Free State asbestos project subcontracted twice, State Capture inquiry hears
Johannesburg – The Zondo commission has heard how a R255 million project to audit asbestos in government houses in the Free State was subcontracted twice.
Businessman Abel Kgotso Manyike, a director at ORI Group, took the stand at the commission on Friday.
Manyike detailed how he was approached by businessman Ignatius Mpambani, who owned Diamond Hill, to become a subcontractor to a company called Master Trade.
Master Trade had been subcontracted by a joint venture between Diamond Hill and Blackhead Consulting, a company owned by Edward Sodi.
The Blackhead and Diamond Hill joint venture had been awarded the R255 million asbestos audit project by the Free State department of human settlements in 2014. The project was to assess 300 000 housing units in the province for asbestos roofing.
Just before the contract was finalised between the provincial government and the joint venture, Mpambani had approached Master Trade as a subcontractor for the project. Manyike told the commission that he came in as a "subcontractor to the subcontractor", this being Master Trade.
Manyike explained he had the expertise needed by Mpambani and that is why the businessman had approached him. Manyike had performed similar work on asbestos audits in Soshanghuve in Gauteng.
He said he had "the equipment and the manpower for the project".
Manyike said he charged 10% of the total R255 million value of the tender awarded to Blackhead and Diamond Hill. He said he believed the price he charged was fair because it was based on the industry standard and the manpower he had.
With a price tag of R255 million, Manyike's company, which did all the groundwork in auditing the asbestos project in the Free State, only received 10% of the funds.
Blackhead and Diamond Hill, along with Master Trade, received the bulk of the profits in the project even though they had not done the groundwork.
When questioned on the price tag of R255 million for the tender and whether he would have charged the same, Manyike said he would have probably charged the same amount because he would have been forced to partner with a company with the financial muscle needed to appease government's requirements of sufficient capital holdings.
Deputy Chief Justice Raymond Zondo asked Manyike: "Would it be correct to say that if the Free State department of human settlement invited bids openly, you could have put in the bid to do the job and what you would have charged may well have been exactly what you charged for doing this job, would it be correct to say that? Or is the position that if you had been the main contractor, you would also have charged maybe R250 million?" Zondo asked.
Manyike replied: "I would have done that chair, I would have partnered with someone with financial muscle. Simply because government before they award jobs of this nature, they look at your financial position. So I would have been disadvantaged."
The asbestos project has been marred with controversy since it was awarded in 2014. The commission heard earlier this week that the contract may have been irregularly awarded by the Free State government.
This contract had originated in Gauteng and the Free State government had been "allowed" to participate in it as this was lawful according to procurement regulations.
What was questionable about the participation of the Free State government was that the panel appointed in Gauteng, which included Blackhead Consulting, had not followed a proper bidding process as required by procurement processes.
Former Free State premier Ace Magashule was also accused of receiving kickbacks from the asbestos project.
Manyike said he was paid in tranches for the work he did, but at some stage, Master Trade stopped paying the full amount owed to him.
He is currently suing Master Trade for unpaid funds. Manyike said he was "indebted" because of the funds owed to him.