Report on an investigation into complaints relating to improper awarding of
tenders by municipalities in Limpopo and North West
Monday, 16 August 2010
The Public Protector submitted her Report on an investigation into complaints
relating to the improper awarding of tenders by municipalities in the Limpopo
and North West Provinces to the Speaker of the National Assembly on 13 August
2010.
The investigation was the result of complaints lodged with the Public Protector
by Mr E Roets, the National Chairperson of AfriForum Youth and Mr I Kekana, the
Head of Communications in the Limpopo Province of the Congress of the People,
which were based on a newspaper report published on 21 February 2010. The
complainants requested that the awarding of tenders by nine municipalities in
the Limpopo Province and one municipality in the North West Province to an
entity, referred to as SGL Engineering Projects (SGL), in which Mr J Malema, the
President of the ANC Youth League, allegedly had an interest, should be
investigated.
The municipalities involved were:
(a) Bojanala Platinum District Municipality;
(b) Mopani District Municipality;
(c) Greater Sekhukhune District Municipality;
(d) Waterberg District Municipality;
(e) Vhembe District Municipality;
(f) Greater Tzaneen Local Municipality;
(g) Makhado Local Municipality;
(h) Greater Letaba Local Municipality;
(i) Lepelle-Nkumpi Local Municipality; and
(j) Mutale Local Municipality.
The investigation focused on:
(a) Compliance by the municipalities in the awarding of tenders to SGL with the
legislation and other prescripts regulating procurement in local government;
(b) Compliance with quality assurance requirements before payment for the
procured services and;
(c) The governance and administration of procurement by the municipalities to
determine whether it generally complies with the prescribed legal framework
relating to supply chain management in local government.
The investigation comprised visits to all the municipalities, interviewing of
municipal managers, chief financial officers and other senior officials involved
in supply chain management, interviewing of witnesses, studying of the relevant
tender documentation, legislation and policy prescripts. Site inspections of
several of the projects relating to tenders/contracts awarded to SGL were
conducted. The public documentation held by the Companies and Intellectual
Property Registration Office (CIPRO) in respect of SGL were perused as were
relevant records of the Engineering Council of South Africa.
From the investigation the Public Protector concluded that Mr J Malema was
involved with SGL during a period that only three tenders were awarded to SGL by
the municipalities referred to above (i.e. on 30 July 2009, 15 October 2009 and
20 November 2009) In one such case, the bid proposal was submitted before he
became a director of SGL. In the other two cases, the bid proposals were
submitted in the name of SGL Engineering Projects CC, which at the time had
already been converted into the private company, SGL Engineering Projects (Pty)
Ltd. Mr Malema’s interest in SGL was therefore not disclosed in the bid proposal
documents.
It is doubtful whether these tenders would not have been awarded to SGL by the
municipalities involved, had the bid proposals been submitted in the name of the
private company, as the evaluation was done mainly on functionality and the
profile of the bidder entity was of little consequence.
The findings of the Public Protector are that:
(a) It could not be determined whether:
(aa) The tender awarded to SGL by the Makhado Local Municipality;
(bb) Four contracts awarded to SGL by the Greater Sekhukhune District
Municipality; and
(cc) One contract awarded to SGL by the Lepelle-Nkumpi Local Municipality
complied with the relevant procurement legislation and other prescripts, due to
poor procurement record keeping by the said municipalities;
(b) Except for the tenders/contracts referred to in paragraph (a) above, in
respect of which no finding could be made, the tenders/contracts awarded to SGL
by the municipalities were the results of procurement processes that generally
complied with the relevant provisions of the Constitution, the Municipal Finance
Management Act, 2003 and the Supply Chain Management Regulations.
(c) The completed projects relating to the tenders/contracts awarded to SGL by
the municipalities, referred to in the report, were generally of an acceptable
quality and standard;
(d) No verifiable information or evidence was presented or could be found from
the investigation that indicated that contract/tenders were awarded to SGL as a
result of improper influence due to friendships, comradeship, favouritism,
nepotism, political affiliations, interference or any other impropriety; and
The Public Protector made recommendations relating mainly to improving the
Supply Chain Management Regulations, the keeping of procurement records by some
municipalities, the reviewing of the Supply Chain Management Policies of some
municipalities and the improvement of the documentation relating to two
contracts entered into with SGL to reflect the correct status of the company and
the updated cover of professional indemnity insurance.
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