News

New R151m scandal in Emfuleni as Hawks launch probe over fraud and corruption

2019-09-16 01:15

Top investigators to look into fraud, corruption and maladministration allegations in the awarding of contracts in the Sedibeng District Municipality

Hawks boss Godfrey Lebeya has appointed a task team of top investigators to probe allegations of fraud, corruption and maladministration in the awarding of contracts in Gauteng’s Sedibeng District Municipality.

City Press can confirm that the team’s appointment follows a march last week in which more than 700 people descended on the Hawks’ headquarters in Silverton in Pretoria, demanding that the unit act on corruption in the Sedibeng area.

The march was prompted by a story in City Press two weeks ago that laid bare the extent of fraud, corruption and mismanagement in the awarding of five tenders totalling more than R300 million.

Read: How Emfuleni wasted millions: Officials, tenderpreneurs and private sector companies fingered for fraud

Emfuleni is one of three municipalities that fall under the jurisdiction of Sedibeng.

The other two are Midvaal and Lesedi.

The three municipalities incorporate the towns of Heidelberg, Meyerton, Vereeniging and Vanderbijlpark.

In an interview with City Press, Lebeya said: “A task team has been formed to beef up the investigations that were already under way.”

The team, he said, had already started its work and it was investigating all the allegations that were made to the Hawks by the residents during the march last week.

Once the task team concludes the investigation, he said, it would hand over the docket to the National Prosecuting Authority for a decision on whether action must be taken.

Lebeya’s investigation comes at a time when more evidence of alleged corruption is coming out of Emfuleni.

A fresh scandal

A forensic report obtained by City Press last week shows that the council paid R151 million for a fleet contract – double the amount it would have paid had officials used vehicle leasing companies that had already been contracted to the National Treasury.

Details about the contract are contained in a hard-hitting dossier compiled by Comperio forensic investigators.

The report shows how, in July 2013, Emfuleni handed Fleetmatics a three-year contract, through piggybacking, for the supply and maintenance of 277 vehicles.

Fleetmatics, owned by the politically connected but low-key businessman Tebogo Mogashoa, is a subsidiary of Talis Holdings.

On its website, Talis Holdings lists the Merafong City Local Municipality, Mogale City, Tshwane and g-fleet as some of its clients.

Comperio’s findings, submitted to council last month, show that the municipality ignored officials’ advice that the municipality use Treasury’s transversal fleet contract.

This, the report shows, would have saved Emfuleni more than 45% of the total amount spent on the contract.

A transversal tender is a contract negotiated by Treasury for goods and services, such as security and fleet services, required by multiple government departments at the same time.

Once Treasury has appointed service providers for a transversal contract, government departments, including municipalities, don’t have to advertise for tenders if they need goods and services that are already covered under the contract.

Departments wishing to participate in a transversal contract have to obtain permission from Treasury, and then sign a service level agreement with the service provider.

A senior official at Treasury told City Press: “In fact, we have told officials to inform us if they find service providers who beat our transversal rates so that we can include those service providers in our database.”

The dossier shows how:
  •  The council paid Fleetmatics a further R64 million after the contract expired in July 2016;
  •  Fleetmatics continuously struggled to deliver the cars ordered by the municipality;
  •  Emfuleni’s officials irregularly changed the interest rate from fixed to floating without informing the council, contributing to the increase in costs. Officials also increased the rate card by another 11%;
  •  Officials paid for invoices totalling R118 000 for an Audi Q7 after the car had been returned to Fleetmatics; and
  •  The council did not terminate the contract, but let it run after it expired in 2016.


No capacity

The report shows that, on September 6 2013, Emfuleni and Fleetmatics entered into an agreement for the supply of 277 vehicles.

On December 9 2013, Fleetmatics delivered 67 cars, excluding compactors, instead of 100, the number ordered by the council.

On January 24 2014, the council wrote to Fleetmatics, complaining about its failure to deliver vehicles as agreed in the contract.

The company delivered another 18 cars on February 3 2014 after the council had expressed its displeasure for the second time.

On March 24 2014, officials wrote to Fleetmatics requesting the company urgently deliver 38 vehicles that should have been delivered at the end of February.

In May 2014, the council and Fleetmatics amended the delivery schedule, but the report shows that the fleet service still failed to deliver, forcing the municipality to write a strongly worded letter, giving it seven days to deliver the outstanding vehicles, most of which were waste management compactors.

Due to pressing service delivery needs, Fleetmatics was forced to sign a five-month lease in October 2014 with another service provider for the supply of eight waste management compactors at a cost of R2.3 million.

In July 2015, the report shows, Fleetmatics had still not delivered 12 trucks, including water tankers and fire engines.

“The delivery of the items depicted below is behind schedule by approximately one year and 11 months. Numerous requests have been made to you regarding delivery of the aforesaid items and you have failed to provide an indication as to when the said vehicles will be delivered,” the report read.

The council placed different orders, totalling 163 cars, which Fleetmatics eventually delivered after significant delays.

In conclusion, Comperio said that “the service provider failed to deliver in terms of the contract, but senior management refused to terminate the contract and to go out to tender to replace Fleetmatics with a service provider that could deliver in terms of the needs of the municipality.

“The contract was not properly managed and controlled by the fleet management department as the contract was never extended or terminated, resulting in irregular expenditure being incurred,” said the report.

Fleetmatics responds

Mogashoa, however, denied that his company failed to deliver.

In an interview with City Press, he explained that Fleetmatics delivered all general cars as soon as council placed the order.

The company, he said, struggled with compactors, fire engines and other customised vehicles because car manufacturers don’t just have such vehicles available.

“Manufacturers don’t keep customised cars in stock. After placing an order, manufacturers have to go and customise a truck to a client’s specifications, which quite often takes up to six months,” he said.

Mogashoa explained that, according to the contract, the delivery date of the cars ordered by the council ranged from between 10 days and six months, depending on the type of vehicle and its specifications.

The contract, Mogashoa said, did not expire in July 2016 as stated in Comperio’s report.

The contract’s expiration was at the end of three years from the day the last car was delivered to the municipality – which happened in April last year.

From there, Fleetmatics started supplying the services on a month-to-month basis at the request of the municipality.

Fleetmatics has not been paid R151 million, Mogashoa said, adding that he had invoiced R170 million.

“We have, however, only received payments totalling approximately R140 million. Emfuleni is therefore in significant arrears of approximately R28 million.”

Regarding the Audi Q7, Mogashoa said the extra billing was related to excess mileage and accident damage. The change from fixed to floating interest rates was by mutual agreement, he added.

One senior council official said that, other than delays in delivering some of the cars, it didn’t look like Fleetmatics had done anything wrong.

“He [Mogashoa] appears to be a businessman with integrity,” said the official.

Municipal spokesperson Lebo Mofokeng said Comperio had presented the council with a number of investigative reports into possible fraud and corruption in the awarding of tenders. All the reports, she said, would be tabled in council on Thursday.

“The executive mayor committed to protect and promote the image and constitutional status of the Emfuleni Local Municipality,” Mofokeng said.


Read more on:

godfrey lebeya
emfuleni
hawks

Next on City Press

Read News24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Add your comment
Comment 0 characters remaining

October 13 2019