EXCLUSIVE: Energy minister investigates R80m in irregularities in nuclear contract

10 August 2017 - 15:42 By Jan-Jan Joubert
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Energy Minister Mmamoloko Kubayi.
Energy Minister Mmamoloko Kubayi.
Image: Gallo Images / Beeld / Nasief Manie

Energy Minister Mmamoloko Kubayi has launched an investigation into several senior officials in her department for alleged nuclear tender irregularities amounting to R80-million.

Kubayi's office has confirmed that it is probing the possible violation of National Treasury regulations when the department awarded an R80-million contract to a nuclear transactional adviser‚ Mahlaka-A-Phalala (M-A-P).

"There are still investigations going on the matters raised in your questions and therefore we are unable to respond as it will jeopardise and weaken the case‚" said a short statement from Kubayi's office in response to 29 questions posed by TimesLIVE.

The minister can expect heavy questioning on the matter from DA MP Gordon Mackay when she appears before Parliament's portfolio committee on energy on Tuesday.

Mackay said this was further evidence why the government nuclear procurement was "captured".

"The nuclear deal is a prime example of state capture. The DA will demand from committee chairperson Fikile Majola that the energy portfolio committee tackle this matter with extreme urgency when we reconvene next month‚ and question the investment.

"We will also demand to know why deputy director-general [Zizamele] Mbambo remains in his post‚ and will propose an ad hoc committee to get to the bottom of this mess‚" said Mackay.

According to documents TimesLIVE has seen‚ energy director-general Thabane Zulu‚ his deputy Zizamele Mbambo‚ procurement specialist Ndaba Ngwane‚ and chief financial officer Yvonne Chetty have signed a deviation request to sign off the deal.

Zulu has since been moved to head the Strategic Energy Fund while Ndaba has quietly exited the department.

Mbambo remains in his position despite awarding the contract‚ which a leaked document shows amounts to R80-million.

The scandal started at the end of August last year‚ when one of the consulting firms in the nuclear build programme‚ M-A-P – against which no allegations are made – compiled a report finding that the department was not ready to issue a request for proposal for the intended nuclear new build programme‚ estimated to be worth R1-trillion.

On September 22‚ Mbambo and Ngwane asked Chetty and Zulu to approve a deviation from normal procurement processes‚ in practice allowing M-A-P to continue work on the development of a transactional adviser.

The next day‚ Chetty and Zulu agreed to the deviation‚ which Chetty warned was subject to the buy-in of the National Treasury and the office of the attorney-general.

However‚ Mbambo and Ngwane merely told M-A-P to continue with a second phase of the contract‚ the cost of which would grow by R80-million to R100-million by March despite the required governance processes allegedly not having been followed.

On September 27‚ then minister of energy Tina Joemat-Pettersson suspended all payments related to the transactional adviser to M-A-P until the department had submitted a verification report to her on all deliverables received.

According to sources close to the events‚ this decision was never communicated to M-A-P as a service provider.

Instead‚ Mbambo‚ Zulu and Ngwane continued to engage M-A-P and received work deliverables towards the procurement process without a contract and without all regulations being followed.

Among the serious allegations that TimesLIVE put to the Department of Energy over the past 10 days is that M-A-P was not subjected to a competitive bid process.

Instead‚ section 16 (a) 6.6 of the Public Finance Management Act was used – despite warnings by the relevant tender committee that this was wrong – to keep paying M-A-P.

This was done despite the law only allowing for the cost of the project to be extended by 15% without an open tender process.

At the beginning of March‚ M-A-P‚ which remained ignorant of Joemat-Pettersson's instruction to stop payments‚ went to see her about payments outstanding‚ adding R60-million to the initial R20-million contract.

M-A-P also revealed to Joemat-Pettersson that it had a copy of the deviation request approved by Chetty and Zulu as given to it by Mbambo and Ndaba‚ despite the strict rules regarding the leaking of internal documents.

The whole matter came to a climax on March 16 when the departmental tender committee met and reviewed M-A-P's bills.

Mbambo was in hot water and held to account as the meeting continued on March 22.

During the meeting‚ it came to light that Mbambo had already on September 1 given verbal instruction to M-A-P to extend its contract by a further R80-million to R100-million.

In the end‚ the Department of Energy shifted funds from the sundries account and paid M-A-P R56-million of the additional R80-million by the end of the financial year (March 31).

Zulu said only the department could comment. Numerous efforts to contact Mbambo for comment failed last week‚ and Ngwane could not be tracked down.

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