- This week the state capture commission of inquiry is looking into allegations of corruption in the Free State.
- The focus is on a R255 million asbestos audit project in the province.
- Procurement processes were flawed, it has heard.
The state capture commission of inquiry has heard that procurement processes were manipulated in the awarding a controversial R255 million contract for an asbestos audit project.
The contract was secured by a joint venture between engineering consultancy firm Blackhead Consulting and Diamond Hill Trading 71 in 2014.
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On Tuesday, the head of the commission’s legal team, advocate Paul Pretorius, SC, gave a lengthy opening statement about what the inquiry was expected to hear about alleged corruption in the Free State.
Pretorius said the pocketing of millions of rand, which were meant to improve the lives of the poor, was a “sorry tale”.
Former Free State economic development MEC Mxolisi Dukwana previously testified that government officials, including the province’s former premier, Ace Magashule, received kickbacks for helping to facilitate this.
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He presented a spreadsheet, called a “cost of business schedule”, which was produced by the company that the contract was awarded to.
Several initials or names in the schedule were noted as TZ, TM, AM, OM, MEC, MZ, Steve, JT and Diedericks.
Following the testimony, the commission’s investigators probed Dukwana’s allegations further.
Pretorius broadly presented these findings to the commission on Tuesday.
He said: “The evidence shows that people on that or initials on that coincide with the initials of officials who received gratification or income or benefits from the monies arising from the contract and importantly, those persons, to a large extent, were persons involved in the procurement process in facilitating a bid entirely overpriced, massively overpriced without any compliance as found by the Public Protector with the procurement prescripts.”
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These are some of the findings uncovered by investigators:
Gauteng/Free State project – No competitive bidding
Pretorius told inquiry chairperson, Deputy Chief Justice Raymond Zondo, that the asbestos project started in Gauteng and was extended to the Free State.
In Gauteng, a panel of service providers was appointed, he said, adding that two panels were appointed – one to carry out general housing work and another to eradicate asbestos. The idea was to identify the extent of the asbestos in low-cost housing to meet the needs of people who could not afford housing of their own, he said.
However, Pretorius said there was no evidence of any competitive bidding in relation to the appointment of either panel.
“A panel of eight contractors was appointed to do an audit of asbestos in Gauteng and they did so on the basis of instructions to perform work. The price that Blackhead charged, or the assessment, not the eradication, was R650 per unit.”
The whole procurement process at that stage was declared irregular by the Auditor-General, he said.
Kickbacks
According to Dukwana’s evidence, the amount reflected on the “cost of business” schedule was paid as gratification in relation to the Free State asbestos contract.
Pretorius said Blackhead Consulting’s owner, Edwin Sodi, was interviewed and had given “much of the evidence necessary to, at the very least, determine the authenticity of the document”.
Pretorius said the allegation was that TZ, believed to refer to former national government director-general Thabane Zulu, was at least involved, if not instrumental, in the participation and budgetary process of unlocking funds.
The second set of initials, TM, was alleged to be the initials of Nthimotse Mokhesi, also known as “Tim”, the former accounting officer and head of department (HOD) in the Free State human settlements department.
“We know the initials TM appears in the spreadsheet. We know he was involved in signing the contract,” Pretorius said.
Referring to the initials AM, Pretorius said: “We know the former premier’s initials were AM, Mr Magashule, and we know there has been evidence of certain payment made to his office for present purpose, but the legislation is clear, whether you receive an amount of money for yourself or for others it still qualifies as an offence in terms of the legislation.”
Pretorius also spoke about MZ, believed to be Martin Zwane, who also allegedly received money. The evidence leader said there was an invoice for an amount of R1.5m.
He also mentioned Steve – an engineer who was paid for engineering work carried out on behalf of a joint venture.
Sodi made a “concession” in relation to JT, who he identified as Jimmy Tau, a prominent former Kaizer Chiefs and Orlando Pirates footballer. He said he appointed Tau as his business development manager and acknowledged that Tau received money and that there was an upfront payment of R4.4 million.
Vehicle purchases revealed
Pretorius spoke about payment to a TZ, reflected in the accounts of Blackhead.
The initials TZ were identified and that payment was recorded on the receiving end of the motor dealer in Pietermaritzburg as Mr Zulu. In one transaction, the money was allegedly used to buy a Maserati for a Mr Ntuli.
A second transaction of R600 000, which was apparent to have been made by Sodi, again reflected TZ on the recipient’s side.
“Mr Sodi pays R600 000 to the motor dealer and it is used as deposit for a range rover bought by Mr Zulu. The explanation for that is that Mr Zulu owns a lounge, TZ Lounge in Pietermaritzburg. It appears to be an entertainment establishment. On one version a R600 000 reflected a tab run up by Mr Sodi at the lounge. On Mr Zulu’s version, it is that it was monies owed by Mr Sodi related to goods and services.”
Property payments – from tender winner to tender granter
Pretorius also mentioned a payment made to T Mokhesi for the purchase of a property.
Mokhesi, who is believed to be represented by the initials TM, signed off on the asbestos contract in his capacity as human settlements Head of Department.
“So, an amount of R650 000 is paid via a trust through attorneys which is used to buy a property in which, according to investigators, it is where Mokhesi lives but the explanation of Mokhesi says this was a joint business venture [and] he and Sodi became friends and decided to invest in a property and there is an agreement which shows how the income from rentals should be divided, and whether this is all genuine or not can investigated.
“What is significant here is that a person involved in a grant of a tender of R250 million, the accounting officer, cannot be in business with the recipient.”
The commission indicated that Mokhesi was expected to give testimony on Wednesday.
