Durban - Despite the cancellation of its R90 million contract last year following its failure to supply orange recycling bags, plastics manufacturer Persian Star Investments 11 CC has been paid a total of R7.7m in back-payments related to that tender.
This was the latest finding by The Mercury as it continues to probe the tender awarded to Persian by the municipality in 2015.
Documents which The Mercury has seen show that Persian sent an invoice to the municipality in December last year and the funds were paid in January.
The official who approved the payment is Robert Abbu, the deputy head of Durban Solid Waste (DSW), who is accused of improper conduct in relation to the awarding of the tender to Persian.
The Mercury understands that this was in relation to the price adjustments related to the R90m tender.
Some city officials have labelled the payment as illegal, saying it should have never been paid because Persian had failed to honour its end of the contract.
A forensic report into the tender reveals that Persian had, from day one, failed to deliver the orange bags as expected leading to the city cancelling the contract last year.
“The tender was cancelled because Persian failed to deliver on a number of occasions. When they did deliver, the bags were not enough and never met the specifications.
“How then do you justify the fact that the municipality has gone and paid them extra for something never delivered?” one official asked.
Sbu Shezi, the head of the city’s legal unit, yesterday defended the payment, saying it was due to Persian as per contract.
“Yes, they were paid that amount of money because it was due to them in terms of the relevant clauses of the contract. If it is found that the money was unduly paid, obviously that money will be recovered,” Shezi said.
Sources told The Mercury this week that they found the payment suspicious as it had seemingly been rejected by both the end-user department (DSW) and by the bid adjudication committee (BAC).
The Mercury has also established from four independent sources that as late as last week Persian made a delivery of orange plastic bags to the municipality.
The sources who spoke on condition of anonymity for fear of victimisation said they were baffled as to how this was allowed to happen when an investigation had recommended that the company be blacklisted from doing business with the city.
“It was strange that on Friday some bags were delivered to the stores when the contract was cancelled. That was completely illegal,” said another senior official.
Last week The Mercury reported how a R90m tender for the manufacturing and supply of orange bags was awarded to Persian despite the company being ineligible for this award as it lacked the capacity to deliver on this contract.
The damning information against the company is contained in a forensic investigation report which resulted from an investigation commissioned by the municipality.
The report lifts the lid on irregularities in the awarding of the tender as investigators found that supply chain management policies were flouted resulting in the tender being awarded to Persian despite the company not meeting the minimum requirements.
Furthermore the investigation uncovered that a quality management certificate (ISO 9001) submitted by Persian as part of its bid actually belonged to another company.
“On Friday (last week) when The Mercury story appeared, Persian was delivering the orange bags to the municipality. I don’t even know why that was allowed,” said one source.
Persian had failed to deliver on its contract leading to it entering an agreement with a Johannesburg company which then supplied the orange bags on behalf of Persian.
This resulted in a city-wide shortage which led to an uproar from residents.
The orange bag initiative is an award-winning programme which aims to encourage people to sort out recyclables at source.
Persian did not respond to questions sent by The Mercury this week.