The contract for a multimillion-rand Umlazi housing project carried out by Shauwn Mpisane’s company was flawed, as procurement processes were not followed and contract documents might have been manipulated.
In addition, the project’s consultant is being investigated by the Hawks and the SA Revenue Service.
This is according to eThekwini housing head Couglan Pather’s affidavit in reply to a high court application brought by Mpisane’s company, Zikhulise Cleaning, Maintenance and Transport, demanding the reinstatement of the suspended R176 million contract.
The municipality, Pather, the chairman of the city’s bid adjudication committee, Sipho Cele, and Housing Settlements MEC Ravi Pillay are cited as respondents in the application.
Mpisane says the project – to build 18 000 houses for the Umlazi B10 housing project in three phases – had been transferred to the municipality by the provincial housing department, and the professionals who had been initially hired, including TP Ngcobo and Associates, were allowed to continue with the work.
TP Ngcobo and Associates then ceded the contract to Zikhulise, which completed the three phases and was paid out.
Mpisane said she had been asked to carry out the project’s fourth phase last year, which involved building 2 114 houses.
The bid committee had awarded the contract to Zikhulise in terms of Section 36, which bypasses the normal tender process, but the committee later suspended the award.
Mpisane said she believed the contract had been suspended because city officials had wrongly assumed that her 2005 fraud conviction prevented her from managing a close corporation.
In his affidavit, Pather said processes followed concerning the project warranted further investigation.
“At the time, when certain processes were adopted, the city operated under the belief that they were properly authorised to do so. With the benefit of hindsight, this has not always been the case…”
He said the executive committee had awarded the contract to TP Ngcobo and Associates, but it did not have the authority to do so.
“I recognise now but did not then that having regard to the Municipal Finance Management Act and the city’s supply-chain management policy, exco (the executive committee) had the power to resolve that a certain project should be undertaken, or taken over in this case, but it had no power to make an award of a contract. I simply did not appreciate this at the time.”
He added that Zikhulise had not been awarded the contract for the construction of 18 000 houses, but 3 100. “It is ludicrous to suggest that the contract was for 18 000 houses. There was no finance in place to cover such an amount.”
He added that Zikhulise’s letter of appointment for the three phases, which was included in court papers, differed from the city’s copy.
“A comparison between the document they have put up and ours elicits a sense of disquiet. The document they rely on does not contain a reference to the number of houses and the figures for the three phases are inflated by a total of R100m.”
The city’s document reflects the cost of the three phases as R24.4m, but Zikhulise’s copy quotes an amount of R124.4m.
Pather added that a consultant hired to oversee the project was being investigated by the Hawks and Sars. “The city has lost confidence in the consultant, given the fact that he is the subject of an investigation regarding his dealings with the city and the applicant (Zikhulise).”
He said documents produced during the consultant’s tenure, and relied on by Zikhulise, could not be accepted at “face value”.
Pather said his argument was largely academic as Zikhulise had already been paid for the three phases, but he did not state which amount had been paid.
The consultant’s contract was terminated in 2010.
Pather added that Zikhulise had been hired without any tender processes being followed and no attempt had been made within the municipality to justify the award.
Pather said he had motivated for the suspended contract to be awarded in terms of Section 36 to ensure the work was completed, as construction had already started.
He said the bid committee had supported this request, but the authorisation of the previous city manager was never obtained and no award was made.
The committee suspended the award on November 2, 2011.
In a supporting affidavit, city manager Sibusiso Sithole said there was no evidence of a lawfully awarded contract between Zikhulise and the municipality.
“Granting of the award would serve to perpetuate unlawful conduct and processes that have already been identified. It can surely not be in the public interest to compound irregularities.” The application was adjourned indefinitely. - The Mercury