Embattled KZN Economic Development and Tourism MEC Mike Mabuyakhulu’s apparent negligence could cost taxpayers more than R25 million, as disgruntled construction companies who had their multimillion-rand tenders cancelled hauled him before an arbitration committee.
Mabuyakhulu’s alleged impropriety is linked to low-cost housing projects in Durban and Pietermaritzburg, in which he had oversight when contracts were awarded to hand-picked, unvetted construction companies, flouting the tender process during his tenure as housing MEC between 2004 and 2009.
The then head of the department, Zandile Nyandu, is also at the centre of the housing scandal, in which she is alleged to have awarded lucrative building contracts, without going to tender, to companies which were not rated construction firms.
The contractors, having had their tenders nullified when Mabuyakhulu left office, are suing the housing department for loss of profit. They had completed only 58 of the 700 units, and had already been paid R6m.
In an effort to resolve the matter without going to court, both parties are now locked in an arbitration process that could bleed government coffers to the tune of R25m. The matter was set down for last week, but has since been adjourned until April.
This week Mabuyakhulu confirmed that he had been subpoenaed to appear as a witness in the arbitration, but declined to comment on the matter. “We are advised that it would not be appropriate for us to deal with the evidence in the press before the arbitration proceeds and is finalised, as it may appear that we are trying to influence the outcome of the arbitration, or that we are breaching the sub judice rule,” he said.
In his affidavit, seen by the Sunday Tribune, Mabuyakhulu insists he had been the driving force behind the projects and denies any misrepresentation. He is also adamant Nyandu’s conduct was exemplary, and that she did not act improperly while facilitating the upgrade work.
“I was custodian of all housing ministerial projects that were undertaken by the department.
“Ms Nyandu, in her capacity as HOD, was authorised by me as the executing authority, whenever I deemed it necessary, to deviate from normal procurement procedures and to use supply chain management delegation 5.1 to make the appointments of service providers, who would then be approved by me,” it read.
Delegation 5.1 provides that services may be procured where early delivery is of critical importance, or in emergencies, where immediate action is necessary. It is used where invitation of comparative bids “is either impossible or impractical”.
In the eight-page affidavit, Mabuyakhulu denies having acted outside the guidelines of his mandate as minister, and also defends Nyandu.
“I dispute any inferences or allegations of misrepresentation. I further deny any allegation that the HOD, in her capacity as the erstwhile accounting officer of the (department), misled me in any way,” the affidavit said.
Nyandu and other officials involved in the awarding of the contracts are also being probed by the Special Investigating Unit, and may face arrest.
Mabuyakhulu and Nyandu were implicated in the scandal by an internal audit by the Department of Finance after the MEC changed his portfolio to that of economic affairs and tourism.
It is understood that at the time the MEC identified five projects for his personal ministerial oversight, saying the upgrades to the government-funded housing required urgent intervention.
Because of the “urgency” of the developments, the MEC admitted in an affidavit to allowing Nyandu to circumvent normal tender procedures and appoint contractors he thought would be sufficiently qualified to complete the respective projects.
He also claims to have allowed the inflation of the quantum subsidy of the developments, meaning the department paid higher rates than in an initial quotation.
His successor, ANC MPL Maggie Govender, had halted work on the upgrades when the tender irregularities arose as a result of an internal audit.
A source close to the arbitration said Govender had considered the contracts between the department and the contractors as void, because required procedures had not been followed.
“A forensic audit found that Nyandu, because she had overseen all of the projects, had not acted in line with procedure,” the source said.
“Thereafter, the contractors took legal action against the Department of Housing, suing them for damages.”
The source said the contractors had no ground for their claims against the state and, in an unexpected twist, Mabuyakhulu appeared to bolster their position by deposing to an affidavit in support of their claims and shielding Nyandu.
“They do not want to have to put Mabuyakhulu on the stand. He has scuppered the state’s case, and they would have to go after him for that. He would be destroyed on the stand, and it would impact his career as a politician,” added the source. - Tribune