Durban - Five companies - some with married directors, common staff and contact details - which were raking in R750 million in eThekwini Municipality contracts are facing possible criminal charges because their alleged collusive activities were uncovered in an explosive KPMG investigation.
The six-month investigation, commissioned by the city, was completed in April last year, and makes several damning findings against the companies, including allegations of forged signatures on tender applications and alleged false financial information submitted to boost Construction Industry Development Board gradings.
City officials do not escape the probe unscathed, as they are accused of failing to properly prepare tender documents, leading to contract amounts spiralling.
The Mercury has seen the 209-page-long forensic investigation into the alleged “collusive” conduct of the five companies: AKRT Investments, Tauris Garden Trading 500, Mogeena Building Construction, Taset 13 and Centwise 157.
Earlier this year the IFP asked the public protector to investigate the matter, accusing the city of dragging its feet in implementing the KPMG recommendations.
Approached for comment this week, directors and staff of the companies said they were aware of the KPMG investigation, but had not seen the final report.
They strongly denied allegations of collusive tendering, but could not comment on the report’s findings, as they were not aware of them.
The July 2015 report, which was tabled at the full council in December last year, and then withdrawn, concludes that the companies were involved in collusive tendering.
The report also recommended that the firms be criminally charged in relation to specific tenders where alleged irregularities were found.
The municipality declined to comment on the report last week. It said the matter was yet to come before the full council.
“We cannot comment on the matter, as full council is currently in full adjournment. The matter will be discussed when council resumes,” said the city’s spokeswoman, Tozi Mthethwa.
Also read: eThekwini contract scandal: What KMPG found
The Mercury understands that three of the five firms were awarded a combined R11.2 million in contracts in June this year. This was despite the city’s saying late last year that the companies would receive no further contracts until the investigation was concluded.
The companies have also been referred to the blacklisting committee.
Cases have been registered with the police and the matter has been referred to the Competition Commission.
The Competition Commission said this week that it had done its own investigation and did not find enough evidence to support allegations of collusion, as required by section four of the Competition Act.
“The commission took a decision not to prosecute any of the firms alleged to have engaged in collusion,” said the commission’s spokesman, Itumeleng Lesofe.
The KPMG report describes how the firms allegedly had directorship links to each other, historical or existing, but tendered for the same contracts from the municipality.
The report said the alleged collusion was characterised by the non-disclosure of conflict of interest when competing for similar contracts.
There are also allegations that there was similar handwriting on documents completed by different companies for tender applications, and that signatures on various documents in 17 tenders submitted to the city were “forgeries”.
All these alleged transgressions were not picked up by city officials, and the five companies were awarded 18 contracts, either individually or as “joint ventures”.
The forensic investigation was instituted after the city’s municipal public accounts committee’s suspicions were raised about the awarding of a R31.5 million contract for the construction of transit camps in Kennedy Road in Clare Estate.
According to the report, a comparison of Companies and Intellectual Property Commission documents showed that the directors of the companies were also at some point directors of one of the other companies.
Furthermore, there are direct links, as the directors of the various companies are married to one another or are close friends.
There were also “common individuals” who represented the companies during site inspections and signed as witnesses on “forms of offer”.
Common landline and fax numbers also appeared on registration documents and tender application documents submitted by some of the companies to the municipality.
In some cases, one phone number was used by three companies and a fax number was used by four of them.
In respect of five municipal contracts, some of the companies tendered for them using either the same telephone, fax or cellphone numbers.
In documents submitted to the Construction Industry Development Board, three companies had the same addresses, which were different from those provided to the municipality.
The board documents also showed that at least one company subcontracted work to other companies.
These subcontracts were the key in that they boosted the subcontracting firms’ board gradings based on the value of the contracts. The higher the grading, the higher the value of government work a company can tender for.
Financially, at least three of the companies appeared to be linked through a trust that lent money to the different entities and had the companies listed as part of their “group companies”.
The Mercury