Tshwane’s multi-billion waste tenders scandal

AFRICAN MIRROR REPORTER

SEVERAL waste collection and management contracts, collectively worth more than R6-billion and irregularly awarded by the City of Tshwane (COT) to companies in which over 4000 employees, several politicians and union members have interests, are the subject of investigations by the Hawks.

Investigations by The African Mirror have discovered a nine-year-old network, which used at least 22 companies to milk the COT for the past 11 years and has been the subject of three forensic probes. The forensic investigators submitted reports with recommendations that the city must cancel the contracts, suspend, take action against those implicated and pursue criminal and civil actions against the implicated contractors to recover the billions lost.

The separate forensic investigations by Seed, Nexus and Fundudzi forensic experts found  evidence of, among others:

• Fraud and corruption.
• Collusion between city officials and contractors.
• Bribery and violence.
• Fictitious and overstated invoices.
• The contractors exceeded COT’s contractual conditions that they can only  sub-contract 30% of their contracts. Most sub-contracted 100% of their contracts.

The irregular involvement of the city’s employees, union members and politicians – across the political lines – has become a political hot potato. The investigations have also led to threats and, as some sources pointed out, concoction of trumped up charges against city officials bent on fighting and uprooting fraud and corruption.

The City’s Audit Executive (CAE) Moeketsi Ntsimane, who has been at the forefront of fighting corruption has had charges of sexual harassment, later reduced to crimen injuria levelled against him. The charges, sources told The African Mirror, are part of a plot by those implicated in the reports to stop the process to recoup billions.

Following the allegations, a special council meeting was convened today to deal with the allegations.

COT spokesperson Jordan Griffiths said the DA-led administration was not part of a plot to remove Ntsimane and pointed out that the council had to follow legal processes set in the law.

“When the DA-led administration took office in November the political leadership began re-integrating themselves into the work of the city. This came after the city had been placed under administration by the Gauteng provincial government and ANC administrators deployed to take over. In the initial weeks of November, the Nexus probity report was delivered to the Executive Mayor and after taking the time to review it, the statement was issued on December 1, detailing the action that would follow. Towards the end of November the Mayor also gave an instruction to the CAE to begin an investigation into the Watchmen services tender to assess the value that was being derived from these service providers.

“It was also towards the end of November that two officials in the Group Audit and Risk department lodged formal complaints of sexual harassment against the CAE. Thereafter the ANC women’s caucus in Tshwane organized a march on this matter requesting that a special council meeting be called to deal with this matter, this march occurred on 1 December. In that same week, SAMWU directed an email to the Acting City Manager requesting that action be taken against the CAE and that a council meeting must be called.

“The CAE is a section 56 manager meaning that he reports directly to the City Manager. As such the disciplinary processes that apply to this role are provided for in legislation, in particular section 56 of the Municipal Systems Act. As such, there is a legislative requirement that allegations of misconduct must be brought to the attention of council whereby an independent investigation must then take place and council must also allow the senior manager 7 days to respond before taking a final decision on suspension. The law is clear on this and the way forward that must be followed. In fact, the CAE himself has openly indicated that he will subject himself to any investigation that must occur and cooperate fully. Crucially important to understand that council does not take an immediate decision on suspension but must first allow time for the senior manager to respond. However, the allegations must be tabled before council.

“The DA-led administration is therefore not part of any plot to remove the CAE. Simply put the DA-led administration must follow the law on these matters and table the allegations before council for the appropriate deliberation to take place. The DA-led administration has been at the forefront of communicating on the processes surrounding these compromised tenders. Further to that, the DA-led administration takes very seriously the importance of the role that the Group Audit and Risk department plays in the institution of Tshwane. The department is a crucial pillar in advancing council, driving investigations along with continued interactions with the Audit and Performance Committee (APC). The Executive Mayor has requested the establishment of a Consequence Management committee to begin dealing with issues of performance and discipline, the terms of reference of this committee were in fact drafted by the Group Audit and Risk department.”

The African Mirror has seen the reports emanating out of the three investigations. Here are the summaries:

SEED FORENSICS probed waste contract CSS 46, worth R2-billion and found:

• Abuse of processes and money by city officials
• Lack of controls and possible collusion of some COT employees with certain service providers, leading to irregular expenditure in some instances and fruitless and wasteful expenditure in others. 
• The majority of Service Providers do not own their own fleet.
• Most of the vehicles utilized are subcontracted.
• Some of the vehicles are not registered on the eNatis system.
• Some vehicles are suspected to have fraudulent license registration numbers.
• The number of vehicles utilized was more than what was allocated and committed
• Favouritism and biased allocations
• Fictitious and overstated invoices
• Collusion, bribery and violence

FUNDUDZI FORENSICS, investigated contract CB82, in terms of which the city paid R453-million between 2011 and 2014 and found:

• Five officials received bribes from three bidding companies.
• A political office bearer – a member of the mayoral committee – deployed trucks in violation of regulations.
• City officials irregularly gave work to companies who had failed the city’s bid adjudication process and without an authority to do so.

Fundudzi Forensics laid criminal charges in 2014, on behalf of the COT with the Hawks against four of the officials who have since left the employ of the city. They recommended internal disciplinary action for the one employee who is still employed.

THE NEXUS report after an investigation into the R4-billion waste contract SS03 , which replaced CSS46, strongly recommended its cancellation after finding among others, that:

• At least 68 COT officials are directors in bidding companies.
•  Over 165 bidders committed what is suspected fraud ranging from: submitted falsified bank guarantees and surety letters, submitting falsified reference letters, collusion and more. 

• No proper needs assessment, procurement plan and no detailed planning document as required by Section 19.2 of the supply chain management policy.
• No market analysis was performed during the demand management phase as per Section 4.2 of the SCM guide.
• No budget provisions were made nor was the COT chief financial officer provided with financial information prior to the advertisement being published as required by the PFMA.
• The relaxation of mandatory requirements renders the process unfair, not transparent, not equitable as required in terms of section 217 of the Constitution and in non-compliance with city regulations.
• BEE requirements were not properly evaluated, resulting in wrong BEE points being allocated to bidders. In fact, certain bidders were awarded BEE points whilst there was no compliance with the requirements as per the terms of reference and the MBD6.1 document.
• The bid evaluation committee (BEC) scoring of the bidders was inconsistent in several respects.  In instances, no BEC quorum was present, in non-compliance with the SCM policy that requires that a quorum be present to evaluate bids
• Three COT employees submitted bids and failed to disclose their interests. The failure amounted to misrepresentations which constituted misconduct and possible criminal conduct and contravention of MSCM Regulation 44 that prohibits employees in the service of the state from doing business with the state.
• Six bidders provided reference letters on behalf of each other and no other reference letters were provided by these bidders.
• Instances were found where the same director or bidder submitted bids under different entities. These directorships were not disclosed in the documents. Their failure to disclose these relationships raised the suspicion of fraud in the form of “cover quoting”.
• Instances were found where bidders stood surety for each other. Furthermore, instances were found where guarantees or surety letters were fraudulent and/or did not comply with the terms of reference. There is even a bidder who submitted a surety letter for his own companies. Despite these discrepancies, these bidders were recommended for award. The process of evaluating the sureties and guarantees was flawed, not accurate and not in accordance with the terms of references.  The recommendations of these bidders are irregular and renders the process unfair, not transparent and not equitable.
• The irregularity of the process during the tender, the discrepancies in the evaluation phases and the prejudice to bidders cast serious doubt on the integrity of the procurement process. These conclusions are serious and renders the process fundamentally flawed and unsalvageable and as such justifies our recommendation for cancellation of the contract.

The COT cancelled contract SS03. Tshwane Mayor Randall Williams said he cancelled the contract after damning findings by Nexus. “The report was damning … I have delivered the report to the Special Investigations Unit,” Randal said, in a statement released on December 14.

The Hawks have not responded to questions from The African Mirror. Their response will be published as soon as it is received.