Fixing rural roads: R300m spent. And not a single tender
A report recommends that criminal charges be brought against the former Amahlathi municipal manager
The Special Investigating Unit (SIU) is probing how four Eastern Cape municipalities spent nearly R300m on road maintenance equipment and water tanks without any of the contracts going out to tender.
SIU spokesperson Nazreen Pandor confirmed investigations were under way in the Amahlathi, Mbhashe and Raymond Mhlaba local municipalities and the Alfred Nzo district municipality.
“The Amahlathi report has been handed over to council to process. The other three are still being investigated and will be completed by March 31,” Pandor said.
The matters under investigation are: The Amahlathi Local Municipality, northwest of East London, spent more than R92m to buy machinery to re-gravel less than 30km of road.
The Mbhashe local municipality, north of East London, spent more than R72m buying equipment three years ago to re-gravel about 500km of road.
The Raymond Mhlaba local municipality, in the Amathole district, spent R42.3m to re-gravel 600km of road.
The Alfred Nzo district municipality spent more than R75m on buying 15 water trucks, at an average of more than R5m per water truck, without it going to tender. Industry experts said this week the going rate for a water truck was between R1.2m and R2.2m. The Amahlathi report, seen by Times Select, was handed over to the council last February, but has not yet been tabled in council. It recommends that criminal charges be brought against former municipal manager King Socikwa, a company named Kwane Capital and its director Mcebisi Mlonzi, a businessman said to have close links to the local ANC.
The report alleges Kwane Capital, under its director Mlonzi, previously known as Laman Financial Services, entered into an agreement with a municipality under the false pretence that it would own the equipment after renting it for a certain period.
Approached for comment, Mlonzi declined to respond.
“This matter has also been referred to the Asset Forfeiture Unit,” the report reads. Pandor confirmed the unit had referred criminal and disciplinary matters to these municipalities.
The SIU billed the Amahlathi municipality R8m for conducting the investigation. Pandor confirmed that, saying the unit was “in discussions” about this with the municipality.
Contacted for comment, Socikwa – whose contract was not renewed in 2017 – denied any wrongdoing, but declined to expand on that.
Amahlathi municipal manager Ivy Sikhulu-Nqwena confirmed receiving a report from the SIU in February last year.
“The municipality is to consult with its attorneys for legal guidance in implementing the report,” Sikhulu-Nqwena said, adding the municipality had applied to the National Treasury for an exception on the R8m bill.
However, Sikhulu-Nqwena said since purchasing machinery, Amahlathi had re-gravelled less than 30km of road. She said the municipality had identified that it needed to upgrade and maintain rural roads within its boundaries.
Raymond Mhlaba municipal spokesperson Cynthia Mokitimi also confirmed to Times Select that her municipality was under investigation by the SIU for spending R42.3m on road machinery.
“The municipality heard of the contract in another municipality which had acquired the services of Kwane Capital. This service included purchasing of new equipment, maintenance of the equipment and tracking. Kwane Capital was contacted for a quotation. Subsequent to receiving the quotation a cost-benefit analysis of the rental stock and the instalment sale stock was done,” Mokitimi said.
She confirmed the municipality did not put the contract out to tender, but had instead used Section 32 of SCM Regulation, which allows a government unit to “piggyback" on an existing contract by another sphere of government. She said the municipality used the machinery to re-gravel 600km of road.
Mbhashe municipal spokesperson Kolwane Ncebakazi, who told Times Select he was aware of the SIU investigation, said in the past three years, the municipality had used machinery to re-gravel more than 500km of road.
Lubabalo Majenge, spokesperson for Alfred Nzo district municipality, which is under investigation for the purchase of very expensive water tanks, confirmed it had spent R75m on 15 water trucks to transport water throughout the district during the drought.
“They were bought in January 2015. They are now ours. We only paid instalments until February 2018,” Majenge explained.
Asked why the trucks were so expensive, he replied: “That is what the investigation is about – were the processes correctly followed?”