As universities grapple with lack of money to fund the free education demanded by students, it turns out that the University of Fort Hare has overpaid a service provider to refurbish residences by nearly R63-million.
The Dispatch also found out that some of the funds were paid two years before the work was over.
Moreover, the company was registered only three months before the multimillion-rand tender was awarded.
The shocking revelations are in a 100-page forensic report titled Forensic Investigation on behalf of University of Fort Hare into Lease Agreement for Students Accommodation, done by Sizwe Ntsaluba Gobodo (SNG).
The damning report was released in June.
SNG investigated contracts awarded to two companies – Equicent Infrastructural Development and the SKG Group.
The report reveals that the university awarded the multimillion-rand tender to Equicent Infrastructural Development to refurbish the residences – but the work was instead done by a company called Equicent Eastern Cape Development. Both had three common directors – Mazwi Yako, Younis Atcha and Mark Corbett.
According to SNG, at the time the bids were submitted in April 2012, Equicent Eastern Cape had only been in existence for three months and did not bid for the tender. “It appears that UFH concluded the contract with the company that did not submit the bid,” read the SNG report.
The report further revealed that invoices of “finished work” worth millions were paid two years before the actual work could be finished by Equicent.
This is blamed on two senior UFH employees who allegedly recommended that invoices be paid without verifying them or the supporting documents.
“Equicent invoiced UFH prematurely in that it invoiced sub-lease rental on residences that had not achieved practical completion in contravention of the agreement, which states that the money shall be paid from the date of practical completion of each residential building,” read the SNG report.
SNG further noted that the number of beds that Equicent invoiced for in respect of refurbished buildings were more than the number of beds that UFH has on its records. “Consequently the payments made to Equicent were overpaid by the amount of sub-lease rental relating to the extra beds charged. Based on the invoices reviewed, the overpayments made to Equicent totalled to an amount of R62936201.87.”
The SNG report said two staff members, the late Vuyisile VG James and CFO Robin Stone, had been responsible for approving the invoices.
“Mr James and Mr Stone recommended and approved invoices for payment in respect of management fees for maintenance without an approved and accepted agreement. The first addendum to the agreement relating to management fee for maintenance was approved and accepted by UFH on October 8 2015 and invoice was recommended for payment on October 4 2013 and approved on October 10 2015.”
The forensic report also highlighted that in return for the work done at UFH, Equicent was to be paid 7.5% of the fees the university would have collected from the residences.
On completion of the refurbishment, the 7.5% arrangement was to fall away and the contract arrangement would kick in.
But apparently the percentage was increased to 10% without all stakeholders being consulted.
The university’s legal adviser, Mzimhle Popo, stated that he was personally asked by former deputy vice-chancellor Dr Jabulani Mjwara and by James and Stone to commit the university to amounts expressed in percentages – the extent of which he had no idea.
Popo told the investigators that he was not aware that the request by Mjwara, James and Stone was not included in the agreement.
SNG said in their report that Stone could not explain the basis for 10% and that there was “no documentary evidence indicating how this percentage was derived”.
Tom told SNG that negotiations on the percentage were held and finally agreed on 10% based on maintenance average costs.
However, the minutes of the meetings where such negotiations were held could not be found.
On Monday UFH spokesman Khotso Moabi said the report was set to be discussed in a council meeting next week. “We cannot comment on it at this stage.”
SNG recommended that UFH instruct an appropriate expert, such as a quantity surveyor, to establish whether any factual basis existed on which it could be concluded that Equicent EC was in breach of the terms of the agreement.
With regard to overpayments, SNG recommended that a potential claim should be pursued in terms of the dispute resolution procedures provided for in the terms of the lease agreement.
Equicent’s Japie Vos initially said: “The university regrettably requested that we do not reply to your questions at this time as this matter is still being handled by the university’s council.” He later submitted their response. — bonganif@dispatch.co.za
l See page 5 for more reporting
Fort Hare R63m overspend
The Dispatch also found out that some of the funds were paid two years before the work was over.
Moreover, the company was registered only three months before the multimillion-rand tender was awarded.
The shocking revelations are in a 100-page forensic report titled Forensic Investigation on behalf of University of Fort Hare into Lease Agreement for Students Accommodation, done by Sizwe Ntsaluba Gobodo (SNG).
The damning report was released in June.
SNG investigated contracts awarded to two companies – Equicent Infrastructural Development and the SKG Group.
The report reveals that the university awarded the multimillion-rand tender to Equicent Infrastructural Development to refurbish the residences – but the work was instead done by a company called Equicent Eastern Cape Development. Both had three common directors – Mazwi Yako, Younis Atcha and Mark Corbett.
According to SNG, at the time the bids were submitted in April 2012, Equicent Eastern Cape had only been in existence for three months and did not bid for the tender. “It appears that UFH concluded the contract with the company that did not submit the bid,” read the SNG report.
The report further revealed that invoices of “finished work” worth millions were paid two years before the actual work could be finished by Equicent.
This is blamed on two senior UFH employees who allegedly recommended that invoices be paid without verifying them or the supporting documents.
“Equicent invoiced UFH prematurely in that it invoiced sub-lease rental on residences that had not achieved practical completion in contravention of the agreement, which states that the money shall be paid from the date of practical completion of each residential building,” read the SNG report.
SNG further noted that the number of beds that Equicent invoiced for in respect of refurbished buildings were more than the number of beds that UFH has on its records. “Consequently the payments made to Equicent were overpaid by the amount of sub-lease rental relating to the extra beds charged. Based on the invoices reviewed, the overpayments made to Equicent totalled to an amount of R62936201.87.”
The SNG report said two staff members, the late Vuyisile VG James and CFO Robin Stone, had been responsible for approving the invoices.
“Mr James and Mr Stone recommended and approved invoices for payment in respect of management fees for maintenance without an approved and accepted agreement. The first addendum to the agreement relating to management fee for maintenance was approved and accepted by UFH on October 8 2015 and invoice was recommended for payment on October 4 2013 and approved on October 10 2015.”
The forensic report also highlighted that in return for the work done at UFH, Equicent was to be paid 7.5% of the fees the university would have collected from the residences.
On completion of the refurbishment, the 7.5% arrangement was to fall away and the contract arrangement would kick in.
But apparently the percentage was increased to 10% without all stakeholders being consulted.
The university’s legal adviser, Mzimhle Popo, stated that he was personally asked by former deputy vice-chancellor Dr Jabulani Mjwara and by James and Stone to commit the university to amounts expressed in percentages – the extent of which he had no idea.
Popo told the investigators that he was not aware that the request by Mjwara, James and Stone was not included in the agreement.
SNG said in their report that Stone could not explain the basis for 10% and that there was “no documentary evidence indicating how this percentage was derived”.
Tom told SNG that negotiations on the percentage were held and finally agreed on 10% based on maintenance average costs.
However, the minutes of the meetings where such negotiations were held could not be found.
On Monday UFH spokesman Khotso Moabi said the report was set to be discussed in a council meeting next week. “We cannot comment on it at this stage.”
SNG recommended that UFH instruct an appropriate expert, such as a quantity surveyor, to establish whether any factual basis existed on which it could be concluded that Equicent EC was in breach of the terms of the agreement.
With regard to overpayments, SNG recommended that a potential claim should be pursued in terms of the dispute resolution procedures provided for in the terms of the lease agreement.
Equicent’s Japie Vos initially said: “The university regrettably requested that we do not reply to your questions at this time as this matter is still being handled by the university’s council.” He later submitted their response. — bonganif@dispatch.co.za
l See page 5 for more reporting
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