Probe into R1bn spent on roads

The former Eastern Cape department of roads and public works paid close to R1-billion for 225 road repair projects that are currently under scrutiny from Premier Phumulo Masualle.

The startling revelation comes after the Saturday Dispatch last week reported how the department awarded road construction work to more than 50 companies without following proper procurement processes.

Following Masualle’s cabinet reshuffle earlier this month, the roads department now falls under the provincial transport department.

The road repair work was done between the 2013-14 and 2014-15 financial years.

National Treasury received a request from the Eastern Cape provincial treasury in 2015 to review the expenditure incurred by public works on infrastructure projects, particularly road construction during these two financial years.

Three implementing agencies – Coega Development Corporation (Coega), Independent Development Trust (IDT) and Sanral – were appointed by the department to get the work done.

The department then engaged Aqua Transport and Plant Hire, a Durban-based company for plant hire for the projects.

According to the treasury investigation, termed National Treasury report on the phase one investigation conducted of roads projects, which the Saturday Dispatch has seen, R941-million was spent between the four entities plus two companies that were not hired by the department.

The DRPW allegedly awarded one road to more than one company – in more than 20 projects.

This led the provincial director-general Marion-Mbina Mthembu to call for private forensic investigators, iFirm, to probe this.

It has been confirmed that iFirm will investigate 21 roads.

Initially, the provincial treasury received allegations that funds were transferred to these entities for roads projects which were never implemented or completed, or awarded the same road project to more than one service provider and there was a possibility of fiscal dumping.

“We have identified 17 IDT road projects awarded to IDT, where the ECDRPW also paid other service providers on the same projects. The value of the projects involved is R22989464. We have also identified two [more] projects allocated to IDT where the ECDRPW made a direct payment to Aqua, the value of the projects involved is R4084442,” read the report.

A further seven roads projects awarded to IDT were identified as also awarded to other implementing agencies.

This later cost the Eastern Cape government more money.

“A total amount of R841 123 950 was transferred to the IDT, Coega, Sanral and Aqua during the 2013-14 and 2014-15 financial years for the roads construction projects.

“In addition to the amount, R100-million was transferred to Sanral in February 2013,” the report stated.

This is how the money was paid to these entities:

• IDT received R173 253 040 during the two financial years under investigation for 52 roads;
• Coega received R304 743 529 for 78 roads;
• Sanral received R62 121 850 plus the additional R100-million;
• Aqua received R248 678 195;
• Midmar Plant Hire received R49 678 542; and;
• Ekene was paid R2 648 793.

Midmar and Ekene were allegedly “hired” by Aqua Plant Hire but were later paid by the department for the work they did.

IDT spokeswoman Thabisile Dlomo said they were allocated 48 road projects and completed 32 of these.

“IDT delivered 32 of the provincial roads as 14 were cancelled and returned to the department. One contractor was terminated and another one withdrawn,” she said.

She said it needed to be noted that in some instances, if a road was say “40km in total, IDT maintained a portion”, and it was therefore possible that the rest of the same road would have been maintained by another entity.

Dlomo said the Special Investigation Unit (SIU) did conduct an investigation in their department regarding this and they had fully co-operated.

According to the report, Coega did not provide information for any of their 78 roads.

But “quarry material” to surface 23.4km on two stretches of road was billed at R1 0143 8301.

“These amounts seem to be excessive for supplying road stone material for the above-mentioned lengths of roads,” the report stated.

One road was awarded both to Coega and Sanral by the DRPW.

“We have identified 10 roads projects awarded to Coega where public works made a direct payment totalling R320 822 235 to Aqua and other service providers in respect of the same roads.”

On Sanral, the investigators said “they were severely hampered by the fact that Sanral provided us with very little information regarding the road projects”. We have identified six projects where payments amounting to R16 359 196 were directly to Aqua by the department for projects allocated to Sanral.”

The department made payments to Aqua totalling R4 084 442 on two of the same roads allocated to IDT.

“The IDT also made payments totalling R8 255 182 to other service providers for the same roads. One of the roads was also awarded to Sanral for R2 292 013.”

The same department made direct payments to Aqua on 10 of the same roads awarded to Coega to the value of R139 232 928. A R64 534 388 payment was made to Aqua for goods and services not normally associated with road projects.

Aqua failed to respond to the Dispatch, despite promising to do so.

Sanral also promised to respond.

lCDC spokesman Dr Ayanda Vilakazi said it was difficult to provide information to the Treasury investigators as CDC had handed all their files and servers to the ECDRPW “as per their request”.

He said they had “difficulties” with the ECDPRW reducing their budgets, which reduced the project “porfolio”. Some projects suffered from “non-funding”, which caused the “premature closure of some projects”, and the department delayed in making some payments, which had “dire consequences” for service providers. — bonganif@dispatch.co.za