The SIU (Special Investigations Unit) recently completed and handed over their report of their investigation into the procurement of, or contracting for goods, works and services, including the construction, refurbishment, leasing, occupation and use of immovable property, during, or in respect of the National State of Disaster, as declared by Government Notice No. 313 of 15 March 2020.
Of the 43 ‘sub investigations’ in the Eastern Cape Province the Nelson Mandela Bay Metropolitan Municipality was called out for the following:
1. Nelson Mandela Bay Metropolitan Municipality (“NMBMM”) and HT Paletona Projects (Pty) Ltd
Nature of Allegation:
On 26 August 2020, the SIU, through a whistle-blower received an allegation about irregularities at the NMBMM. The allegations relate to the infrastructure projects which were implemented to assist the NMBMM to curb the spread of the pandemic during the COVID-19 Disaster period. It was alleged that the NMBMM received an approval from NT for the reallocation of uncommitted funds allocated in the 2019/2020 financial year to support the alleviation of the declared disaster on COVID-19. It was alleged that the former City Manager Ms Noxolo Nqwazi (“Ms Nqwazi”), forwarded the name of the company HT Paletona Projects (Pty) Ltd (“Paletona”), to be utilised for various projects. Paletona is allegedly from Welkom in the Free State Province and it was appointed for the construction of 2 000 toilets meant for the informal settlement which were never delivered. The whistle-blower further alleged that the prices for the construction of the toilets were inflated and that a company outside the Eastern Cape Province was appointed to provide chemical toilets to informal settlement communities. The whistleblower also alleged that there was collusion between the service provider and Ms Nqwazi.
Summary of findings:
The SIU investigation found that the goods and services rendered by Paletona related to various projects which involved the construction of 2 000 erven of toilets, stand pipes and 2 000 aerators for informal settlements within the jurisdiction of the NMBMM. The total value of the ‘fixed price’ contract is R24 600 000 (exclusive of VAT). The SIU investigation has established that the memorandum motivating for the appointment of Paletona resulted in the appointment of the latter on 17 April 2020. It has also been found that Paletona was appointed before the award letter which was only issued on 28 April 2020.
The declaration of a Disaster Management period as a consequence of the outbreak of COVID-19 pandemic was used to circumvent proper procurement processes and a non-existent emergency situation was thus relied upon. From the date of appointment of Paletona, only 200 erven of toilets, stand pipes and aerators for the informal settlements have been built. Paletona was appointed following Municipal SCM Regulation 36(i) and (v), this regulation is only used in cases of emergencies. After the appointment of Paletona a further two service providers submitted their quotations. The SIU viewed the submission of the two quotations as irregular since Paletona was already appointed.
Disciplinary action:
The SIU referred two letter recommending disciplinary action against an Acting executive Director: Human Settlements, Mr Mvuleni Mapu (“Mr Mapu”) and Acting City Manager, Ms Noxolo Nqwazi (“Ms Nqwazi”) both of the NMBMM on 31 March 2021. The NMBMM informed the SIU that Mr Mapu was suspended and later came back to the office. In respect of Ms Nqwazi, the NMBMM advised that they are awaiting Council resolution.
Civil Litigation:
The SIU issued a letter to the NMBMM to stop paying HT Paletona which was effected by NMBMM. HT Paletona approached the High Court to force NMBMM to pay the money owed to them. The SIU applied to join the proceedings to oppose the application. The matter was heard on 19 August 2021 and judgement is reserved.
2. KaziForce (Pty) Ltd (“KaziForce”)
Nature of Allegation:
On 20 July 2020 the SIU received an allegation that KaziForce was irregularly awarded a tender valued at R1 844 700 by NMBMM. It was alleged that the Director of KaziForce, Mr Mamella Maqula is a close family member of a sitting NMBMM African National Congress Councillor, Mr Gamalihleli Maqula. It was also alleged that KaziForce had over-charged the NMBMM for the PPE they delivered.
Summary of Findings:
The SIU investigation revealed that Mr Gamalihleli Maqula was the Director of KaziForce from 24 April 2017 and he resigned on 26 May 2018. The current sole Director of KaziForce, Ms Mamella Maqula, is a sibling of Mr Maqula. The SIU investigation further revealed that during the procurement process of the PPE, the NMBMM did not require companies to declare relationships with employees of the municipality and therefore no MBD4 form was submitted by KaziForce.
The SIU investigation found that KaziForce used incorrect circulars when they submitted quotations to the NMBMM which resulted in them being over paid by R606 300 for the PPE they delivered.
The NT MFMA Circular 102, dated 28 April 2020 reflected the prices for the two types of masks, namely surgical masks (“Patient”) and surgical masks (“Health Care Worker”) as R10.22 per mask (Patient) and R12.48 per mask (Health Care Worker). Paragraph 4.9 of Circular 102 states that, “If prices are higher than those provided on Annexure A, a price variance of up to 10% of prices on Annexure A will be allowed. Any deviation to this provision must be approved by the accounting officer or delegated person based on a justifiable reason”. The SIU established that KaziForce should have charged the NMBMM R11.24 per mask. The SIU investigation further established that the NMBMM paid KaziForce in excess of R606 300.
Mr Roger Ferreira (“Mr Ferreira”), Head Logistics and Demand Management Section was responsible for authorising and approving quotations and authorise orders to be issued. He failed to exercise due diligence by not complying with NT Circulars in the issuing and approving of these quotation which resulted in NMBMM incurring irregular expenditure.
Disciplinary action:
The SIU referred a letter recommending disciplinary action against a Senior Manager, Mr Ferreira of the NMBMM on 9 June 2021. The NMBMM informed the SIU that the matter is being processed and will provide feedback on the progress thereof.
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