City axes Khuselani security

2018-01-24 13:35
Msunduzi to claim millions lost to fraud.

Msunduzi to claim millions lost to fraud.

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Msunduzi Municipality has terminated its controversial multi-million rand contract with Khuselani Security & Risk Management (KSA) on numerous allegations of fraud.

The Witness can today reveal that in a scathing letter from the city manager, Sizwe Hadebe, to KSA’s sole director Mahomed Yacoob, he sets out the reasons why he is giving the company notice.

He also accuses Yacoob of deceiving the bid evaluation committee when he tendered for KSA to provide security services to the municipality’s facilities and buildings in 2009 and 2013.

Attempts to get comment from Yacoob were unsuccessful and his phone was answered by a man who would not identify himself but said he worked for him. Later, his phone went straight to voicemail.

However, in a related query sent to Yacoob recently, he said he denied “the commission of fraud and request you to provide proof thereof”.

The 2009 contract was worth approximately a million rand a month and the 2013 contract was almost R1,6 million a month.

“The municipality intends to claim the damages that it suffered over the period of the contracts,” said Hadebe.

He alleges that KSA formed corrupt relationships with some City officials, who then assisted in facilitating the company’s fraudulent conduct.

Last year The Witness reported that senior officials had been fingered in an internal audit report for allegedly overpaying almost R8,5 million to KSA.

The damning findings were made by the Special Investigating Unit, which was, in 2016, directed by President Jacob Zuma to investigate the allegations of fraud and non-compliance related to the security tenders at Msunduzi.

Hadebe said in the letter to Yacoob that more than 10 counts of fraud were committed by KSA, including submitting six false documents as well as overcharging the municipality.

He said the bid evaluation committee was induced by fraudulent misrepresentations when it awarded KSA points 90 points for their price and nine points for their B-BBEE status.

“KSA had claimed to be a level 2 B-BBEE contributor. [However] KSA had submitted false documents [to the MSC Verification Services] to obtain a B-BBEE rating which it used on their tender application document, which information was false and fraudulent,” Hadebe added.

He said KSA also submitted three fraudulent compliance certificates purportedly issued by the Private Security Sector Provident Fund (PSSPF).

“There certificates were issued to comply with the sectoral wage determinations specifically in respect of pension funds as part of their tender documents,” said Hadebe.

He said KSA was not in good financial standing with the PSSPF at the time, as it owed R481 774, therefore the certificates could have not been validly and lawfully issued.

One of the letters from the Department of Labour that stated KSA was compliant with the Employment Equity Act and other labour laws was also found to have been issued by an official who was not authorised to do so. The department also had no knowledge of the official who supposedly issued the second letter, which was meant to confirm and certify that KSA was registered with the Unemployment Insurance Fund.

“The person listed as Sharon Grase is not known to [the Department of Labour] in Durban. The font size in the date stamp and the size of the stamp do not correspond with the official stamp from DOL,” said Hadebe.

In addition to submitting fraudulent documents, Hadebe said KSA overcharged the city for items that were inclusive in the tendered price of the original contracts and those that were not part of their scope.

KSA is alleged to have claimed separately for two-way radios, dogs, mobile armed response and a mobile unit, which were included in the tender rate.

The company also charged Msunduzi for vehicles and a mobile unit even though the contract did not make provision for such; therefore they were not claimable by KSA.

“KSA charged the municipality for security services allegedly provided at sites which were not included in the scope,” said Hadebe.

He said KSA also fraudulently claimed for invoices for services allegedly rendered but which were not supplied. “By way of example, KSA had submitted invoices totalling R23 001 418,47 in December 2015.

“An audit revealed that of the aforementioned amount R6 858 176,79 were invoices in respect of the security services to the previous municipal manager,” Hadebe explained.

KSA also allegedly charged Msunduzi R97 5000 for escort vehicles in 2015 but they were never provided and that was also outside the scope of their contract.

Municipality still counts its losses

City manager Sizwe Hadebe said in the letter to KSA boss Mohamed Yacoob that “as a result of the fraud, dishonest and corrupt activities of KSA, the municipality has suffered huge losses going into millions of rands ...”

He said the municipality was “still computing its losses”.

Hadebe said the city intends to claim the damages it has suffered over the period of the contracts.

“Should you wish to challenge this cancellation of the contracts, we advise you that the Special Investigative Unit is an interested party to this matter and has a direct and substantial interest in it,” wrote Hadebe. 

Read more on:    pietermaritzburg  |  msunduzi municipality

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