Safcol closed tender under fire

10 April 2016 - 02:00 By THANDUXOLO JIKA

The acting CEO of a parastatal allegedly awarded a R10-million tender to his business associates without declaring the conflict of interest. Harvey Theron, the acting CEO of South African Forestry Companies, approved the awarding of a tender to Analytical Risk Management - a company run by his business partners, including John Duarte, the former husband of ANC deputy secretary-general Jessie Duarte.Analytical Risk Management and Theron's company, Prospero Digital Agency, are subsidiaries of Vumela Holdings, a company run by John Duarte, his son Yusha Duarte and Malcolm Mabaso, the political adviser to Mineral Resources Minister Mosebenzi Zwane.The company was listed as a subsidiary on the Vumela Holdings website, but the website was taken down after Business Times sent questions last month.In December, Theron appointed Analytical Risk Management, which trades as 2RM, to conduct a due diligence investigation into Safcol's performance and financials, without following normal tender processes.This was directly after Theron, who was on the board, was named acting CEO following the resignation of then CEO Nomkhita Mona.Theron denied any links to John Duarte when contacted for comment and refused to explain how his company was listed under Vumela Holdings' portfolio on its website.Theron and Yusha Duarte were groomsmen at Mabaso's wedding last year."Prospero is not a subsidiary of Vumela," said Theron."What Mr Duarte involves himself in would not be any of my business. Linking me to people [like] Mr Duarte knows is ridiculous ... if you print anything that will harm my career or company, I will hold you personally and your company liable for losses I might suffer due to damaging my reputation."When asked to explain how his company was listed on the website of Vumela Holdings, he said: "The Companies and Intellectual Property Commission and SARS should answer that question for you. They are resellers of Prospero's services."John Duarte did not respond to text messages or phone calls from Business Times.Sources who spoke to Business Times on condition of anonymity claimed that Theron and the board had been adamant about not issuing a tender for the due diligence investigation."The board informed the executive in October that they would like to conduct a due diligence into Safcol. The CEO [Mona] agreed and asked that they go out on tender, but the board said that was not necessary as it had already identified suppliers and this was urgent," said a source, who has extensive knowledge of the issues at Safcol.According to an internal board document motivating for a due diligence investigation, seen by Business Times, the probe was necessary because Safcol's revenues had been stagnant for the past few years.This despite the fact that "management commissioned two separate reports to review operations and made recommendations for the corporate strategy and direction".Safcol harvests and processes timber in Mpumalanga, Limpopo and KwaZulu-Natal.Khaya Buthelezi, a spokesman for Safcol, said the appointment of a service provider had been urgent at the time."When it became apparent to the board that management information could not be trusted, the board took a resolution to appoint a service provider to conduct a full due diligence exercise of Safcol and of its related entities," said Buthelezi."This was done in accordance with the provisions of the Public Finance Management Act and Treasury regulations for a competitive bidding process."However, due to the sensitive nature of the exercise and the urgency of the matter, the board opted for a closed tender route."According to sources, Mona and chief financial officer Zoliswa Mashinini resigned on December 15 2015 as they refused to sign the contract with 2RM. Before they resigned, the board had approached Public Enterprises Minister Lynne Brown to approve the appointment of 2RM without a tender as the executive refused to sign off on the appointment.But Brown referred the matter back to Safcol. "In the case of Safcol, the board requested minister Brown to approve the appointment of 2RM. The minister referred the matter back to the board as it was an operational matter within the competence of the board," said Colin Cruywagen, a spokesman for Brown.A source said there had been no urgency for the due diligence and no need to deviate from normal tender processes.The source added that "2RM was the most expensive, but Harvey [Theron] and the board insisted that 2RM carry out the work. This placed the executive in a difficult position where it was faced with a possibility of a deviation [from tender processes] which didn't make any sense."Two sources said Theron signed off on 2RM's appointment immediately after the resignations of Mona and Mashinini."The most intriguing thing is that there was no declaration of a possible conflict of interest by the acting CEO," said one source.Buthelezi confirmed this week that no member of the board or the executive had made any declaration of interest and Safcol had received no further response about the possible conflict of interest between Theron and Duarte...

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