Possible corruption flagged in public works tenders for KZN flood repairs

An internal audit into the national department of public works and infrastructure’s tenders to rebuild state-own properties damaged by the April floods has revealed widespread risks, including tenders to companies owned by the same director, service providers owned by state employees and suppliers that did not exist on the government’s central supplier database.

Public works and infrastructure minister Patricia de Lille said the auditor-general’s (AG) preliminary report also revealed: 

• awards were made to companies that had never traded with the department in the previous three years;
• awards were made to service providers owned by employees of the state;
• some awards were made to newly registered companies that had never traded with the department before;
• service providers were approached by departmental management using a deviation process where there was no competition among service providers and no market analysis done to assess price reasonability;
• five quotations exceeding R1m were awarded to the same company;
• the quoted amount by the service providers exceeds the authorised amount;
• quotations were received after the contract had already commenced on site; and
• projects were not completed within the stipulated time.

“These initial results are extremely worrying and I have engaged the department on these risks and findings to get to the facts and determine which officials need to face consequences where wrongdoing is confirmed,” said De Lille.

“The AG’s office recommended an investigation into instances of non-compliance to determine the real root cause of the risks and that irregular expenditure identified from the projects should be included in the 2022/23 annual financial statements. The AG’s office also confirmed that the matter has been referred to the labour relations and legal services unit to investigate further.”

When De Lille was first notified of the finding by the AG’s office she immediately asked whether the department could stop payments to contractors until the full investigations and final audits were completed.

“The regional manager of [the department] has confirmed that no services have been paid thus far. All payments and services will be subject to approval and ratification by the relevant committees such as the bid adjudication committee and delegated authority. In order to investigate the flags by the AG’s office further, the department’s internal audit unit also conducted an audit on the flood intervention projects,” she said.

“The department’s internal audit unit also visited the sites and were accompanied by the relevant senior management in the department in the region. Similar areas of concern were highlighted by the internal audit team as was highlighted by the team from the AG’s office.

“The internal audit unit in the department engaged the region on its findings and the region expressed a view that most findings should be resolved with information and clarifications provided and that this will necessitate a review of the overall internal audit unit’s conclusion.”

The initial conclusion by the internal audit unit found that key controls implemented by management were inadequate and ineffective in minimising the identified risks.

“These initial findings are disappointing and worrying and I will work with the department and AG’s office to get to the bottom of all risks identified and where there is clear evidence of wrongdoing we will ensure that officials face serious consequences,” De Lille said.

“It is extremely disappointing that we continue to see such flags being raised on work where the government is needing to respond to an emergency and bring about service delivery to people in need in a responsible manner.

“In a time when there is so much work to be done in our country to deliver services to communities in need, it is truly sad that such information has come to light and my constant appeal to officials is to conduct their work with integrity and due diligence because we are entrusted with public funds and public funds must be spent wisely and for public good.” .

She said she had released the brief preliminary report from the AG’s office in the interest of transparency.

“I have acted swiftly to avoid a repeat of the PPE corruption experienced in the country during the Covid-19 pandemic,” she said.

Meanwhile, the ad hoc joint committee on flood disaster relief and recovery said it was dissatisfied with progress after its last visit in May in KwaZulu-Natal to assess the extent of damage caused by the floods.

“The committee was on its second day today [Wednesday] of its three-day oversight visit in KwaZulu-Natal to assess the progress that has been made after it came to the province after the floods. The two sites that the committee visited in Port Shepstone were Valley Road Bridge and Crescent Street Bridge.

“The committee was not satisfied with the lack of time frames by which repairs to both bridges are planned to be completed,” the committee said.

“It was informed that the bollards that have been installed as per its previous recommendations were only constructed five days ago. This indicates a lack of commitment on the part of the Ugu district municipality to reconstruct the damaged infrastructure.”

The committee recommended that the municipality hold discussions with the provincial government to secure funding from the money budgeted for flood disasters that took place before the April as the available budget had been allocated for those disasters.

“According to the committee, there needs to be a clear timeline regarding the expenditure of the monies that the municipality has already received for the flood disaster. To prevent delays the committee recommended that the municipality should improve the capacity of its technical departments to minimise the use of external service providers for the repair work of the bridges,” the committee said.

“Furthermore, the committee recommended that a meeting between the municipality and the donor who offered to assist in the construction of the Valley Road Bridge should be facilitated. The committee also agreed to return to the district to assess progress made before the adoption of its final report.”

The committee also visited the N2 freeway in Amanzimtoti, which was also damaged by the floods.

“Even there it noted a glaring lack of progress due to a conflict between [the SA  National Roads Agency] and business forums. The committee is concerned about the impact of these disagreements on the flow of traffic on the Adams Road part of the N2 freeway. Currently, there is traffic congestion of up to 8km during peak hours,” it said.  

The committee visited the Umlazi/Lamontville interchange, where it welcomed the efforts by the eThekwini municipality to fix the interchange using its own internal resources.

“However, the lack of a memorandum of understanding (MOU) between the city and the department of transport is delaying the process. The committee recommends that an MOU should be concluded between the two parties to allow for a speedy resolution of the matter.

“The sites visited today enabled the committee to comprehend the devastating nature of the damage caused by the flood disaster and the need for all the relevant stakeholders to work together for the reconstruction of their areas,” it said.

The committee plans to visit the Mountview shelter in Verulam, Tongaat water treatment plant and Umdloti.

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