Madonsela reveals startling admission by On-Point’s Gwangwa

2012-10-10 15:10
Xolani Mbanjwa
Lesiba Gwangwa, CEO of On-Point Engineers, admitted during a probe by Public Protector Thuli Madonsela that he had acquired a shelf company solely for the purpose of clinching a R52 million tender to administer contracts in the department of roads and transport – a tender that was declared fraudulent by Public Protector Thuli Madonsela today.

Madonsela addressed the media in Pretoria where she revealed the findings of an 18-month investigation into the tender.

Read City Press’s exposé on the report here.

Gwangwa last month appeared in the Polokwane Magistrates’ Court on charges of fraud and corruption. ANC Youth League leader Julius Malema is among his co-accused.

Madonsela today lashed the Limpopo department of roads and transport for fraudulently awarding the R52 million tender to a company in which Malema’s family trust held shares.

Madonsela also found that On-Point had lied in its bid documents that it had 9 years experience in the construction industry, whereas it had only been set up a few weeks prior to the tender being advertised.

She also found that millions were paid by On-Point to Malema’s family trust and other trusts. These amounted to kickbacks according to Madonsela.

On-Point was awarded the tender in 2009 to oversee and supervise the work of professional service providers employed by the department to plan, design, build, upgrade and maintain roads and bridges in the Limpopo province.

“There is incontrovertible evidence confirming that On-Point entered into the alleged back-to-back agreements with some of the professional services providers doing work under its supervision on the basis of which On-Point had to do some or most of the work and was to be paid for such by them.

“In one case, the professional service provider was only entitled to 5% of the amount paid by the department as its input was confined to reviewing work done by On-Point,” said Madonsela.

Madonsela has asked the State Attorney to probe double payments made to On-Point by service providers and also the “questionable” relationship between On-Point and senior officials in the department of roads and transport.

“That On-Point was given preferential treatment is without doubt. The unanswered questions are compounded by the fact that On-Point knew about and started preparing for the bid some time prior to September 2009 (when it was advertised).

“On-Point should never have been awarded the tender as it did not qualify by a long stretch. The bid it presented to the department on 29 September 2009 for the PMU tender consisted of a deliberate and fraudulent misrepresentation in respect of the profile, composition, experience, personnel, assets, annual turnover and contribution to youth business development,” said Madonsela.

She said a crime of fraud had been committed and should be investigated.

Madonsela said the failure by the department’s bid adjudication and bid evaluation committees, including the head of department Ntau Letebele, “to perform a due diligence test on and verification of its functionality and compliance with the requirements of the bid, was improper and constituted maladministration”.

She also found that Malema’s Ratanang Family Trust was paid more than R2 million in the form of “dividends and loans”.

The money was also used to buy Malema’s farm.

“The amount of R1 million withdrawn five days after one of the kickbacks was paid under the back-to-back agreements is further accounted for in the bank statements as having been paid towards the Ratanang Farm,” said Madonsela.

She said other payments of R160 000 and R100 000 were paid towards Malema’s Sandton property.

Madonsela has, among other things, recommended that:

» The Limpopo head of department cancels the tender;

» The State Attorney institutes legal proceedings against On-Point;

» Treasury imposes a restriction penalty on On-Point (a blacklisting of the supplier);

» Treasury must reconcile all double payments made to On-Point and recoup the money;

» Disciplinary steps be instituted against senior department officials from the bid evaluation and bid adjudication committees in connection with impropriety, unlawfulness and maladministration pertaining to their awarding of the tender to On-Point Engineers;
 
» The Master of the High Court should take urgent steps to investigate the Ratanang Family Trust and the Gwangwa Family Trust with specific reference to payments made to these trusts by On-Point; and

» The Hawks should investigate the department, On-Point and all other companies the received money through the deal.