Joint venture awarded R255m Free State tender without proper accreditation, State Capture inquiry told
Johannesburg – A businessman whose company was part of a joint venture awarded a R255 million asbestos audit tender in the Free State has conceded his company didn’t have the proper certification needed to handle asbestos.
Edward Sodi, who owns a company called Blackhead Consulting, took the stand at the Zondo commission on Friday.
Blackhead Consulting and Diamond Hill Trading, a company linked to now-deceased businessman Ignatius Mpambani, had been awarded an asbestos audit tender in 2014 by the Free State department of human settlements.
The project was to assess 300 000 housing units in the province for asbestos roofing.
The two companies had formed a joint venture. The contract awarded to Diamond Hill and Blackhead Consulting was later subcontracted twice, first to a company called Master Trade and again to ORI Group.
Ori Group is owned by Abel Kgotso Manyike, who testified earlier on Friday at the commission. He told the inquiry that he had been contracted to assess asbestos houses in the Free State by Mpampani, but his contract was a signed agreement with Master Trade.
Manyike said Mpambani knew of his expertise as he had done similar work in Soshanghuve, Gauteng. He had the manpower and equipment needed.
Manyike's company was set to receive 10% of the overall cost of the tender even though the company performed the overall work to assess the houses for asbestos.
He said the price tag he charged was fair, although he is still litigating Master Trade because of outstanding fees.
Sodi was questioned about the bidding Blackhead Consulting and Diamond Hill Trading did to motivate for the Free State government to award the contract their joint venture.
When questioned by Deputy Chief Justice Raymond Zondo and advocate Paul Pretorius about his company's capabilities, Sodi conceded the company did not have the certification needed to handled asbestos.
He said this was an oversight and admitted it was deceitful and did not provide the Free State department of human settlements with the proper understanding needed to decide whether it should acquire the services of the joint venture.
"I know we should have done that at the beginning but we would have told them, 'Guys we don't have the credentials to handle asbestos’," Sodi testified.
Sodi was also asked about whether his company had disclosed to the Free State department that the contract would be subcontracted twice. He said he did not personally disclose that with the department, but said his partner (Mpambani) may have done so.
"We did not inform the department that we were going to subcontract the work, but I do not know if my partner (Mpambani) may have disclosed that. But, personally, I did not have that discussion with the department.’’
On whether the Free State department was informed of the breakdown of costs of the project with the inclusion of subcontractors, Sodi said he did not do so and the department was only provided with a breakdown of costs per house for an audit and removal of asbestos.
"We did not give the department the breakdown of the cost with the subcontractors. We gave them a breakdown of the cost (R850) per house," Sodi said.
The asbestos project had 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 process in Gauteng, which included Blackhead Consulting, had not followed a proper bidding process as required by procurement legislation.
Former Free State premier Ace Magashule was also accused of receiving kickbacks from the asbestos project.