JOHANNESBURG - The Department of Correctional Services (DCS) said on Monday that Bosasa's application for voluntary liquidation has necessitated it to embark on a continuity plan to ensure uninterrupted provision of nutrition at correctional centres.
This is after African Global Operations, formerly Bosasa Operations, on Monday announced that its group of companies were filing for voluntary liquidation after two major South African banks, FNB and Absa, said they will be closing their accounts due to reputational risks.
Bosasa has been strongly implicated in corruption during the Zondo Commission of inquiry into allegations of state capture, with its former chief operations officer Angelo Agrizzi and other employees testifying about its payment of bribes to senior government officials to win tenders.
Bosasa currently holds a multi-million rand contract to supply catering services at more than 20 South African prisons. About 4,500 workers are set to lose their jobs when the company is liquidated.
In a statement, the DCS said it has urgently set up a war room, capacitated with work stream captains, working on an in-depth operational plan which will immediately kick in to facilitate a seamless transition in the event of any disruption to nutrition services.
The department said any possible interruption of service related to Bosasa will only be limited to seven management areas out of 46; housing 46,434 inmates, which is 29% of the total inmate population.
National Treasury will be meeting with the department on Monday with a view to set up systems to address any challenges that may arise during the transitional phase.
"It’s worth noting that since the testimony given by the former Bosasa CFO at the Zondo Commission of Inquiry, Correctional Services had already started a review process in relation to all food services contracts," it said.
"The department is at an advanced stage in terms of developing an alternative food services plan. An audit has been concluded to this effect, looking at, amongst others, the state of the kitchens including infrastructure and equipment, financial and human resources, systems involved in procuring perishable goods, and the standard operating procedures."
Bosasa, which employs more than 4 500 workers, said it was advised that in the event that it may not be able to pay its creditors within six months, it has an obligation to enter into business rescue or voluntary liquidation, as per the Companies Act.