Companies in ECDC’s bad books get tender
Auditors find deal was struck irregularly with ‘dummy’ firms
A forensic investigation by auditing firm Nexia SAB&T has found that a R16m contract awarded by the ECDC three years ago was irregular, involved a front company and benefited a close friend of an official employed by the corporation at the time.
The contract called for the erection of a 6.2km security fence and a guard house at Fort Jackson Industrial Park in Mdantsane. The probe revealed the ECDC had irregularly awarded the contract to a “dummy” joint venture company, which was apparently being used as a front by two service providers already in the “ bad books” of the corporation.
The work was supposed to have been completed by November 2016, but “to date, it is not complete”.
The probe, which was sanctioned by the provincial treasury, found three former ECDC senior officials had acted negligently in awarding the tender and recommended this be reported to the Hawks and the Special Investigating Unit.
The officials could not be contacted for comment.
The dicey contract was awarded in March 2016 to joint venture company Elityeni JV Conrite Walls, a company which “did not pass compliance stage and therefore should not have been considered for functional evaluation”, let alone be awarded such a mega contract.
The report seen by the Daily Dispatch, states that the joint venture was in fact used by Mvezo Plant and Civils and Governor Group as a “dummy corporation to fraudulently obtain the tender from ECDC”. These two companies had been red-flagged by the ECDC and were no longer allowed to do work for the corporation, after “failing to perform on some previous ECDC projects”.
According to the report, Elityeni JV Conrite Walls used the same offices, auditors and street address as one of the two red-flagged companies, and meetings between the joint venture company and the ECDC “were attended by Mvezo representatives who signed and provided their Mvezo e-mail addresses”. “Prima facie evidence exists…which indicates that Mvezo and the Governor Group used Elityeni as a dummy corporation to obtain the tender from ECDC, and disguise the true ownership of Elityeni,” states the confidential report.
Elityeni was said to have been one of only two companies which were “responsive” to the advertised tender and the evaluation process was then “shortened”.
However, investigators could find no independent documentary evidence to confirm that only two bids had been received.
They found that the decision to shorten the tender process had been irregular.
No evidence was found that the tender had been advertised on the National Treasury’s e-tender portal as required, no tender opening register had been found and minutes of the bid evaluation committee (BEC) had not been “kept and maintained”.
The joint venture consisted of eight companies, some of which, according to the report, failed to provide crucial documents during the tendering process.
The investigators recommended three former senior officials involved in the saga be taken to task and that this should include reporting them to the Hawks.
One of the implicated former officials confirmed to investigators that the owner of the Governor Group was his close friend, lived about 1km from his home, was a member of his ANC branch and his running club, and drank alongside him at the same sports bar.
Investigators found that phone records indicated this official called the owner of Governor Group 437 times between November 2016 and October 2017.
The investigators recommended that all projects and tenders awarded during the tenure of the three officials in question be probed, especially those with variation orders.
They recommended that all the companies involved should be blacklisted.
Nexia SAB&T also found the corporation’s BEC “had failed in its duties” to correctly evaluate the joint venture’s bid, and recommended action against the committee members.
Investigators found that the BEC members’ evaluation score sheets, contained identical scores, with some telling investigators “they could not recall how allocated scores were determined”.
They found that the BEC scoring “was not objective and based on bid documents submitted”.
Nexia SAB&T recommended that ECDC classify the expenditure as irregular in financial statements.
Provincial treasury HoD Daluhlanga Majeke on Friday confirmed his department had sanctioned the probe and had now handed the ensuing report to the ECDC for actioning.
“It is their report, and it is for them to deal with its contents. Only when they do not act do we can come in, but I know they are currently acting on the recommendations,” Majeke said. Attempts to get comment from the implicated companies were unsuccessful.
ECDC CEO Ndzondelelo Dlulane confirmed the corporation was implementing the report’s recommendations and that they were working with provincial treasury to blacklist the companies.
Dlulane said the matter had been reported to law enforcement agencies. Some officials opted to resign when the probe commenced.
Several ECDC employees involved in the matter face disciplinary proceedings...
Would you like to comment on this article?
Register (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
This article is reserved for DispatchLIVE subscribers.
Get access to ALL DispatchLIVE content from only R49.00 per month.
Already subscribed? Simply sign in below.
Already registered on HeraldLIVE, BusinessLIVE, TimesLIVE or SowetanLIVE? Sign in with the same details.
Questions or problems? Email helpdesk@dispatchlive.co.za or call 0860 52 52 00.