplying the mother-baby kits only that the partial deliver/es had been rejected by personnel at the Medical Stores on account of a packaging requirement which was not part of the contract. 2. The Defence submitted that allegations of money laundering under counts no. 4- 7 should not arise because the predicate offence of theft of the Kl 980 billion has not been established based on the submissions outlined above. 3. The Defence finally submitted that allegations of issuing cheques on an insufficiently funded bank account under the third count should not be sustained because at the material time, the account had sufficient credit to en cash the two cheques in issue (exhibits P29 and PJ0). These are the total issues in this case. Henceforth, I will state my findings and apply the law thereto. I shall begin with allegations of theft by servant and theft, followed by those relating to money laundering and concluding with those regarding issuing cheques on an insufficiently funded bank account. The following issues are not in dispute: 1. That A1-A6 and A9 in their capacity of employees of the Ministry of Health had played different roles in the eventual disbursement of the Kl 980 billion from the Ministry of Health to Kahekam. On that basis A1-A6 and 9 were public servants relative to the Ministry of Health within the context of section 277 of the Penal Code for purposes of the charge of theft by public servant under count no.1 -J41- provided it is established that they had converted the Kl 980 billion with the intention of permanently depriving the Ministry thereof; 2. That after the Kl 980 billion was paid to Kahekam it was withdrawn from the Kahekam Bank Account by A7 and AB on 'f(!-.rious R~casions. On that basis/ the charge of theft under count no.2/ against Jand I&' is appropriate provided it is established that the duo intended to permanently deprive the Ministry of Health of the Kl 980 billion; 3. That the K1980 billion was paid to Kahekam pursuant to a contract (under exhibit Pll) between the Ministry of Health and Kahekam and that the said contract originated from the request that was made by Dr. Victor Mukonka for the procurement of the extra mother-baby kits; 4. That the Evaluation Committee conducted an evaluation only for the procurement of the initial mother-baby ldts. In that evaluation Kahekam was rated the second best bidder. The procurement of the extra mother-baby kits only underwent a post-evaluation conducted by A2 wherein he recommended Kahekam to be awarded the contract for their supply. Reverting to allegations of theft by servant and theft, what is in dispute is whether or not: 1. Kahekam was fraudulently awarded the contract for the supply of the 50/000 extra mother-baby kits.; 2. Al-A6 fraudulently paid Kahekam the K1980 billion. And; 3. A7 and AB intended to permanently deprive the Ministry of Health of the Kl 980 billion. The contract between Kahekam and the Minisby of Health for the supply of the 50,000 extra mother-baby kits comes in issue because it is the basis upon which the K1980 billion was paid to Kahekam. According to the prosecution, the contract was fraudulently awarded to Kahekam. Two reasons have been advanced in support of this assertion. Firstly, it has been indicated that the procurement of the 50,000 extra kits ·J42- were not evaluated by the Evaluatlon Committee. Therefore, tender procedures were flouted. According to the prosecution, an addendum to the bid Involving the procuren,ent of the Initial mother-baby kits was supposed to have been made so that the procurement of the extra kits could have been subjected to an evaluation by the Evaluation Committee. Secondly, it has been indicated that the recommendation made by A2 under post-evaluation, for the award of the contract to Kahekam to supply the extra mother-baby kits, was not discussed or approved by the MTC. Ir\ resolving this controversy, I have first perused the Public Procurement Act No.12 of 2008. This is the statute that governs procurement procedures in public institutions. Section 50(5) of the Act empowers A2, by virtue of his office, to conduct a post qualification evaluation. The provision prescribes as follows: "a post qualification may be undertaken in accordance with the criteria in the solicitation document to determine whether the best evaluated bidder has the capacity and resources to effectively carry out the contract." Furthermore, according to sections 20 (2)(b) of the Act, by virtue of his office, A2 is empowered to recommend to the MTC, for the award of a contract to a successful bidder. The provision stipulates that_"without prejudice to the generality of subsection (1), the functions of a procurement unit are to - prepare solicitation documents, bid notices, short lists, evaluation reports, contract award recommendations ( emphasis mine)and contracts". The combined effect of sections 20(2)(b) and section 50(5) of the Public Procurement Act is that A2 by virtue of his office, is empowered to conduct a post-evaluation and subsequently to recommend to the MTC to award a contract to the successful bidder. This position is also possible for the procurement of the extra mother-baby kits in this case. Therefore, there was no illegality in the fact of A2 conducting the post-evaluation and recommending Kahekam to be awarded the contract for the supply of the 50,000 extra mother-baby kits. Secondly, regarding allegations of breach of the tender procedures, the prosecution has not provided me with the provision that was allegedly breached when Al and A2 -J43- omitted to make an addendum. Suffice it though to state here that the Public Procurement Act provides for offences and penalties under sections 75-77. To the contrary, Al and A2 have told the Court that at the material time, tender procedures were not guided by any regulations, a position that has been corroborated by Pw32. Given this position, I am inclined to conclude that indeed there were no regulations governing tender procedures at the material time. This could be the reason why the prosecution has not raised any charge against Al and A2 stemming from the Public Procurement Act in line with its assertion that the duo had flouted tender procedures by ' omitting to make an addendum relating to the procurement of the extra mother-baby kits. Had Al and A2 indeed flouted the tender procedures, the prosecution would have raised specific charges against the duo under the Public Procurement Act for which Al and A2 would have been expected to specifically defend themselves. In the absence of any specific provision prescribing or proscribing a code of conduct or procedure, what would be expected of Al and A2 was for them to act reasonably and in good faith taking into account the surrounding circumstances. Given the set of facts before me, I have asked myself the following pertinent questions: was an addendum a mandatory requirement in this case? What good would the addendum have served? What different information would the addendum have provided to the Procurement and Supplies Unit? My response to the foregoing questions is that an addendum was not a mandatory requirement firstly because it was legally avoided by the fact of A2 conducting a post-evaluation. Secondly, the addendum was not specifically prescribed by any law or regulation as a mandatory requirement. Thirdly, the request for the procurement of the extra mother-baby kits had already been approved by the Permanent Secretary. Fourthly, based on the evaluation of the procurement of the initial mother-baby kits, Al and A2 already had information regarding the capability of the bidders. This would have been the same information which the addendum would have yielded because the bidders and the goods sought to be procured were the same as those that were evaluated in the tender for the supply of the initial mother-baby kits. -J43- omitted to make an addendum. Suffice it though to state here that the Public Procurement Act provides for offences and penalties under sections 75-77. To the contrary, Al and A2 have told the Court that at the material time, tender procedures were not guided by any regulations, a position that has been corroborated by Pw32. Given this position, I am inclined to conclude that indeed there were no regulations governing tender procedures at the material time. This could be the reason why the prosecution has not raised any charge against Al and A2 stemming from the Public Procurement Act in line with its assertion that the duo had flouted tender procedures by omitting to make an addendum relating to the procurement of the extra mother-baby kits. Had Al and A2 indeed flouted the tender procedures, the prosecution would have raised specific charges against the duo under the Public Procurement Act for which Al and A2 would have been expected to specifically defend themselves. In the absence of any specific provision prescribing or proscribing a code of conduct or procedure, what would be expected of Al and A2 was for them to act reasonably and in good faith taking into account the surrounding circumstances. Given the set of facts before me, I have asked myself the following pertinent questions: was an addendum a mandatory requirement in this case? What good would the addendum have served? What different information would the addendum have provided to the Procurement and Supplies Unit? My response to the foregoing questions is that an addendum was not a mandatory requirement firstly because it was legally avoided by the fact of A2 conducting a post-evaluation. Secondly, the addendum was not specifically prescribed by any law or regulation as a mandatory requirement. Thirdly, the request for the procurement of the extra mother-baby kits had already been approved by the Permanent Secretary. Fourthly, based on the evaluation of the procurement of the initial mother-baby kits, Al and A2 already had information regarding the capability of the bidders. This would have been the same information which the addendum would have yielded because the bidders and the goods sought to be procured were the same as those that were evaluated in the tender for the supply of the initial mother-baby kits. -J44- And fifthly, had the addendum been made, It would have pushed the date for committing the money beyond the deadline set by the financier, the Global Fund. Such a development would have resulted into the Ministry losing the money it dearly needed to purchase the mother-baby kits and in fact rendering the tendering process an academic exercise. That development would have had negative consequences on expecting mothers. Based on these reasons I am satisfied that Al and A2 acted reasonably because the advantages thereof far outweigh the benefits, if at all, that could have been derived from making an addendum. For the avoidance of doubt, I re-state my finding that Al and A2 did not flout any tender procedure by recommending Kahekam through a post-evaluation, to be awarded the contract by the MTC In the absence of guide lines pertaining to his work, I am of the view that what was required of A2, was for him to disclose to the MTC, the true circumstances surrounding the procurement of the extra mother-baby kits. Such . manner of disclosure was necessary in order to negative the possibility any fraud on his part. I am of this view because the MTC, by virtue of its role of approving and disapproving recommendations of the Procurement and Supplies Unit requires bona fide information about every recommendation. Evidence before me indicates that A2 made the requisite disclosure. This, he did in his Memorandum to the MTC. The memorandum is part of exhibit Pll. The relevant portion of this disclosure appears under the title "BACKGROUND" at page 2 as follows: " ••• the PMTCT Unit had made a request to procure 50,000 mother baby kits. The tender was floated in December after obtaining a no objection from the Zambia National Tender Board. The tender closed on 16th January 2009. However, on 15th January 2009, a day before the tender closed, the procurement unit received a request from PMCTC Unit requesting to increase -J45- the quantities from 50,000 to 100,000. Since the tender was to close the following day, it was not possible to issue an addendum as it was too late". At this stage, the nagging question Is whether or not A2's Memorandum was discussed and approved by the MTC. I am convinced that the controversy here has arisen due to the absence of the minutes of that MTC meeting. Had the minutes been made available to the Court It could have been easily ascertained whether or not A2's Memorandum had been discussed. I have insisted on minutes because the settled position is that ff\lnutes are recorded at every MTC meeting. This position Is according to Dw4. Therefore, the MTC meeting of 21st January 2009 cannot be an exception. Minutes of that meeting were also recorded. In fact Dw4's testimony regarding the existence of the said minutes has been corroborated by Pw39 who told the Court that there was in existence, minutes of the MTC meeting of 21st January 2009 only that he did not come across them because they had been collected by Pw41. I am satisfied that Pw41 collected the minutes on the strength of exhibit Pd2, the ACC-Warrant of Access. I am this view because some of the documents sought by Pw41 .in exhibit Pd2 are "minutes of the Tender Committee meetings for all the contracts". With this specific indication, I have no basis to doubt that the minutes of the MTC meeting of 21st January 2009, were part of the documents that were collected by Pw41. Further, Pw2 ~ confirmed that he also saw the minutes at the omce5 of the ACC where he was summoned for purposes of investigations in this matter. " In view of exhibit Pd2 and the testimonies of Pw2 and Pw39, I am convinced that the minutes are in the possession of the state. However, it is not clear as to the reason why the prosecution has not availed them to the Court. The inference to be drawn under the circumstances Is that which is favourable to the Accused. In this case, it will be inferred that had the minutes been availed to the Court they would have indicated that A2's Memorandum In exhibit Pl 1 was discussed by the MTC that sat on 21st January 2009 and subsequently that the MTC had approved the procurement of the extra mother baby kits and awarded the contract for their procurement to Kahekam. This is the -J46- principle that was laid down in the case of JOHN NYAMBE LUBINDA V. THE PEOPLE (1988-89) ZR110 where it was prescribed that "where evidence available only to the police is not placed before the Court it must be assumed that had it been produced it would have been favourable to the accused". I am of the view that the rationale for this principle is to make criminal proceedings fair for both the prosecution and the accused. In the wise, every manner of evidence available to the Prosecution whether advantageous or disadvantageous to its case must / be availed to the Court in order to help the Court arrive at a fair judgment. This requirement was laid down, in the case of JOSEPH MULENGA AND ALBERT JOSEPH PHIRI V. THE PEOPLE (2008) ZR 1 in which it was held that "what is required of the prosecution is to adduce evidence to prove all material particulars of the offence charged beyond reasonable doubt in a fair manner. A fair manner implies that even evidence favourable to the accused which may be available to the prosecution must be produced before the court". The fact that A2's Memorandum was discussed by the MTC of 21st January 2009 has further been corroborated by Pw2-Pw5. The witnesses told the Court that the extra mother-baby kits were discussed by the MTC only that the discussion was not concluded. I have not seen any other document, apart from A2's Memorandum, that contains information regarding the extra mother-baby kits. In fact it is for that reason that Pw4 has taken steps to help Kahekam perform the contract. This position is evident from her letter dated 13th May 2009 addressed to the Permanent Secretary in the Ministry of Finance and National Planning (exhibit Pdl0e) in which she is requesting the latter to help clear the safety pins mentioned in exhibits Pd l0f and Pd 10h with the Zambia Revenue Authority. It is not in dispute, according to the testimonies of Pw7, A7 and A8 among others, that safety pins are part of the mother-baby kit and that the said pins were being shipped into Zambia on behalf of the Ministry of Health by AB, an agent of Kahekam. I have no doubt that the consignment being refered to by Pw4 in her letter relates to the contract between Kahekam and the Ministry of Health refered to under A2's memorandum because there is no evidence before me indicating that there • -J47- was any other contract between the Ministry of Health for the procurement of mother baby kits. Under the circumstances Pw4 is blowing hot and cold air at the same time by stating that the MTC of 21st January 2009 did not conclude the discussion relating to the procurement of the extra mother-baby kits yet In the same breath she has undertaken measures aimed enforcing the same contract which she implies was not awarded. Clearly, she Is contracting herself a position which shall reduce the credibility of her testimony. Ir, view of the foregoing, I urge that the prosecution should have availed the minutes to the Court and because of that omission, I have adopted the position favourable to the Accused persons outlined above. The next controversy that I must settle is whether or not the payment of the Kl 980 billion was fraudulent. The NEW 7th EDITION of the OXFORD ADVANCED LEARNER'S DICTIONARY at page 592 defines the term "fraudulent" as "intended to cheat somebody usually in order to make money illegally". According to this definition, an intention to deceive must be established if conduct is to be deemed fraudulent. It is not in dispute that A1-A6 and A9, were amongst the officials at the Ministry of Health who played a role in the movement of the K1980 billion from the Ministry of Health to Kahekam. However, evidence discloses that the disbursement of the money was triggered by a written request made by AB. After Kahekam was awarded the contract, AB wrote to the Ministry of Health requesting the Ministry to pay Kahekam the advance sum of K1980 billion pursuant to clause 16 of the contract. A8's request for the advance payment bond is contained in exhibit Pl 1. Next, the Acting Permanent Secretary (Pw27) to whom A8's request was addressed, endorsed on it as follows: "Head Procurement and Supplies Unit - FYA". The addressee of the endorsement was Al, the contract manager. Section 57(1)(a) of the Public Procurement Act provides that among others, the responslblllty of a contract manager Is to manage the II -J48- obligations of the procuring entity specified in the contract. Acting on the endorsement, Al instructed A2 to effect payment of the requested sum "after getting the advance payment security". A2 obtained the security bond and prepared the requisite documents which eventually were relied upon by the other Accused persons and other personnel at the Ministry of Health to pay the K1980 billion to Kahekam. The controversy here relates to the cause of action which Pw27 expected Al to undertake in response to his endorsement of the letters "FYA". According to Pw27, ~e expected Al only to clarify with certain issues which were not clear to PW27, on A8's request but not to authorize payment because he is not empowered to do so since that course of action is the preserve of the permanent Secretary or an officer acting in that office. On that account it has been indicated to the Court that the payment was fraudulent because the rest of the personnel who got involved in effecting the payment were not supposed to obey Al's instruction directed to A2 to effect payment. I have perused the Cabinet Communication Guide, for the meaning of the letters "FYA" in correspondence in Government institutions. The letters. stand for: "FOR YOUR ACTION/ ATTENTION". Indeed based on his endorsement, it cannot be disputed that Pw27 expected some form of action to be undertaken by Al. In determining the nature of that action, I have analysed the meaning of the letters "FYA" within the context of A8's request because that is where the endorsement was made. In my considered opinion, it was reasonable for Al to instruct A2 to commence the process of payment because that is the implication of Pw27's endorsement in view of the fact that A8 had requested for payment. If Pw27 was only seeking clarifications from Al, he should have been specific about those clarifications and I have seen nothing that could have hindered him from being spedfic. Every reasonable government official placed in Al's position would have acted in the manner that Al acted. I am convinced that it is in that vein that the rest of the officials who played a role in processing the said payment acted in the manner they did. In fact if I were to adopt the prosecution's claim of illegality, then all those officials -J49- at the Ministry of Health who had played a role in effecting the said payment, should have been indicted alongside A1-A6 because they also relied on Pw27's endorsement, among other authorities. Pw27 cannot now be heard to summersault on his clear instruction. If he meant otherwise than for Al to commence the process of payment, then I have no hesitation in finding that he had misled Al and therefore that it would be injustice for the Accused persons to be prejudiced by his inaccurate draftsmanship. His inaccuracy shall cohsequently work against his testimony on account of the contra proferentem rule relating to the interpretation of written documents. The EIGHTH EDITION OF ORSBORN'S CONCISE LAW DICTIONARY at page 88 defines the contra proferentem rule as "the doctrine that the construction least favourable to the person putting forward an instrument should be adopted against him." Al acted reasonably by commencing the process of payment because that is the reasonable interpretation of Pw27's endorsement as read in the context of the document on which it was endorsed. It has further been indicated that Al acted illegally because he has no authority to authorize payment in the sum of Kl980 billion. Again here, I advise that this argument is not tenable because in this case, Al was instructed to commence the process of payment by the official (the Acting Permanent Secretary) who had the authority to authorize the payment coupled with the fact that the instruction was backed by a contract that was awarded by the MTC. In total, I have not found any fraudulent intention or illegality in the manner the Kl980 billion was disbursed to Kahekam because apart from Pw27's authority, Al-A6 and indeed other officials at the Ministry of Health had relied on other relevant authorities which triggered the payment. Such authorities include the request for the extra mother baby kits made by Dr. Victor Mukonka, the MTC paper approving the procurement of -JSO- the extra mother-baby kits, the subsequent contract awarded to Kahekam to procure the extra kits, A8's request for the payment and the security bond. The prosecution appears to question the validity of the security bond and therefore that the K1980 billion was not secure when it was paid to Kahekam. My finding here is that it was not the concern of the Ministry to inquire into how the bond was acquired by Kahekam because the Ministry is not privy to the contract been Kahekam and Goldman in respect of the security bond. In my opinion, what is of concern to the Ministry is that the bond was recognized as valid by the Goldman. The testimonies of Pws8-10 indicate that Goldman recognized the security bond to be valid as from 22 nd January 2009 to 31st March 2009 so that if Kahekam had failed on its obligations to the Ministry of Health, Goldman could have indemnified the Ministry. Further, I observe that at no time did Goldman recall the bond from the Ministry. The bond only ~eased to be operational after the state interfered with the collateral that was pledged by Kahekam. This position entails that Goldman has been treating the bond as binding on it. Based on the foregoing I have found that the K1980 billion was secured by the bond at the time it was paid to Kahekam. This position exonerates the Accused persons from the intention to permanently deprive the Ministry of Health, of the K1980 billion. As noted earlier, an intention to permanently deprive the owner of his property is a crucial element of the offence of theft. Failure to prove that element is fatal on the part of the prosecution. Similarly in this case, allegations of theft by public servant and theft shall failed because the prosecution has not established that the Accused persons intended to deprive the Ministry of Health permanently of the K1980 billion. Even assuming that the contract was fraudulently awarded to Kahekam, should the Accused persons be visited by criminal sanctions? OSBORN'S CONCISE LAW DICTIONARY cited above at PAGE 219, stipulates that a contract entered into in that manner is voidable on account of the vitiating factor of misrepresentation. In that case, the injured party may affirm or avoid the contract by way of rescission or sue for damages in tort. Similarly, these are the options available to the Ministry of Health in -J51- this matter, if truly the contract between itself and Kahekam was induced by fraud. ljl. Criminal sanctions would have ensued only if it is established that the party that misrepresented itself did not intend to supply consideration. To the contrary however, apart from securing the K1980 billion using the bond, Kahekam had also shown unwillingness to perform its obligations under the contract only that further performance was prevented by the state itself either because officials at Medical Stores rejected partial delivery of the mother-baby kits or because the investigators made it impossible for Kahekam to perform the contract. Again, I urge here that the K1980 b~llion has not been stolen. The money is in the possession of Kahekam on account of the contract. The state can still recover it through a civil action or indeed obtain the mother-baby kits by enforcing the contract since it is still binding on the parties. I now examine allegations touching on money laundering. Indeed money laundering is a secondary offence. Its sustainability is dependent upon the existence of a predicate offence. Turning to this case, the predicate offence of theft having failed, it naturally follows that the allegations of money laundering cannot .be sustained. Accordingly, I shall not discuss this allegation any further because doing so shall only amount to an academic exercise. For the avoidance of doubt, the allegations under count no.4-7 touching on money laundering shall fail based on the reasons aforesaid. Turning to the third count, the allegation is that the cheques ( exhibits P29 and 30) bounced 13th February 2009 when they were presented for payment because the Kahekam Bank Account (exhibit P31) on which they were drawn had insufficient credit. As noted above, the two cheques had a combined value K198 million. I have examined the status of exhibit P31 particularly as at 13th February 2009. My finding is that on that date, the account had opened with a credit balance of K254,828,154.06 an amount which is well above the combined value of the two cheques. Additionally, going by exhibit Pd12, until 1st June 2009, the same bank account was enjoying an overdraft facility of K400 million. In mathematical terms, the combined effect of the credit balance alluded to plus the overdraft facility entails that the two cheques could have -JS2- been en cashed and could have left the account with a credit balance of K456,828,154.06. Furthermore PwlS has told the Court that Kahekam used to be allowed by the Bank to overdraw its account. Given the foregoing facts, it is a paradox that the two cheques could bounce on account of insufficient credit in the Kahekam Account. Had these figures been present to the minds of the Bank officials, I am convinced that the two cheques could have been en cashed and these allegations could not have arisen. Allegations of issuing a cheque on an insufficiently funded account cannot be sustained . simply because a cheque has bounced. Without the intention to defraud there is no criminal act. I am of this view because a cheque can bounce for reasons other than that of insufficient funds in the account on which it was drawn. The instant case is a typical example of this position as it is clear from the facts that exhibits P29 and 30 bounced for reasons unrelated to that of insufficient funds in the Kahekam account. In the wise, the prosecution must establish that when A7 issued the two cheques, he had the intention to defraud and that he was aware of the insufficient credit in the Kahekam bank account. This is the spirit of section 33 of the National Payments and Systems Act No.l of 2007 pursuant to which the charge was raised. Similarly, it has been prescribed in the case of SALONE ABAKA V THE STATE SC.271/2005 that a person shall not be guilty of the offence if he proves to the satisfaction of the court that when he issued the cheque he had reasonable grounds for believing, and did believe in fact, that it would be honoured if presented for payment within the period. Turning to this case, the elements outlined above have not been established since the Kahekam Bank Account had sufficient credit at the time the two cheques were presented for payment. On that account, the allegation under the third count of issuing cheques on an insufficiently funded account, shall fail. Having considered all the evidence in this case, I am not satisfied that the prosecution has proved its allegations beyond reasonable doubt and I therefore find Al-A6 and A9 f -J53- NOT GUILTY of the offence of theft by public servant contrary to section 272 and section 277 of the Penal Code CAP 87 of the Laws of Zambia, A7 and AB NOT GUILTY of the offence of theft contrary to section 272 of the Penal Code CAP 87 of the Laws of Zambia, A7 NOT GUILTY of the offence of issuing cheques on an insufficiently funded account contrary to section 33(1)(4) of the National Payments and Systems Act No.1 of 2007, A5-A7 NOT GUILTY of the offence of money laundering contrary to section 7 of the Prohibition and Prevention of Money Laundering Act No.14 of 2001 and ACQUIT them accordingly/ I hereby direct that they be set at liberty forthwith. DELIVERE IN q ~N COURT THIS ............ DAY OF ......... NOVEMBER, 2012. I