Road Accident Fund wants R60m for furniture lease - to avoid the sheriff
Times Select has reliably been informed the awarding of a contract has been finalised
The cash-strapped Road Accident Fund (RAF) is planning to pay up to R60-million to lease, instead of buy, office furniture so that it cannot be attached by the sheriff to settle claims owed to victims of road crashes.
Times Select has reliably learnt that the RAF's bid adjudication committee (BAC) had finalised the awarding of a five-year contract for the rental of furniture for its six offices for R2-million each per year. The offices include its head office in Pretoria and five regional offices in Pretoria, Johannesburg, East London, Cape Town and Durban.
The RAF evaluated the bids of two companies, including Gauteng-based office furniture supplier Gxakwes Projects. Last year, Eskom became embroiled in controversy after it asked the Treasury to approve an extra R24-million “expansion” of a contract that the power utility had with Gxakwes Projects to supply 9,217 “operator and visitor chairs”.Meanwhile, the bid adjudication committee asked the RAF's acting chief executive, Lindelwa Jabavu, in January to recommend to the board to approve the tender.
The 10 of the 11 members of the RAF board, who have voting powers, were subsequently asked to cast their vote by March 5, via a round robin resolution, to either approve or reject the contract.
The RAF's core mandate is to compensate and rehabilitate victims of road accidents and their dependants. In the past financial year, it paid out R29.8-billion in claims.
In February last year, the RAF's former chief executive, Eugene Watson, was forced to tell claimants that they could not be paid because its bank account had been attached by the sheriff of the court.Times Select was informed that the RAF's chief financial officer, Rodney Gounden, had indicated to the company secretary, June Cornelius, in an e-mail early last month that the reason why they wanted to lease furniture “is due to the major disruption we face when assets are attached by the sheriff”.
“The board is aware of the attachments and the disruption to business as a result. We couldn't lease furniture on a RQF [request for quotation] basis because that would defeat the aspects of the PFMA [Public Finance Management Act]. Therefore we are doing a tender,” the email stated.
According to Cornelius's email which was sent to RAF executives and board members, Gounden further stated: “This tender is for the creation of a panel to supply furniture on a leased basis. The needs will still be assessed, as in the past, but now we will have a panel which will enable us to do this in accordance with the PFMA as well as in an efficient manner.”
Another document seen by Times Select stated that the RAF's “current furniture will remain unless it is attached by the sheriff or if the furniture needs to be replaced based on condition, age. Only in these instances will furniture be replaced.”
Referring to the latest tender, the document stated that the “fact that a budget is given does not mean we will have to spend that entire amount”.
According to the document, the RAF was forced to cancel a five-year national furniture contract on October 7 2014, that was awarded to M and F Business Furniture, which is incidentally the other company that has tendered for the latest contract.The contract awarded to M and F Business Furniture in November 2012 for a total amount of R10-million was cancelled after 22 months.
Steven Fish, managing director of M and F Business Furniture, said the RAF did not provide reasons for the cancellation of the contract.
“One of our directors reached out to the RAF in order to provide us with some clarity. They did meet but the RAF were unable to provide reasons for the termination, only that should any furniture be required in future they would issue new RFQ's [request for quotations] which we could repond to.”
He believed that the tender for the rental of office furniture had not yet been awarded.
Mzwakhe Gxakwe, CEO of Gxakwes Projects, said he was also still awaiting the outcome of the adjudication of the tender.
The Treasury said in an e-mailed response that it did not have the background information that led to the RAF's decision to lease instead of buy office furniture.
“If the decision to lease was based on the cost/benefit analysis report presented to the board, then it would have been OK, but if it is based on the fear that assets will be taken, then it is wrong.”The RAF's chief marketing officer, Phumelela Dhlomo, said in an e-mailed response that the tender process had not yet been concluded.
“The RAF's board has not yet considered for approval the RAF bid adjudication committee's recommendations regarding this tender.
“With regards to why the RAF is renting or leasing furniture instead of buying, it relates to our ability to settle claims immediately, resulting in a creditors book of about R8-billion.”
He said that creditors were generally paid within 150 days of settlement but that attorneys issued writs because they did not want to wait.
“The sheriff would then present these writs and attach our assets as we don't have cash to pay the writs. Consequently, our moveable assets like furniture, computers and printers are removed by the sheriff and sold.”
He said that in some cases staff were forced to sit on boxes “while trying to be productive” after the office chairs had been attached by the sheriff.
“Since the last attachment by the sheriff more than 12 months ago at our Menlyn branch [Pretoria], we have been leasing furniture and computer equipment. While the leasing option is more expensive, it does enable us to manage attachments.”