Security firm ‘must pay’

2018-05-09 18:35

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The Special Investigative Unit (SIU) wants Khuselani Security and Risk Management (KSA) to pay back R554,8 million lost by Msunduzi over its allegedly unlawful contracts.

Alternatively it should pay at least the R158,9 million the company had allegedly overcharged the City, according to documents filed in the Pietermaritzburg high court.

The SIU approached the high court in Pietermaritzburg following its investigation into Msunduzi’s security contracts with KSA.

The probe, which led to the termination of the contracts in February, was into the alleged flouting of procurement processes, irregular expenditure as well as unlawful conduct of the officials of Msunduzi and KSA. The City and KSA later agreed that the parties would cut ties at the end of April since the municipality needed time to appoint a new service provider.

However, KSA has since been asked to stay on site on a month-to-month basis until the tender process has been finalised.

The SIU claims to have found evidence pointing at non-compliance with some of the procurement regulations during the awarding of the 2009 and 2013 contracts as well as the 2016 service level agreement, which resulted in the municipality incurring “improper, irregular and unlawful expenditure”.

Msunduzi is cited as the second defendant in the court matter but no relief is sought from the municipality.

Some of the City’s officials who were involved in the awarding of the tenders have, however, been accused of negligence and flouting key regulations.

KSA has been accused of making false representations by submitting fraudulent documents during the bidding process, therefore, the awarding of the tender was in contravention of the Municipal Finance Management Act.

Attempts to get comment from KSA’s sole director Mahomed Yacoob were unsuccessful but he denied all the allegations made by the SIU during an interview with The Witness last month.

“KSA is not a one-man show and we are competitive but we do everything above board, there is nothing illegal. We will defend any court action brought against the company,” he said at the time.

The SIU alleges that by extending the 2009 and 2013 contracts through the “emergency” process, KSA was “unfairly favoured over all other prospective tenders and had received payments for services that it was unlawfully contracted to perform”.

The SIU says the purported extension was intended, by both Msunduzi and KSA, to circumvent lawful tendering processes and to avoid competition and compliance with section 217 of the Constitution and as a result led to a financial loss in excess of R135 million.

“Security services are not a special works of art or a historical object, it is not impractical or impossible to follow the official procurement processes, no reasons were advanced by the accounting officer for the deviation and no approval from the council was sought and obtained,” read the summons.

In the event that the court finds that the extension was valid, the SIU’s alternative claim relates to an alleged overpayment above tendered rates for the 2009 contract, which cost Msunduzi more than R14 million.

The SIU claims the rates and sites were unlawfully changed by Msunduzi and KSA in the 2016 service level agreement. The recommendation to change the rates from 78% to 96% was allegedly approved by Sizwe Hadebe, in his capacity as the acting municipal manager at the time.

The unit said it is irregular and unlawful to introduce prices and rates without any valid variation.

“The agreement was concluded contrary to the applicable procurement policies, applicable legislation and constitutional imperatives and [is] thus invalid,” said the SIU.

It alleges that the state is entitled to the restitution of all monies paid to KSA between February 2010 and August 2014 amounting to R135,1 million and R419,7 million paid to the company between September 2014 and February this year.

“Alternatively and only in the event that this honourable court finds that any of the agreements are valid, the state is entitled to the restitution of all monies paid to the first defendant (KSA) as overpayment in the amount of R158 972 232,06.”

The Witness is aware that KSA has filed its intention to oppose the SIU suit.


Read more on:    pietermaritzburg  |  msunduzi municipality

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