Durban - A R7.5 million contract to guard Durban’s International Convention Centre has ignited a battle between security companies, and a police investigation into the firm that won the tender.
Some local security firms are up in arms over the award to a company that is facing a police probe into a claim of fraud for allegedly not paying all of its staff’s mandatory provident fund contributions.
The eThekwini Municipality and the company against which the allegation has been levelled, Isidingo Security Services, have not responded to Daily News questions over these allegations.
However, ICC CEO, Julie-May Ellingson, said she was not aware of the fraud allegation, saying the company had provided all the legal documents to prove that it was compliant with legislation.
The Private Security Industry Regulatory Authority said it had lodged the fraud allegation against the company. SAPS spokesman, Captain Thulani Zwane, confirmed this.
The SA Security Association (Sasa) said it had called for an investigation into the tender award and had withdrawn Isidingo’s gold membership, granted to companies that met all of the sector’s stringent legal requirements, including compliance with the Private Security Sector Provident Fund.
Sasa’s KZN chairman, Gary Tintinger, said the association had, on November 25, lodged an objection with the eThekwini Municipality to the tender award. This was after tendering firms received regret letters stating the winner.
“Sasa objected on behalf of its gold members who felt the tender should not have been awarded to Isidingo Security as they were seriously in default in respect of contributions to the statutory Private Security Sector Provident Fund – making them non-compliant with legislation,” Tintinger said.
“Sasa’s view is that the city needs to investigate and visit the companies that tendered for the contract and go through an audit of compliancy with PSIRA, Provident Fund, Sars, UIF and the Department of Labour,” Tintinger said.
Tintinger said the city had replied, advising that the tender would not be awarded until a full investigation had been conducted.
He said the tender process required all bidding companies to produce a certificate of compliance from the provident fund. He said Isidingo had obtained a temporary compliance certificate from the fund, which was valid for only 30 days. Once it expired, it would not be re-issued unless all the outstanding contributions were paid up.
“Isidingo might have got a letter of compliancy based on an agreement to pay, but they are non-compliant with paying provident fund by the stipulated date, which by law is the 7th of each month,” Tintinger said.
“Isidingo have made arrangements to pay the arrears over a period of time. They are compliant with this arrangement. But they have not paid the debt of about R11 million in full.
“We did query the issuing of the compliance certificate with the PSSPF and have been advised by the chairman of the fund that they will, in future, not be issuing a letter of good standing to any company which is in any way in arrears,” Tintinger said.
“Sasa’s stance is that no company will be awarded gold status if their provident fund contributions are not up to date. Making ‘payment arrangement’ with the Provident Fund or Sars, WCA (Workmen’s Compensation Assistance) and UIF does not constitute compliance,” Tintinger said.
Private Security Sector Provident Fund chairman, Cobus Bodenstein, confirmed that Isidingo had signed an agreement to pay off R11 million in arrears pension contributions. He said the company had been issued with a temporary compliance certificate that was valid for a month from December 3.
“They paid off close to R1 million in December and the outstanding amount now stands at R10 million,” Bodenstein said.
Private Security Industry Regulatory Authority spokeswoman, Siziwe Zuma, said it had laid a charge of fraud against Unitrade 1047 CC trading as Isidingo Security Services “for deducting provident fund contributions and failing to pay over to the administrators of the fund” in contravention of Sectoral Determination 6 under the Basic Conditions of Employment Act of 1997, that provides for compulsory membership and contributions to the fund.
“The criminal investigation in this matter must still take its course and at this stage, the authority cannot confirm whether the business will be formally charged by the National Prosecuting Authority as the investigation must be concluded by the South African Police Service,” Zuma said.
Ellingson said Isidingo had provided, among other documents, a PSIRA Certificate and a Security Industry Alliance Certification with its tender confirming that it was a Gold Class Member (Expiry Date: June 30, 2014) and compliant with all legislation, including the provident fund.
“When evaluating tender documents, the Durban ICC utilises all documents and certificates issued with the tender to confirm compliance, thus we rely heavily on authorising bodies within the various industries to highlight non-compliance/compliance through certifications and letters of good standing,” Ellingson said.
“All letters of compliance and good standing were provided and clearly indicated that this company was compliant.
“Until such time that we receive official notification from the respective authorities that they have retracted their certifications and/or letters of good standing, we cannot be prejudiced against this tenderer,” Ellingson said.
Ellingson said she was unaware of the fraud claim but was aware of a letter Sasa had sent to the municipality advising it was in the process of withdrawing Isidingo’s gold membership status due to non-compliance with the provident fund. She said the ICC had then contacted Isidingo and asked for a letter of compliance from the provident fund, which it had submitted on December 5.
“The Private Security Sector Fund Compliance Certificate is dated 3 December 2013. This letter states that Isidingo is ‘in line with the Sectorial determination and in compliance with requirements of the fund’.”
However, Ellingson said the ICC was not aware whether a letter of award for the contract had yet been issued to Isidingo.
“The eThekwini Municipality distributed letters of regret to those companies who were not considered the successful tenderer. The letters, dated 18 November, 2013, stated that Isidingo Security Services was found to be the successful tenderer,” Ellingson said.
“Regarding the steps the city will take in moving forward, the Durban ICC is currently awaiting direction and a decision from the city,” Ellingson said.
“From the ICC’s perspective, we believe any allegations must be dealt with through the formal appeals process to ensure transparency and fairness to all parties prior to any award being made by the eThekwini Municipality,” Ellingson said.
Some security companies which spoke to the Daily News on condition of anonymity said they were unhappy with the award to Isidingo, and had lodged official objections with the municipality, but had not received a response.
Tintinger said the practice of hiring non-compliant security companies was rife in the market.
“There are many large corporate consumers utilising non-compliant security providers simply because they are cheaper. Until such time that someone does something about this, you are always going to get non-compliant companies undercutting the prices of compliant companies and being awarded lucrative contracts to the detriment of the security officers who lose out on legislated benefits,” Tintinger said.