* This story has been updated.

Johannesburg - Telkom stands accused of irregularly awarding a multimillion-rand security tender to two untransformed companies with “lily-white management” which did not meet prescribed market requirements. 

Insiders at the telecommunications company have lifted the lid on alleged dodgy dealings by two senior managers, who by allegedly underhand manoeuvres, ensured their preferred companies were awarded a R755 million contract. They allegedly bypassed procurement processes and brought in two companies, Combined Private Investigation and SMADA, which got the lion’s share of the lucrative contract. 

According to documents in the possession of The Sunday Independent, in July 2016, the state-owned entity requested auditing firm KPMG to identify suitable service providers to submit bids  for physical guarding and network protection services. The criteria given to KPMG included industry overview, supply market analysis, competitor key client overview, best practice contracting models and SWOT on key suppliers. In August, a KPMG report identified 21 service providers that could be invited to tender. 

“The Subject Matter Evaluation Team (SMEET) reviewed the KPMG recommended service providers and only seven were found to be suitable as the report included suppliers,” the former employee said.

Following the process to identify seven companies, two business requesters, Wayne Louis and Frans Potgieter, added three service providers based on their industry knowledge. These were SMADA, Combined Private Investigations and SSG. 

Louis is said to be a senior security manager of Telkom’s Asset and Revenue Protection Services. “Nine service providers were presented to the Sourcing Contracts Approval Council (SCAC) in September (2016) to be invited to participate in a closed tender process. This was approved by SCAC and a tender was then issued to all service providers, except TSU Protection Services, which never responded,” said the source.

According to the documents, the nine companies, along with their B-BBEE  grading, were: Bidvest Protea Coin, iMvula Quality Protection, Fidelity Security and Services (all graded at level 2), G4S Security Solutions, TSU Protection Service (level 3), SMADA, SSG and Combined Private Investigation (level 4) and Sibongile Security Services (level 1). The companies shortlisted to the next stage of technical evaluations were Bidvest Protea Coin, Fidelity, Combined PI, SMADA and iMvula. 

The source said presentations and site visits were done in January and February 2017. “The SMEET concluded the technical evaluation and SMADA, iMvula and Combined PI were shortlisted for the award after the pricing and B-BBEE evaluation. 

“Based on the inputs from the SMEET, a recommendation to award was presented to SCAC and exco for support,” said the source, adding that the board approved the recommendation in March 2017.  

The source questioned why a company with a B-BBEE level 1 rating did not get the contract. 

Questions regarding the tender arose when Network Protection Services investigators were transferred to the different companies from Telkom under section 197 of the Labour Relations Act, which deals with the transfer of a business and the rights of employees affected by such a transaction. 

According to two employees, when they got to CPI they discovered the company was lily-white and the majority of documents and videos were in Afrikaans. Other problems were working conditions and allegations of racism. One employee left Telkom as a regional manager, but was demoted after the move. 

“They told us black people are not managers at the company and the individual couldn’t keep his position. We were all made senior investigators,” said the employee.

CPI owner Roy Robertson denied this, adding that there were black managers in the company, but failed to provide the names, numbers or positions they held. 

“No section 197 employee was stripped of any job title or demoted. They were incorporated into the existing CPI structures. It is categorically denied that the statement was ever made that any of our employees will not be a manager as a result of their race,” he said. 

Louis’s meteoric rise in Telkom has been controversial. His 2003 promotion caused a stir. Workers claimed he was promoted despite not meeting the requirements. They said he did not have the degree that was a prerequisite. According to the workers, 48 people applied for the position, 10 from Telkom. The source said these people had the correct qualifications. The workers alleged Louis got preferential treatment and the rules were relaxed to accommodate him.

The matter has now gone to the High Court in Pretoria. In his answering affidavit, Louis Potgieter confirmed that the position required a three-year degree or diploma and five years’ experience. “I approached my line manager at the time, Peter Ross, a former Telkom employee who was the executive for Security and Investigations. I informed him I was still studying for a three-year qualification as this was one of the requirements,” he said.

Louis said Ross indicated he would approach Human Resources management to request that the requirements be relaxed in terms of Telkom’s recruitment and selection policy at the time. He was also accused of falsifying his CV. Louis Potgieter denied the allegation.

Telkom spokesperson Nomalungelo Faku declined to comment,  as the matter is the subject of litigation pending before the High Court in Pretoria. 

“Telkom is therefore not currently in a position to respond to the questions. We can confirm that Telkom has acted in line with all applicable legal prescripts and are confident that the high court will find in its favour. 

“The application in the high court is expected to be heard early in 2019,” she said.

The Sunday Independent