Publications
Partners
State-owned enterprise Transnet could be forced to reverse its decision to suspend the deal it signed with a company regarding a multibillion-rand Durban Container Terminal contract last year.
After deciding to suspend the CMI Emtateni joint venture’s R4.2 billion contract to expand a section of Durban’s port in November because of alleged irregularities, Transnet was last week informed that there was nothing untoward in the way the contract was awarded.
Mkhwanazi Inc, appointed by Transnet to conduct an investigation into the contract, released a draft forensic report that found that some of the allegations were baseless.
In the executive summary, which City Press has seen, Mkhwanazi Inc also found no irregularities relating to the industry grading requirement for one of the joint venture’s partners.
Instead, Mkhwanazi Inc punched holes in the report Transnet used to suspend the entity. In the report, Mkhwanazi Inc said that the earlier report used as the basis for the suspension:
. Made material and substantive errors in coming to certain factual findings;
. Used these erroneous findings to make conclusions, impute intent and brand persons; and
. Disregarded easily obtainable evidence that may contradict their narrative.
Investigator Paul O’Sullivan, who submitted the unsolicited forensic report to Transnet, described Mkhwanazi’s report as the “shoddiest draft forensic report I have seen in 45 years”.
O’Sullivan’s report, done under the auspices of nonprofit organisation Forensics for Justice, accused CMI Emtateni and its partners of improprieties such as getting a Construction Industry Development Board grading within an unusually short period of time.
His report also singled out PGM Engineering owner Philani Mavundla as a tax dodger following a 2016 SA Revenue Service judgment amounting to R96 445 and PGM Engineering’s 2014 civil judgment amounting to R29.2 million.
O’Sullivan had also said that PGM Engineering was the “original intended bidder”.
However, Transnet’s report found that PGM Engineering was not part of Emtateni, which partnered with CMI, and questioned O’Sullivan’s basis for saying PGM was the original intended bidder.
One of O’Sullivan’s recommendations was that the state-owned enterprise suspend CMI Emtateni joint venture’s five-year contract that was awarded on July 3, and freeze an R87 million payment for work done.
Transnet duly complied and also implemented O’Sullivan’s recommendation to conduct its own investigation. The Transnet report also found no irregularities related to the Construction Industry Development Board grading.
The firm should not be paid for the “shoddy” work “that has taken six weeks to produce”, O’Sullivan said.
“Mkhwanazi’s report has remained completely silent on the bulk of our allegations. It’s clear they’ve not performed a diligent investigation,” he said.
“In Mkhwanazi’s favour, we’ve already recorded them advising us in December 2018 that they know nothing about forensic investigations and rely solely on their subcontractors. It is clear that they’re merely middlemen in a procurement process,” he said.
Transnet spokesperson Molatwane Likhethe said: “Transnet has not finalised its investigation into the CMI Emtateni joint venture’s berth deepening project. Transnet would like to be afforded an opportunity to finalise the report and share the finding once all necessary processes have been completed.”
CMI Ematateni JV board chairperson Enrico Alicandri said that he could not comment in detail. “We’re, however, surprised that O’Sullivan is in possession of a confidential report ... We have tendered our cooperation with Transnet’s investigation and we are confident that we’ll be exonerated from O’Sullivan’s vexatious allegations.”
Since the CMI Emtateni joint venture was suspended, Transnet has incurred about R38 million in standing time penalties.
The R4.2 billion tender was part of the R7 billion planned expansion of the Durban port, which handles 65% of local container cargo, and was aimed at altering berths 203 to 205 to improve safety.
Studies found existing quay walls did not meet the minimum safety standards and that there was a risk of potential quay wall failure.
There are a limited number of berths for large container vessels and this has resulted in delays and vessels needing to wait in queues.
