The Yellow Plant tender

The City of Tshwane, under mayor Randall Williams, issued a press statement this week about the R4billion worth of corruption under the previous ANC-led government that was now being uncovered by the current DA-led administration. In the statement, he made specific reference to the now-notorious Yellow Plant tender – a R100 million-a-month bonanza for corrupt officials and their relatives. But the report that revealed the tender irregularities also revealed some uncomfortable truths about the Tshwane Metro, and gave an indication how long it was going to take to get the municipality straightened out.

At the beginning of November 2020, accounting firm Nexus Forensic Services sent a probity report through to the Acting Municipal Manager of the Tshwane Metropolitan municipal council, detailing large-scale corruption, theft, fraud, collusion and mismanagement connected to a heavy-vehicle hire project (called the Yellow Plant tender), which is worth R100 million a month.

The report, which is admirable in its thoroughness, threw up a few surprises along the way. As part of its mandate, it needed to do a background check on the status of City of Tshwane’s employees. The city employs 26 000 people, both in a permanent or a contracted capacity.

The report revealed that 95 of these city employees have been dead for more than ten years. 179 employees, further, did not have ID numbers and – to all intents and purposes – didn’t exist. 4 707 employees were also directors of private companies and were linked in total to 11 419 commercial entities. These employees were also linked, through personal relationships, to 19 900 directors of companies.

Not one of these directorships, relationships or connections was disclosed by the employees concerned, which is a requirement according to the Municipal Finance Management Act. In total, therefore, 18% of the city’s workforce is quietly and illegally doing business with the city.

“This probity report is damning,” said Williams in the city’s press release. “It indicates widespread abuse of the city’s supply chain processes. It implicates officials at various levels. It implicates bidders and companies who were clearly colluding together. Fundamentally, at its heart it indicates how the ANC administrators in their short time in office failed dismally in providing the necessary oversight and leadership over supply chain management processes.”

“This is a toxic situation,” said a high-ranking official in the Metro who spoke on condition of anonymity. “We have people working for the city who are also politicians. This is a big problem. They are not working for the city in order to serve the public, they are there to fulfil their political ambitions and buy power.”

This latest tender has come a long way. It was first advertised in 2014, as a tender for the hire of general construction vehicles, plant, refuse removal vehicles, specialised vehicles, equipment and machines for a three-year period. The projected cost was R100 million a month, and it was awarded in the 2015/2016 financial year.

Almost immediately it was red-flagged as suspect. An internal report from 2018 identified huge problems: misconduct by officials; corruption; collusion; bribery; fraud; falsified claims; overbilling and overcharging; and an attempt to bribe the forensic investigator. The internal report pulled no punches – it recommended many disciplinary processes and several criminal charges. However, these came to nothing.

“Yes, people were suspended,” says the official. “But then they were reinstated. The criminal cases – they are still open but the people who were charged are back at work. Nothing has ever come of those charges. Despite the report, the tender just continued. Nothing was ever done.”

The problematic tender came up for renewal in 2020, and this time the Acting City Manager, Ms. Mmaseabata Mutlaneng, commissioned a probity report around the process. The Nexus report has not only found that the tender process was so flawed as to be unimplementable, but has also highlighted serious governance failings within the municipality.

Part of the bid specifications was that the heads of different departments within the Metro that used these vehicles would provide a needs analysis, a cost analysis, and a procurement plan. These were either not done, or were incomplete. On that basis alone, the tender should never have been issued. However, it went ahead and was advertised. 709 companies responded.

Members of the Bid Evaluation Committee – the people who examine and adjudge the bids – had direct links to 46 of these companies. 71 of these companies had City employees as directors, while three of the companies were wholly owned by city employees. 35 companies all had the same directors, and they all gave sureties and references to each other.

It also emerged, during interviews with the Bid Evaluation Committee and the Bid Adjudication Committee (which plays an oversight role), that many members of these committees did not understand the documents they were meant to peruse. As a result, the scoring was uneven and incomplete. Five companies, that should have passed with flying colours, were disqualified. On the other hand, companies that did not provide the correct documentation such as tax compliance certificates or other compliance measures, nevertheless got through to the second round.

The conclusion of the Nexus report was that the tender process as so ‘tainted with irregularities’ that it would need to be cancelled. In fact, the report went on, the process was so flawed that the city laid itself open to ‘judicial review’ from any losing bidder, who would have grounds to take the city to court.

While one has to congratulate the city for taking the trouble to examine the tender process for this lucrative service, and embarking on this investigation, the story does not end there.

The entire staff of the Metro Group Audit and Risk (GAR) department have been receiving death threats. A letter, dated November 26 2020, to the Acting City Manager and the local head of police Lt. Gen. Johanna Nkomo, sets out a number of instances of intimidation and threats from municipal employees and their relatives. The investigators make it clear, in their letter, that their job requires them to make enemies. In reviewing tenders from the city, they have identified ghost employees, irregular salary increases, tender irregularities, scams in land sales and acquisitions, Covid-19 PPE corruption, and inflated payments to service providers. They have also been reviewing expenditure which has affected a number of politically connected contractors. However, this has led to severe pushback from the implicated officials.

An investigator in the GAR department managed to discover and infiltrate a Whatsapp group run by a number of disgruntled employees. He uncovered a number of plans to discredit members of the Audit and Risk team, and cast doubt on the credibility of their reports. One such tactic involved bringing false accusations of impropriety against them (sexual harrassment), stealing files and records, starting a whispering campaign that the investigators were being manipulated by a political party, and intrusive intelligence-gathering about their private lives. The officials’ cars have been broken into, their houses burgled, they have received threatening phone calls.

They glumly predict that, now that they have cancelled the vehicle-hire tender, things are only going to get worse, and they have asked for the city to provide them with protection.

“We have not had a response from the city,” they say. “But this cannot continue. The entire municipality is compromised, and there are only two ways to solve this problem. The SCM function must be outsourced and tender processes must be made public. Legal action must be taken against implicated officials, and investigators must be protected.”

Randall Williams, in his press statement, has made it clear that the city would take immediate action. Members named would be suspended and disciplined. The entire report would be handed over to the Special Investigations Unit (SIU) for further criminal investigation. In the meantime, ad hoc arrangements would have to be made for service delivery to continue while the corrupt tenders were re-issued. He asked for the city’s residents to be patient on the rocky road ahead.

“There is political will to solve the corruption in Tshwane,” says one source. “But unfortunately it is too slow. It is the tortoise, we need the hare.”

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