The rot in North West - Part 1

Published Oct 9, 2015

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In a series over three days, The Star’s senior journalist Baldwin Ndaba reveals graft, tender-rigging and mismanagement of ratepayers’ money running into hundreds of millions of rand in the Dr Ruth Segomotsi Mompati District Municipality in Vryburg, North West. Itumeleng English took the pictures.

Vryburg - Senior officials of the Dr Ruth Segomotsi Mompati District Municipality in Vryburg, North West, have been accused of channelling millions of rand to companies owned by people known to them.

The allegations were reported to the Hawks in June. Included in the accusations were that senior officials, particularly municipal manager Zebo Tshetlho, were instrumental in the awarding of tenders on a roster system, instead of putting them out for competitive bidding.

Most of these companies belonged to the late billionaire Wandile Bozwana and his friends.

Bozwana was killed in a drive-by shooting on the N1 in Pretoria last Friday.

The auditor-general found the municipality had failed to provide details of contracts given to Bozwana’s companies, as well as other entities, and that made it difficult for the office to find that the municipality had got value for its money.

The auditor-general also found there was no competitive bidding for most of the tenders and the municipality had used a roster system to award critical tenders.

The roster system was the brainchild of the municipality’s former chief financial officer David Thornhill.

Thornhill has since resigned and taken a similar job at Naledi Local Municipality, also in Vryburg.

Tshetlho and Thornhill have been accused of conniving with service providers and giving them huge contracts. Some of the beneficiaries of these contracts were allegedly closely linked to the councillors and municipal officials. Allegations are that the contractors financed the lavish lifestyles of some of them.

In their declarations of interests to the council, some councillors and officials confirmed owning businesses and other properties but denied allegations that these were as a result of the contractors.

Their houses and cars were valued at millions of rand.

The Star conducted its own investigation and found that the Dr Ruth Segomotsi Mompati District Municipality had awarded contracts worth millions of rand to certain companies, but the amounts had been reduced when they were tabled before a full district council meeting for approval.

No tender procedures were followed.

Hired at R23m for 1.5km of road and a letter to prove it

On August 1, 2013 municipal manager Zebo Tshetlho appointed a Limpopo-based construction company, Lebaka Construction JV Malerate Construction, for the rehabilitation of Dr Nelson Mandela Drive in Huhudi township outside Vryburg.

The contract was for a fixed amount of R 9.9 million inclusive of VAT as well as contingency and escalation costs.

The municipality handed over the site to Lebaka on August 14 after agreeing on terms. Lebaka also committed itself to a surety of guarantee in the form of a bank transfer of an approved insurance company for an amount of R993 279.60.

It also took out a common law liability insurance of not less than R1m, if it fails to complete the job.

And it submitted a certificate of good standing from the Workmen’s Compensation Commissioner and supplied the municipality with its health and safety plan.

The municipality made the appointment following the recommendation of STK Consulting Engineers. The consulting engineers drew up the planning for the rehabilitation of the 1.5km road. Dr Nelson Mandela Drive, according to the plan, needed paving, storm water drainage and curbs.

The road begins from the N8, which is one of the entry points to Huhudi from Vryburg, and it stretches to the gravesite where ANC stalwart and Mandela’s former secretary Dr Ruth Mompati was laid to rest.

The rehabilitation of the road was scheduled for six months – ending in February last year. In April, the construction was granted an extension after they cited that rains had delayed the rehabilitation. It was granted.

Controversy, however, surfaced when the auditor-general (AG) revealed that the letter of appointment of Lebaka Construction JV Malerate Construction was actually for R23m.

The AG in his findings said it was stated in their letter of appointment. He discovered the letter during their audit into the affairs of the municipality. The AG found that complete documents regarding this tender could not be found.

Tshetlho had disputed it saying R23m was “highly inaccurate”.

Lawrence Phasha of Lebaka Malerate Construction said his company was paid only R9m. However, the AG found that vital documents could not be found.

The AG made similar findings against various other companies. Another company was given a R1.8m tender just to do road marking on a 300m stretch – not far from Dr Nelson Mandela Drive. The AG also found no supporting documents for this tender.

Tshetlho said he was unaware that a criminal case had been opened against him and other council officials.

 

White-owned company in R212m tender scandal

One of the biggest beneficiaries of multimillion-rand contracts from the Dr Ruth Segomotsi Mompati District Municipality was a 100 percent white-owned company with its headquarters in Kimberley.

Izwelethu Cemforce, according to the latest Companies and Intellectual Property Commission (CIPC) data, is owned by Hendrik Lodewicus Diedericks. Diedericks has a 100 percent shareholding.

He previously had a black shareholder, George Mareko of Homelite, near Galeshewe, in Kimberley.

Mareko had 40 percent shares in the company, but he resigned in 2010.

In 2011, Izwelethu Cemforce was given contracts worth R212 million to build pit latrines at various villages in Taung, Bloemhof, Christiana, Schweizer-Reneke and Vryburg’s Morokweng village.

The figure of R212m was given by the Auditor-General in his 2013/2014 final management report into the affairsof the district municipality handed to North West Premier Supra Mahumapelo and mayor Elvis Tladinyane in November last year.

The contract was for the duration of four years.

However, the municipal manager, Zebo Tshetlho, claimed that the appointment was for R10m.

Despite his insistence that the four-year contract was for R10m, on February 15, 2013, the council’s bid adjudication committee recommended that Izwelethu Cemforce’s total project should be increased from R68m to R102m.

Some of the funds were R34m from the municipal infrastructure grant budget adjustment of the 2012/2013 financial year from the national government.

The amount was for work to be completed until the end of June 2013. In June this year, the council extended the contract until December and recommended that the council should pay the contractor R282m by the end of December. This is according to engineering contract payment certificate 39 of the district council, seen by The Star.

Most of these payments to Izwelethu Cemforce were made from municipal infrastructure grant funds.

The appointment of Izwelethu Cemforce was mired in controversy in 2011. The district municipality, through its lawyers, Venter Booysen & Ferreira, has to seek legal opinion from advocate JHL Scheepers about their appointment to provide pit latrines.

The legal advice was sought after those adjudicating the tender gave two other companies, Boitshoko Road Surfacing & Civil Works and Marups Trading Enterprise JV, wrong tender documents, which led to their disqualification.

Despite the controversy, the municipality went ahead to appoint Izwelethu Cemforce.

According to sources in and outside the municipality, it was a common cause for historically white companies to assume indigenous names and gain access to municipal contracts – in some instances, without BEE partners.

In the case of Izwelethu Cemforce, the municipality, through Tshetlho, claimed it was 60 percent black owned, but the CIPC member details last published electronically on November 30, 2014 show Diedericks as the only active member.

However, Tshetlho insists there were black shareholders with a 60 percent stake when the contract was issued to Izwelethu Cemforce.

He listed the following names: Jan Louw, Sisanda Dyubeni, Thembekile DA Nabo and Rucracia Willis.

But, according to the CIPC, on January 25, 2015, a certain Jan Louw was listed as a 40 percent shareholder, but he resigned in 2010.

Even worse, the latest listing includes only Diedericks’s wife and the family trust. The others aren’t included on the list.

Despite the discrepancies, Tshetlho maintained that correct procedures were followed in the appointment of Izwelethu Cemforce.

“All payments made so far to Cemforce are for work done and all the evidence is available to show that they have performed in line with their appointment.

“I wish to reiterate that this municipality has always treated rural sanitation not as a project, but as a multi-year programme because of the huge sanitation backlog we have in the district,” he added.

The Star

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