Durban security contract hints at political interference

2017-08-24 11:02
eThekwini Municipality. (Duncan Alfreds, News24)

eThekwini Municipality. (Duncan Alfreds, News24)

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Durban - For the 10th successive year the eThekwini metro council has rolled over a R50m a month security tender under a controversial emergency supply chain management policy.

This means that the same eight companies responsible for guarding municipal property in Durban continue to benefit a decade after their contracts formally expired.

They are Enforce Security, Vusa-Isizwe Security, Sharks Protection Services, Royal Security, Secureco Metsu, iMvula Quality Protection, Khuselani Security and Risk Management and Isidingo Security Services.

A senior council source and an aggrieved contractor who is out in the cold both complained that many of the beneficiary companies have strong connections with the ruling African National Congress.

Four, and possibly five, of the companies can be seen as politically connected (See below).

Aborted attempt

Indeed, it is alleged that the last major attempt to renew the security contract, in 2012, was aborted after one of the bidders, Isidingo Security, was disqualified and used its influence to have the tender scrapped.

Isidingo director Anutheran Padayachee, has denied the allegation. All the other companies that amaBhungane was able to contact denied that political connections played a role, either in the award of the contract or its extensions.

Amabhungane has also learned that more than 18 months after bidding closed on a new security tender in February 2016, the municipal security management unit has admitted that it is running behind on awarding a new contract.

In a confidential report submitted to the eThekwini executive council in June, which was leaked to amaBhungane, the unit requested yet another extension of the original tender, CMS-0031, for three months under emergency circumstances.

It said it would retain the eight current service providers on a month-to-month basis until the end of 2017, or until a new contract is awarded.

Section 36 of the council's supply chain management policy allows the city manager to circumvent official procurement processes under "circumstances which may give rise to an emergency [which] may not have been foreseeable, or where it is impractical or impossible to follow official procurement processes".

The unit has extended the contract at least eight times over the past 10 years, invoking section 36 on at least four occasions.

Other extensions are either not explained on the council website, or are justified in terms of section 5 of the supply chain management policy.

This stipulates that any tender award over the value of R10m must be made by the city manager.

Contested tenders

In the past, the municipality has explained the roll-overs by claiming that the tender award has been fiercely contested, raising the risk that municipal properties will be unguarded while disputes are resolved.

"It's a hugely complicated tender to award," said Michael Sutcliffe, the city manager when the original contract was handed out in 2004.

"It requires many checks and balances, such as site visits."

Asked to explain the two roll-overs when he was in charge, Sutcliffe said: "The looming threat of legal action by bidders meant that officials really had to follow processes to the letter, and that took a long time."

Sutcliffe said that problems with material specifications during the 2007 tender process resulted in "rumblings of legal action" by aggrieved bidders, which decided him to cancel the tender process.

To deal with the problems, he had established a security management unit under Dumisani Bhengu in 2008/9 to oversee contracts, escorts, VIP protection and static security.

He said he also attached advisers to the unit to assess whether ratepayers were getting value for money.

"When I left my position in 2011, I was confident that we had addressed all issues with the tender process and that an award would follow expeditiously," Sutcliffe said.

The tender was again advertised in 2012 by Sutcliffe's replacement as city manager, S'bu Sithole, and amaBhungane has seen a document showing that by September 2013 new service providers had been finalised and Sithole only needed to make the awards.

External audit

However, he chose instead to order an external audit by Deloitte, and then claimed that the findings compelled him to scrap the tender and start again.

An insider in senior management at eThekwini claimed that Sithole had never circulated the Deloitte report, while another source close to the process alleged that his aim in ordering the audit was to avoid making the award for "political reasons".

Sithole initially referred amaBhungane to the city for comment, but later said: "In all matters [relating to] extending contracts or using section 36, council was appraised throughout. These issues were once ventilated in court and the court ruled in the munici-pality's favour."

Although Sithole did not provide details, this may be a reference to an unsuccessful High Court application by Tactical Security, one of the winning bidders, to have the tender cancellation set aside.

The security management unit's June 2017 report provides a breakdown of pay-outs to each of the security companies from January to March of this year, showing that the total payment averages R50m a month.

AmaBhungane has also seen an internal municipal document showing that the winning bids in the 2012 tender process totalled R23m - implying that ratepayers are shelling out significantly more than they should be.

There is further controversy around a R30m settlement reached between the council and Vusa-Isizwe, which issued summons challenging the annual rates negotiated with contractors after the 2012 debacle.

Opposition councillors abstained in protest when the deal came to exco for approval.

The company could not be reached for comment. Phone calls to its listed number went unanswered, as did a message sent through its website.

The city's security boss Bhengu; its head of supply chain management, Andre Petersen, and its spokesperson, Tozi Mtethwa, did not respond to questions about the private security tenders over a two-week period.

In a general statement, Mthethwa said the municipality "has a stringent supply-chain management process in place which is applied in the awarding of all contracts, this includes the awarding of security contracts".

Security contract

Successful bidders for the eThekwini security contract - if it is ever awarded - will supply 2 700 security guards stationed at 900 locations around the Durban metropolitan area.

This includes a schedule of VIP bodyguards for councillors and other officials, under a contract valued at R3.5m a month in 2012.

Security guards protect municipal property such as City Hall, parks and the beachfront. They also accompany employees working on the municipal electricity and water networks.

According to the South African Municipal Workers Union (Samwu), eight of the city's 10 most expensive service providers are privately owned security companies - despite security's classification as a non-essential service.

Some ANC and opposition councillors, as well as Samwu and the MK Military Veterans' Association, have called on the metro to "insource" security personnel to save on the exorbitant cost of security services.

In 2015, the city announced plans to develop an internal VIP protection unit, in the hope of saving taxpayers R8m a year. City spokesperson Tozi Mthethwa has announced that the city plans to hire 96 guards, mostly MK veterans.

There has also been contention over who should guard city officials.

With more than 1 000 vacant posts, the eThekwini Metro Police has reportedly taken further strain from the deployment of police personnel to guard councillors.

As part of a power struggle that recently resulted in his alleged "forced retirement" and a pay-out of R10m, the head of the metro police, Eugene Nzama, applied to the High Court for a ruling against high-ranking city officials interfering in his duties.

One of his objections was that his officers were being removed from other duties to protect councillors.

Samwu suggested that about 300 part-time school crossing guards should staff the unit.

Politically connected

AmaBhungane was able to establish that at least four of the eight private companies that have been providing services to the eThekwini municipality for the past 13 years are politically connected:

• Isidingo Security

During in the 2012 tender process, Isidingo Security was disqualified from tendering because one its directors, Anutheran Padayachee, was found to be married to the director of another bidder, Bhejane Security.

Despite this, Isidingo remains the highest-earning security contractor to the city. In the first three months of 2017, the company was paid almost R34m for its services.

In a complaint submitted to the city ombud in 2014, a rival bidder, Tactical Security, alleged that director Padayachee was personally behind the scrapping of the 2012 tender.

Tactical director Celement Mdluli alleged that Padayachee had claimed to sources in the industry that "the entire bidding process was set aside to favour him due to the exclusion of his two companies and as a result of his political muscle and his close connections and influence with the city manager".

In an emailed response to questions, Isidingo spokesperson Vimal Dabideen denied that Padayachee had a relationship with Sithole or had wielded any influence over him or the tender process.

Sithole said: "I have never interacted with any of the service providers except one that had challenges with tax clearance certificates, and we ended up cancelling the contract with that service provider."

• Enforce Security

Enforce's website describes the company as the largest privately owned and managed security company in South Africa.

AmaBhungane has learned that one of its directors, Sibusiso Justin Ncube, is married to the KwaZuu-Natal MEC for co-operative governance and traditional affairs, Nomusa Dube.  

Ncube is former minister Sbu Ndebele's co-accused in the R10m eNatis corruption trial.

Asked whether this connection had any bearing on the extension of the city's security tender, it said these were "simply allegations not grounded in fact [and] should be posed to the municipality".

• Royal Security

Royal Security's founder, Roy Moodley, is a well-known Durban businessman and owner of racehorses, as well the former ward chairperson of the ANC in Umhlanga and a good friend of President Jacob Zuma.

Moodley resigned from active directorship of Royal in June 2015. The sole active director remains Moodley's son, Mageshpren Moodley.

Royal Security also shares a registered address with Hailway Trading, an entity registered to Roy Moodley that received a mystery R500m pay-out from tech company Siyangena Technologies just six months after Siyangena bagged a controversial Prasa tender in 2011.

Mageshpren Moodley did not return calls to his office or messages sent to his email address.

• Secureco Metsu

Former directors of Secureco include murdered South Coast ANC councillor Wandile Wonderboy Mkhize and Muntukayise Bhekuyise Ntuli, a member of the Kwazulu-Natal provincial legislature.

Mpho Scott, a former ANC national MP who resigned in 2003 to pursue business interests, remains an active director.

Scott's other business dealings include lucrative state contracts worth more than R1.5bn in total.

They include a R700m contract with correctional facilities in Kokstad and a R500m contact with the trade and industry department's Travenna campus in Pretoria.

Scott denied that his connections with the ANC had any bearing on the security tender, and commented that the ongoing contract extensions in eThekwini "are problematic for business and governance.

"eThekwini should answer to why it has not awarded the tender. As businesses it is not ideal for us to be kept on month-to-month contracts without the surety of a long-term contract."

Two other contractors are of interest.

The late Joe Matthews, the son of ANC icon ZK Matthews and father of the current Minister of Science and Technology, Naledi Pandor, was a director of iMvula Quality Protection until his death in 2010.

Matthews crossed the floor to the Inkatha Freedom Party after the ANC refused to accredit him for its 1990 conference in Durban, but remained a deputy minister of safety and security in Nelson Mandela's Cabinet.

Matthews' son, Zolani, is said to be a shareholder of iMvula, although amaBhungane was unable to confirm this.

AmaBhungane was also unable to establish whether Khuselani Security and Risk Management has high-level political contacts.

But the company was recently in embroiled in a scandal involving the Msunduzi mu-nicipality in KwaZulu-Natal.

In April 2016, The Witness newspaper implicated multiple high-ranking Msunduzi officials in overpaying the company almost R8.5m for security services.

In June this year, the newspaper reported a source as saying that a number of officials had subsequently been suspended.

Khuselani's owner, Mohamed Yacoob, said the company had "unnecessarily" been portrayed in a bad light and that it had agreed to repay any debt to the council.

However, the Witness later reported a source as saying that nothing had been done to rectify overpayments, and that the sum had grown to R64m.

Read more on:    durban  |  local government  |  security

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