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City tender fraud shock

By Bheki Mbanjwa ?and Zimasa Matiwane Time of article published Jun 22, 2017

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Close to 400 suppliers that had received tenders from the eThekwini municipality had submitted fraudulent tender documents to the city while bidding for contracts, the Auditor-General (AG) has found.

In the AG’s report released on Wednesday, the eThekwini municipality is named as the worst transgressor for awarding tenders to 377 suppliers with fraudulent declarations.

According to the report, the municipality had awarded the contracts to the suppliers in the 2015/2016 financial year.

While the total value of the contracts was not disclosed, eThekwini had the highest number of suppliers with fraudulent documents, other municipalities and metros all recorded figures lower than 90 suppliers.

In the same reporting period, the City of Johannesburg recorded 80 of these, City of Cape Town had 68 and Ekurhuleni Metro had 59.

City manager Sipho Nzuza said an investigation will be launched into the matter and that the 377 suppliers could face blacklisting by the state.

He said once the investigation was complete, cases would be referred to the city’s blacklisting committee which, after blacklisting the suppliers, may refer the matter to the National Treasury.

The suppliers may then be barred from doing any work with all state organs. Nzuza said the municipality may also recoup funds and cancel contracts where applicable.

Nzuza, who assumed his position last month, said he had already identified some weaknesses in the city’s procurement procedures and taken steps to deal with weaknesses identified by the internal audit division, especially those related to procurement.

“I have just come out of a meeting with the internal audit section where they pointed out weaknesses they had detected. I have instructed all the deputy city managers to report to me on a weekly basis,” he said.

Read more here: Tender irregularities exposed

Nzuza also said he was concerned about contracts being awarded in terms of Section 36, which deviated from normal supply chain processes, and wanted to ensure such tenders were above board.

He has also formed the executive acquisition committee to properly scrutinise all Section 32, Section 36 and Section 116 contracts.

These include the extension of existing contracts in cases where there was no time to go to open tender or when a supplier had a contract with another state organ.

The committee includes legal representatives, SCM specialists and professionals in technical fields such as engineering.

“We apply these controls to make sure that processes are followed and all documentation is genuine. I am hoping that the committee will address and put a stop to those things,” he said.

Mike Sutcliffe, a former eThekwini municipal manager and now the director of City Insight, a firm of local government specialists, said the submission of fraudulent documents was a criminal matter and should be pursued as such. He said urgent action was needed as such acts could have “huge implications” in terms of services rendered and goods delivered by the companies involved. “If I were city manager, I would be having meetings with procurement people and asking for updates on each case and whether charges have been laid at the police station,” he said. “This is something we cannot tolerate as society because that is where corruption creeps in”.

However, Sutcliffe said he sympathised with municipalities as it was not always practical to verify every bit of information contained in a document, especially in low-value bids.

He suggested that eThekwini link itself to the national central supplier database as a way of dealing with this.

Lennox Mabaso, the spokesperson for the Department of Co-operative Governance and Traditional Affairs (Cogta), said the awarding of contracts to people with fraudulent documents was an indication that someone had not done their job properly and that “consequence management” should be applied.

Mabaso said MEC Nomusa Dube-Ncube has studied the report and met councillors and mayors who committed themselves to looking into the concerns raised.

DA provincial leader Zwakele Mncwango said the party was not surprised by the findings as he believed procurement processes were riddled with political interference, leading to unethical conduct by officials.

The Mercury

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