Juju benefited from kickbacks - ThuliComment on this story
Johannesburg - The awarding of a contract for more than R400 million by the Limpopo Department of Roads and Transport to On-Point Engineering was flawed, with evidence of fraud, corruption, malpractice and violations of the provisions of the Prevention and Combating of Corrupt Activities Act, Public Protector Thuli Madonsela has found.
She began her investigation into the awarding of the project management unit (PMU) contract last year after allegations that then-ANC Youth League president Julius Malema had used his political position to influence the awarding of contracts to companies he was involved in.
Madonsela’s investigations also looked into allegations that Malema benefited, through his Ratanang Family Trust, from kickbacks paid by the companies involved.
She found evidence of corruption, fraud and malpractice in the awarding of the contract, with a failure to scrutinise bid documents and tax certificates.
“It is mind-boggling why the stark discrepancies between the bid document and the tax clearance certificate did not disqualify On-Point or present red flags regarding the possibility of tender fraud, to those who dealt with the bid, particularly the department’s head, Ntau Letebele.”
The investigation found that, at the time of the submission of the bid document, On-Point had existed for about a month, had no employees, no assets or annual turnover, and several of the purported key management personnel and staff members were not involved with the company.
“As a company, On-Point had no profile, track record nor experience and therefore no functionality that could have made it eligible to be considered as a competent bidder.”
Beating 15 other bids to the contract, On-Point presented a bid document under the name Achir Shelf, a five-month-old shelf company it had bought one month earlier.
On-Point’s constitution misrepresented the company as a nine-year-old engineering company with a solid track record and a sound management structure.
“On-Point should never have been awarded the tender for the PMU as it did not qualify by a long stretch,” Madonsela said on Wednesday.
The bid it presented to the department in September 2009 consisted of deliberate and fraudulent misrepresentation. “That On-Point was given preferential treatment is without doubt,” she said.
She found that double payments were made by the department, to On-Point and professional designers contracted for the same job – constituting fraudulent practices. “The public protector is… of the view that a crime under the Prevention and Combating of Corrupt Activities Act has been committed,” Madonsela said.
Due to the awarding of the contract to On-Point being based on deliberate misrepresentation and non-compliance with procurement prescripts, its shareholders – including the Ratanang Family Trust and the Gwangwa Family Trust, which eventually became the shareholders of Guilder Investments (the sole shareholder in On-Point) – benefited improperly from the “dividends” and other payments made by On-Point.
Madonsela found evidence that Malema benefited from kickbacks.
“As a trustee of the Ratanang Family Trust, Malema was therefore also put in an advantageous position as his family was supposed to benefited from it.”
Payments of more than R2m had been made into the Ratanang Trust, and other deposits into a “Sandton property” and “Sandowns property”.
Madonsela said the Ratanang Family Trust had benefited improperly from the unlawful, fraudulent and corrupt conduct of On-Point and maladministration of the department.
She called for the immediate cancellation of the agreement between the department and On-Point, and for the state attorney to institute legal proceedings against On-Point and shareholders who benefited from the awarding of the contract. There should also be a bid to recover monies to which the department was entitled.
Madonsela also asked for the recovery of the full amount disbursed in double payments as well as other undue payments made to On-Point.
She called for disciplinary steps to be taken against the officials who served as members of the bid evaluation committee and the bid adjudication committee, with regard to their failure to perform their functions diligently.
The Master of the Pretoria High Court should take urgent steps to investigate the administration and disposal of the trust property of the Ratanang Family Trust and the Gwangwa Family Trust, with specific reference to the payments made by On-Point and any assets acquired.
Madonsela said the acting national director of public prosecutions and the head of the Asset Forfeiture Unit should take note of evidence and information obtained during the investigation on the criminal offences, fraud and the contravention of section 12 of the Prevention and Combating of Corrupt Activities Act. She said an investigation of the criminal offences referred to should be carried out.