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BCM keeps pumping millions into exposed 'front' company

The empty house without plant or construction equipment at 7 Regent Street in Eureka, Wilsonia is the registered office for Czar Construction company.
The empty house without plant or construction equipment at 7 Regent Street in Eureka, Wilsonia is the registered office for Czar Construction company.
Image: Mark Andrews

Buffalo City Metro continues to dish out tenders worth millions to Czar Construction company, despite allegations that it is being used as a fronting company.

The Dispatch revealed last month that the company, owned by Nyameka Tshangana, was awarded tenders worth R300m by BCM in the past five financial years although the company apparently had no equipment to do the specified work.

While the allegations have yet to be tested, many BCM insiders say the company is being used as a front company by senior people within the municipality.

Despite the exposé by the Dispatch on November 23, documents recently seen by the paper show that the company received awards worth R14.7m between November 24 and December 11.

Co-operative governance & traditional affairs (Cogta) spokesperson Makhaya Komisa said they planned to investigate a number of tenders awarded by BCM, including the ones awarded to Czar Construction.

Komisa said their department was busy finding a service provider to do the investigations.

“We can confirm that we are sourcing a company that will do forensic investigations into these tenders at Buffalo City Metro. All the companies and beneficiaries will be investigated. This will happen in the new year,” said Komisa.

BCM spokesperson Samnkelo Ngwenya said as a public institution entrusted with public funds, the council subjected itself to any oversight processes that sought to advance sound management and service delivery.

“We welcome any accountability measures, be it from Cogta or Chapter 9 institutions. Government procurement processes are located within the broader framework of the constitution and the Municipal Financial Management Act (MFMA), which has four interrelated components, namely planning & budgeting, revenue & expenditure management, reporting, and oversight,” said Ngwenya.

“Ideally, we would want issues of corruption and fraud to be tested internally first and scrutinised by our internal verification systems, which have checks and balances, including audit committees and oversight committees.”

In addition to the R302,298,575.81 paid between 2014 and June 2019, a further R57m was paid to Czar Construction between July and now.

Of this R57m, more than R14,7m worth of work was paid for after the Dispatch exposé.

The work awarded is for construction of internal roads and other projects. Questions sent to Czar Construction last week about their latest work and payments from BCM were not answered at the time of going to press.

The company, which has an annual income of R50m, according to BCM's central supplier database, has an empty house in Wilsonia's Eureka registered as their office address.

When the Daily Dispatch visited their Regent Street company address in Eureka, it found an empty residence without any plant, machinery or signage.

Another of the company’s addresses, in Cuyler Street a block away, was visited in November. Only accident-damaged vehicles could be seen.

But when the Dispatch returned to these two addresses on Friday, earth-moving machinery was parked inside the yard at Cuyler Street, although the Regent Street address remained empty.

The company was awarded most of the work this year by the controversial BCM selection committee which was set up by city manager Andile Sihlahla earlier in 2019, “to award tenders equally to all companies on the BCM database”.

Ngwenya said BCM management would always co-operate fully with all investigations.

“We have also responded extensively to the questions raised by the Cogta MEC, Xolile Nqatha, after having started our own investigations in the wake of these allegations,” said Ngwenya.

Ngwenya said BCM had also set up a toll-free fraud hotline, for anyone with information and allegations of maladministration to report through and remain anonymous. The number is 0800-668-413.


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