R40m plant stands idle

THIRTEEN brand new roadworks machines worth R40-million are standing unguarded on open public ground in the middle of a small Eastern Cape town.

Now questions are being asked about a R95-million hire purchase deal the Stutterheim-based Amahlathi Municipality signed on April 1 with wealthy Tsolo-based middleman Mcebisi Rudolf Mlonzi.

Documents seen by the Saturday Dispatch, revealed that:

• The deal was signed when CFO Joyce Ntshinga was on bereavement notice, and the official acting in her capacity, Bennie Cilliers, was allegedly bullied and threatened into signing off the first payment of R8.9-million;

The financed deal will cost the council about R41-million more than a cash deal;

Invoice 100079 from Mlonzi’s Laman Financial Services demanding R501657 was dated March 31, but the deal was signed only on April 1;

Cilliers wrote to municipal manager Balisa “King” Socikwa informing him that no council resolution existed to authorise the deal; the budget made no provision to operate such a large plant and supply chain management processes were not followed. Despite this and the non-compliance with the Municipal Finance Act, Cilliers was “instructed” by Socikwa to authorise the payment;

Socikwa was warned that it was forbidden to use Ministerial Intergovernmental Grants (MIG) to buy plant equipment and was aware that ratepayers would have to pay;

Already on April 7, with the deal only six days old, Laman’s Johannesburg attorneys wrote Amahlathi a letter of demand for R10.3-million and the remaining “33” monthly instalments of R3.7-million (R132m);

The 13 machines, plus six more still to be delivered, are not insured; and

The contract states that the vehicles are sold voetstoots, that Laman is not responsible for late or even non-delivery and that Amahlathi officials were not “induced” to sign.

Mlonzi is a director of 19 companies, and besides his Tsolo home, lists six more residential addresses in Cape Town, Sandton and Mthatha.

“It was a clean deal. I buy the machines from Barlow World and sell them. We do this for lots of Eastern Cape municipalities. We are bringing about 200 (machines) to the Eastern Cape,” he said yesterday. He referred queries about tender process to Socikwa, who confirmed he and engineering manager Olwethu Kwababana signed the deal on April 1, but he had still to report back to council on the new debt.

He also confirmed that the cash price for the 19 vehicles was R54-million, but could not remember if the final price for the deal was R95-million.

Asked how a small 45000-person municipality with an R180-million annual budget would carry the new debt, he said: “I don’t have money. The cash was not in the account.”

Socikwa said Laman would maintain, repair and service the fleet and even provide 19 operators for three months, and that Amahlathi had 15 operators “in the system” who would be trained to run the new plant.

“It is total overkill!” said a source close to the municipality. The source also predicted the plant would cost over R30-million a year to run, bringing the total cost of the deal to R185-million.

DA councillor Taki Kyriacos said the last council discussion about roads was resolution 2/4/13 which stated that council “consider” purchasing new machinery for “infrastructure”.

“They are trying to cover it up,” he said.

Socikwa confirmed that Kwababana, who set up the deal, was “not at work”.

He refused to confirm that she was booked off for stress, as sources claimed.

Asked if the deal had been through a tender and supply chain process, Socikwa said: “No, it was not normal. It was in terms of Section 32 (of the Municipal Finance Act) and I still have to report to council. All the determinations are available.”

However, he confirmed he had already authorised a payment of R8.9-million to Laman in April for the “first three months” of the deal.

The Dispatch inspected the vehicles, most branded Barlow World The CAT Rental Store and parked on the grass in front of a play school. While Socikwa claimed they were under private security guard, no guards were seen.

The sources said guards were provided only at night and on weekends. –– mikel@dispatch.co.za