The multibillion-rand Bosasa state contracts likely to be affected by the company's impending liquidation

2019-02-18 12:52
Patrick O' Connell Gillingham appears in the trade court in Pretoria. (Gallo Images, Netwerk 24, Beeld, file)

Patrick O' Connell Gillingham appears in the trade court in Pretoria. (Gallo Images, Netwerk 24, Beeld, file)

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Beleaguered facilities management and security company Bosasa, now known as African Global Operations (AGO), announced on Monday that the company was under voluntary liquidation.

The decision comes after the company's main banking institution, First National Bank, communicated it would close the company's banking facilities by 28 February, 2019.

AGO and its directors have been accused of corruption and bribery in exchange for state contracts since at least 2008. The details of this alleged corruption was exposed during testimony by former Bosasa chief operations officer Angelo Agrizzi before the state capture commission of inquiry.

Conservative estimates calculated from early data and compiled by National Treasury, show that Bosasa was paid roughly R12bn by the government between 2004 and today, through various departments and entities.

Bosasa still has several contracts running with government departments:

Correctional Services

Bosasa was first awarded multibillion-rand contracts by the Department of Correctional Services to supply catering services at prisons around the country in 2004 and 2005. These contracts are still active.

The contracts were the subject of a Special Investigating Unit probe that found in 2009 that bribes had been paid to correctional services commissioner Linda Mti and chief financial officer Patrick Gillingham in exchange for the tenders.

Social Development and Home Affairs

The company also holds contracts with the Department of Social Development in many provinces to run youth centres, facilities which house awaiting trial minors, in Gauteng, the North West and the Western Cape, among others.

In addition, the long-term contract Bosasa has to manage the Lindela Repatriation Centre under the Department of Home Affairs will also be under question.

According to a parliamentary reply seen by News24, it costs home affairs roughly R10m a month to have Bosasa run Lindela.

In January, Western Cape Premier Helen Zille ordered a probe of all contracts her provincial government has with AGO, TimesLive reported.

Fleet deal

AGO subsidiary Kgwerano Fleet Management Solutions has a contract with the Department of Transport to provide a fleet management service for the national fleet of government vehicles.

Historically, Bosasa and its subsidiaries was also awarded a host of contracts to supply, install and maintain security measures, including fencing, access control and CCTV systems at various government institutions.

This includes the courts, prisons, offices of the Chief Justice of South Africa and the National Prosecuting Authority offices to name a few.

It is unclear whether any of these maintenance contracts are still valid.

Bosasa also holds a contract with Airports Company South Africa for physical guarding services, which will also be affected. 

News24 approached National Treasury on Monday to confirm what the process was if a supplier which had long-term contracts was placed under voluntary liquidation. Treasury referred queries to the specific departments with which the contracts reside.

This is a developing story. Additional comments will be added to this story as and when they are provided.

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