WeeklySA_AdminGraft: Racket entailed inflation of department of correctional services procurement contracts millions of rand for predetermined contractors…
By Monk Nkomo
The Special Investigating Unit (SIU) has welcomed the decision by the Special Tribunal which declared as invalid, two Independent Development Trust (IDT) contracts valued at R1, 6 billion and ordered the five companies involved to pay back all the profits gained from these contracts between 2011 and 2012.
The Tribunal reviewed the contracts following an intensive investigation by the Special Investigating Unit (SIU) into the contracts that were awarded by IDT on behalf of the Department of Correctional Services during this period. The Special Tribunal this week reviewed and set aside two contracts worth R1.6 billion that the IDT had awarded to five companies to implement projects for the Department of Correctional Services between 2011 and 2012. The contracts were declared unlawful and invalid and the companies ordered to pay back all profits they had received from these contracts.
The investigation by the SIU revealed that the IDT failed to follow the applicable statutory and regulatory procurement provisions governing public procurement as set out in the Constitution of the Republic of South Africa, in concluding the contracts with the companies. The IDT is a schedule 2 State-owned entity which manages the implementation and delivery of critically needed social infrastructure programmes on behalf of the government. In a statement released by the SIU, the Department of Correctional Services appointed the IDT in 2011 as an implementing agent to manage the implementation of security fencing, parameter fencing, intercoms and conditions audits, and other infrastructure projects at various correctional centres in South Africa.
Following its appointment as an implementing agent, the IDT contracted Secelec Consulting Engineers (Pty) Ltd, Bakone Consulting Engineers (Pty) Ltd, and Bakone Secelec Consulting JV 2011 as transactional advisors to implement the building of fences around various prisons at a cost of R492 960 564.66. The contract was later cancelled.
In 2012, the IDT appointed Manyeleti Consulting SA (Pty) Ltd and SA Fence and Gate JV as transactional advisors for a similar job. The budget for the initial tender increased by R72 454 350.62 or 15.2%. However, the total budget increased to R861 255 544.40. This escalation represented 81% of the approved budget and way above the permitted 20% deviation as per the National Treasury regulations. The Tribunal found that the tender or contract award was predetermined.
The decisions of the IDT and the resulting contracts, which had now been reviewed and set aside by the Special Tribunal, had a total contract value of R1,660,434,091.00. Over and above the SIU’s independent investigations and analysis of the irregular contracts entered into by the IDT to implement the Department’s projects, the Office of the Auditor-General of South Africa, during its audit, found that the same contracts did not comply with the procurement prescripts and resulted in the Department incurring an irregular expenditure of R1,660,434,091.00 that had to be disclosed under irregular expenditure.
The Special Tribunal ordered the five companies to render the full accounts of all the payments they had received under the contracts awarded by the IDT and reasonable expenses incurred, supported by necessary vouchers. Following the calculations of expenditure to service the now illegal contracts, the companies shall pay whatever profits that were earned. Furthermore, the companies were ordered to cover the legal costs of the review application brought by the SIU. The SIU welcomed the decision of the Special Tribunal, as it formed part of the implementation of investigation outcomes and consequence management to recover financial losses suffered by the State.
The Special Tribunal has a statutory mandate to recover public funds syphoned from the fiscus through corruption, fraud and illicit money flows. The SIU was in terms of Proclamation R28 of 2017 authorized to investigate allegations of corruption and maladministration in the affairs of the Department of Correctional Services and to recover any financial losses suffered by the State due to corruption and negligence.
The SIU was empowered to institute a civil action in the High Court or a Special Tribunal in its name, to correct any wrongdoing uncovered during both investigations caused by acts of corruption, fraud, or maladministration. In line with the Special Investigating Units and Special Tribunals Act 74 of 1996, the SIU would refer any evidence pointing to criminal conduct it uncovered to the National Prosecuting Authority (NPA) for further action.
