Mlaba and the tender ‘hijack’

EThekwini Mayor Obed Mlaba. Picture: Bongiwe Mchunu

EThekwini Mayor Obed Mlaba. Picture: Bongiwe Mchunu

Published Mar 14, 2011


EThekwini mayor Obed Mlaba’s family link to a R3 billion alleged tender “hijack” in Durban has tensions running high at the city hall.

The tender is for the conversion of waste to energy at Durban’s Bisasar Road landfill which is expected to reach capacity within the next three years.

Mlaba was allegedly a “silent partner” in a firm identified as the preferred bidder for the tender, of which 20 percent was apparently owned by the Mlaba Family Trust. In a bizarre turn of events the tender, with Environmental Waste Solutions (EWS) as the preferred bidder, was allegedly “hijacked”.

The original majority shareholder, Durban businessman Richard Wardrop, appears to have been sidelined . A new company was formed with a similar name, called Own Environmental Waste Solutions (Pty) Ltd, with Mlaba’s two daughters among the directors.

The latest information comes at a time when Mlaba and city manager Michael Sutcliffe are at loggerheads over, among other things, the auditor-general’s annual report for the financial year ending June, 2010, as well as damning claims in the so-called Ngubane audit report, that has raised concerns about the city’s supply chain management process, amid calls for city officials’ heads.

With a mandate from the ANC, Mlaba has called for a full-scale forensic investigation into the city’s finances, although he has yet to announce which company will be spearheading the probe.

According to the auditor-general’s management report dated November, 2010, close family members of Mlaba and an unnamed senior city official have previously received three tenders from the city to the value of R88,31 million. The Mercury reported last year that one of Mlabla’s daughter, Thandeka, received two contracts for container toilets.

However, this is the first time Mlaba appears to have been directly linked to trying to do business with the city.

Sutcliffe would only say this weekend that “the root of the tensions are the (bid) investigations”, but declined to elaborate further.

In his reaction, Mlaba denied there was any tension between himself and Sutcliffe.

After being questioned about his alleged interest in the Bisasar Road project, Mlaba declined to make further comment and withdrew an earlier statement, saying: “Bring all the documents you have to me and I will respond to your questions properly. I don’t deal in tensions, I deal in principles.”

At the heart of the latest extraordinary tale to rock eThekwini is the city’s call for the Bisasar project early in 2008.

Three companies were shortlisted as preferred bidders: EWS (Environmental Waste Solutions); the Durban-based Re-ethical Environmental Re-engineering (commonly known as re-) and the JSE-listed Interwaste Holdings.

EWS was the trading name given to a shelf company bought by Wardrop for the project.

“Sixty percent of the company belonged to me, 20 percent to the Obed Mlaba Family Trust - Obed was one of our silent partners - and 20 percent to Bheki Mtolo, who was introduced to me by Mlaba,” Wardrop told The Mercury.

“I was told the way they had done it was all above board and straight. Obed told everybody that after his retirement ‘this is what I am going to do; this is my hobby’.”

However, Wardrop claims that, unbeknown to him, a local estate agent, Leon Boshoff, whom he befriended when buying a house in Durban, allegedly muscled in on the bid without his knowledge.

Boshoff, together with the mayor’s daughters, Thandeka and Thabiso, among others, then registered a second company called Our Environmental Waste Solutions (Pty) Ltd. This is confirmed by a company search of the Cipro database, which gives the registration date as November 26, 2009. However, both Boshoff and Thandeka Mlaba resigned as directors the day after the company was registered. Thabiso Mlaba remains listed among the directors.

Wardrop also claims that Boshoff represented himself to the city as a director of the original EWS company

“Boshoff told everyone I had been sacked. EWS was my company; how could I be sacked?” said Wardrop.

Meanwhile, Boshoff also approached re-, the company that was expected to win the bid, to set up a partnership for the lucrative job. This was confirmed to The Mercury by Tadek Tomaszewski, the managing director of re-.

On November 30, 2009, Obed Mlaba chaired a meeting with Tomaszewski and also asked for a partnership deal.

“I offered them a 50/50 partnership, but Mtolo said 60/40. Ten percent, he said, had to go to the ANC,” Tomaszewski said.

During the meeting Mlaba referred to the project as “his retirement plan”, Tomaszewski said.

Despite repeated and documented misgivings expressed by DSW officials and a French Development Bank expert, EWS was nevertheless identified as the preferred bidder.

In an earlier report to the bid evaluation committee, DSW’s John Parkin expressed concern about EWS’s submission.

“It is clear EWS has not been totally forthcoming in its communications thus far. In the proposal claims are made that cannot be substantiated or have been shown to be not true.

“It must be of further concern that the company that we originally were corresponding with has now changed and we are receiving correspondence from a company with a completely different letterhead,” he wrote.

On February 23, 2010, Sutcliffe nevertheless gave the authority for DSW to negotiate with EWS as the preferred bidder.

The confirmation letter two days later from DSW’s Raymond Rampersad is addressed to Leon Boshoff of EWS (Pty) Ltd.

Wardrop said he found out about the award by chance and immediately wrote to Rampersad to thank him.

But two days later Wardrop received a letter from a lawyer acting for Our Environmental Waste Solutions (Pty) Ltd threatening him with legal action if he continued to communicate with the municipality about the project.

“I didn’t know what was going on,” he said.

In an e-mail dated March 17, 2010 to Rampersad, copied to Sutcliffe, Wardrop announced his company was withdrawing its bid.

In a letter to Wardrop dated April 8, Sutcliffe asked to meet him “urgently and “confidentially”.

In a further e-mail on September 6, Wardrop asked Sutcliffe about a “forensic” audit which he had allegedly promised at the April meeting.

Responding to Wardrop’s inquiry, Sutcliffe blamed the World Cup for the delays, “but I believe it is in the pipeline”, he said.

In his comment to The Mercury, Sutcliffe said: “The tender process is not concluded. The preferred bidder was identified, but the tender process hasn’t been signed off.”

Boshoff and Thandeka Mlaba referred The Mercury to their lawyer, Andile Khoza, at Strauss Daly, who said he would not comment until he had seen all the documents in the newspaper’s possession.

Asked about his family’s tenders with the city, Mlaba said: “I have no response because I am not the one that awards tenders.”

Mlaba did not respond to questions by phone or an SMS from The Mercury about his alleged involvement with EWS. - The Mercury

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