Zondo commission hears process in R255m Free State asbestos tender contract was flawed
Johannesburg - The Zondo commission has heard how the Gauteng and Free State human settlements departments allegedly used a flawed process to extend a multimillion-rand contract to each other.
This comes as the commission zooms in on the R255 million asbestos contract awarded to a company by the Free State provincial government for the eradication of asbestos in government houses.
The contract has been marred by allegations of corruption and grand-scale looting.
Explaining the genesis of the tender, which will be the focus of the Commission this week, evidence leader and the Commission’s head of the legal team advocate Paul Pretorius said procurement processes which allowed Blackhead Consulting and the Free State human settlements to participate in an already existing asbestos contract in Gauteng had been “entirely flawed”.
He pointed out that Treasury regulations allowed state institutions and departments to participate in any contract arranged by means of a competitive bidding process by other organs of state, subject to the written approval of the concerned organ of the state.
“The idea behind that provision is that if there is a competitive bidding process in one department that produces a contract binding on those two parties, the second organ of state or department may participate in that contract. It is not anything that allows the formation of a new contractual relationship,” he said.
He further told the Commission that in Gauteng, two panels of service providers were irregularly appointed, with the first panel tasked with general work relating to housing while a smaller panel of eight contractors was tasked with the eradication of asbestos.
“There is no evidence of any competitive bidding that occurred in relation to the appointment of either panel. That is important because of the procurement processes which followed,” Pretorius said.
Blackhead Consulting, which was among the eight companies, had charged R650 per unit, just for the assessment of the existence of asbestos, which Pretorius said had been declared irregular by the Auditor General.
“Importantly, there was no individual contract in existence between Blackhead Consulting and the Gauteng department relevant to this evidence at the time that the ’contract’ was transferred to the Free State, nor is there any evidence that a fair tender process preceded the conclusion of any contractual arrangement between Blackhead and the department of human settlements in Gauteng,” he said.
He said Blackhead Consulting director Edwin Sodi had revealed through his evidence that the profits from the asbestos projects were massive.
“Sodi is clear that he was paid for his investigation assessment of the prevalence of asbestos in the areas he was asked to do in Gauteng. He was paid almost R230 million and his profit, on his own version was in the region of R100 million,” Pretorius said.
The Free State contract, which was also carried out by Blackhead Consulting through a questionable joint venture, has been subject to allegations of large scale looting with top political leaders including ANC secretary-general and then premier Ace Magashule being accused of being behind the alleged theft of public funds.
The inquiry continues.