Umgeni Water in R220m tender scandal


No time for public tender processes – but lots of jobs available to veterans, stalwarts and comrades

Umgeni Water has been rocked by allegations that it has awarded a R220 million security tender to a company with political connections without following competitive public tendering processes.

Earlier this month Umgeni cancelled its month-to-month contract with Excellerate Services and handed it to Reshebile Aviation and Protection Services without a tender.

The water company decided to piggyback on Reshebile’s contract with the Airports Company SA (Acsa).

To save costs and time, and in emergencies, Treasury allows “piggybacking”, which permits government entities to appoint a company already contracted by another department to deliver the same services, at the same cost, terms and conditions, without going out to tender.

Reshebile Aviation and Protection Services, which is contracted by Acsa to provide security services in all airports across the country, has strong links to the ANC.

ANC veteran and former Robben Island prisoner Paul Langa was a director of the company.

Khanyisani Mazibuko, a director at the company, is a former presidential bodyguard.

Another ANC veteran, Gertrude Shope, is an active director. John Nkadimeng, another stalwart of the ANC, is a former director.

A senior government bureaucrat who deals with procurement said piggybacking is a deviation from normal competitive tendering procedures which is strictly reserved for emergencies.

“Treasury is becoming increasingly concerned about the number of tenders awarded through piggybacking. Treasury regulations make provisions for piggybacking for emergency cases. Section 217 of the Constitution says public procurement should be fair, open and transparent.

“There is no fairness, openness or transparency when contracts are awarded via piggybacking. It is a gross abuse of the system,” the bureaucrat said.

Shadrack Dladla, another director at Reshebile, refused to comment.

Umgeni’s spokesperson Shami Harichunder said Reshebile Aviation and Protection Services had been contracted by Umgeni Water to provide security services at its various sites.

“This appointment was made in line with Umgeni Water’s internal supply chain processes and procedures and in terms of National Treasury Regulations,” said Harichunder.

However, Harichunder did not respond to detailed questions, arguing that the matter was sub judice.

After Excellerate’s contract was cancelled, the company rushed to the Pietermaritzburg High Court, asking judges to prevent Reshebile from entering Umgeni’s premises and start working.

The company argued that it had a legitimate month-to-month contract.

The application was dismissed on the basis that the matter was not urgent.

However, Excellerate’s chairperson Sibusiso Ncube told City Press that he intended launching another court bid, seeking to force Umgeni to appoint a security service provider through an open tender.

The company, Ncube said, would seek to review and set aside the appointment of Reshebile through piggybacking.

Piggybacking proliferates

This is the third case in recent months in which the practice of piggybacking is being challenged in court.

Last month the Grahamstown High Court ruled that a R3 billion contract to roll out broadband in the Eastern Cape was irregular, illegal and unlawful.

The court action was initiated by the State Information Technology Agency (Sita) earlier this year after the Eastern Cape provincial government awarded the R3 billion contract to Liquid Telecom without an open public tender.

The Eastern Cape’s director-general Marion Mbina-Mthembu appointed Liquid Telecom by piggybacking on a contract which the company had with the Western Cape provincial government.

However, the court did not set aside the tender. It requested both Sita and the Eastern Cape government to file papers, detailing how they want the matter to be sorted out.

In February this year a company called Blackhead Consulting had dragged Sedibeng Water to the Bloemfontein High Court, seeking an order to declare the water utility’s decision to award a R300 million project through piggybacking as illegal and unlawful.

The company also wanted the tender to be set aside.

Around November last year Sedibeng Water appointed Pro-Plan Consulting Engineers, without an open public tender, to design and supervise the construction of phase two of the Vaal Gamagara Water Scheme.

Blackhead is one of the companies which had submitted bids for the project before Sedibeng cancelled the open tender process and appointed Pro-Plan through piggybacking.

The Vaal Gamagara will deliver bulk water supply to Northern Cape and parts of the Free State and North West.

Den of corruption

Since Umgeni Water forced its former chief executive Cyril Gamede out of office 18 months ago the company has been paralysed by instability and allegations of corruption.

A legal opinion solicited by Water and Sanitation Minister Gugile Nkwinti in July found that Umgeni had an illegal board.

Umgeni’s board, led by Gabsie Mathenjwa, appointed Thami Hlongwa, who has been acting since July last year as permanent chief executive.

This was despite Nkwinti having advised Mathenjwa not to appoint Hlongwa because the board was illegal. Nkwinti had also not approved his salary as required by legislation.

Nkwinti argued that Hlongwa’s appointment needed to be ratified by Cabinet.

In September last year Future Growth, a division of Old Mutual which acts as an agent to a number of companies that hold bonds issued by Umgeni Water, threatened to withdraw R3 billion worth of bonds if the former water and sanitation minister, Nomvula Mokonyane, did not stop meddling with Umgeni’s board.

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