Emfuleni municipality withdraws 'irregular' contracts worth R62m

Council slammed for using Covid-19 to deviate from procurement rules

31 July 2020 - 07:30 By SIPHO MASONDO
Gauteng cooperative governance MEC Lebogang Maile on Monday heard a presentation from the Emfuleni municipality’s CFO Andile Dyakala that the council had used Covid-19 as a pretext to award tenders through deviations to usual procurement processes.
Gauteng cooperative governance MEC Lebogang Maile on Monday heard a presentation from the Emfuleni municipality’s CFO Andile Dyakala that the council had used Covid-19 as a pretext to award tenders through deviations to usual procurement processes.
Image: Mabuti Kali

The troubled Emfuleni local municipality has been forced to withdraw 16 “irregular” tenders worth R62m after it awarded them through deviations — using the coronavirus pandemic as a cover.

A PowerPoint presentation prepared by the municipality’s CFO Andile Dyakala for Gauteng co-operative governance MEC Lebogang Maile shows that, earlier this month, the council used the pretext of Covid-19 to award the tenders through deviations to usual procurement processes.


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Dyakala delivered his presentation at a meeting the municipality’s officials had with Maile on Monday.

During the presentation, Dyakala accused municipal manager Lucky Leseane and supply chain manager Jason Mkhwane of approving the awarding of the tenders through deviations in contravention of the Municipal Finance Management Act (MFMA).

“The municipal manager approved the deviation without considering advice from the CFO [CFO] as per section 81 of the MFMA. As per the standard operating procedures and practice notes, the deviation approved by the accounting officer was not duly considered by the Bid Adjudication Committee (BAC). The municipal manager approved the 16 deviations, which were recommended by the supply chain manager,” said Dyakala.

“This compromises governance structures which are put in place. Approval of the deviations without the recommendations of the BAC and the CFO compromises governance structures which are put in place.”

However, Leseane didn’t respond to direct questions about the allegations made against him by Dyakala. Instead he referred questions about Dyakala’s presentation to Maile, saying: “I don’t want to get involved in Emfuleni’s politics.”

Mkhwane said he didn’t have the powers to approve deviations. “It is unfortunate if the CFO [Dyakala] said so. The CFO must take responsibility for those misrepresentations,” he said.

Leseane has now withdrawn the tenders.

After the meeting with Maile, Leseane wrote a letter to Patrick Ngoepe, the co-operative governance department’s infrastructure manager, informing him that the municipality would cancel all tenders awarded through deviations.

“During the meeting with the MEC [of] Cogta today, July 27, it was decided that [the] above projects will not be awarded to service providers by using an emergency deviation as previously considered but to allow the full competitive procurement process to run its course,” the letter reads.

“The projects that are affected were discussed in detail in the meeting of today, as well as the need to finalise the procurement process. The deviation reports that was to be submitted to the bid adjudication committee are hereby withdrawn, considering our discussions today.”

Municipal spokesperson Stanley Gaba said no tenders were awarded. “No letters of appointment have been issued and no purchase orders have been issued,” he said.

“It can be confirmed that the meeting did take place. Kindly take note that no tenders were cancelled as no appointments have been made to any of the above service providers.

“The Emfuleni local municipality is under administration and meetings are held frequently with the administrator, MEC and other senior managers to implement the financial recovery plan of the [municipality].”

Dyakala’s presentation shows that officials had used the coronavirus as a motivation for deviating from normal procurement processes.

“The deviation makes reference to Covid-19 as the reason for deviating and further refers to the reprioritisation of the municipal infrastructure grant (MIG) as the reason for the deviation. However, the deviation is in contravention of section 217 of the constitution ... which states that any procurement in the public sector must be done in accordance with a system which is fair, equitable, transparent, competitive and cost-effective,” it said.

“All the 16 deviations, to the value of R62.2m, must be declared irregular. There is a report that letters of appointment were issued to all the recommended service providers, and the CFO has no knowledge of the letters.

“Concomitant consequence management action must be implemented to all officials involved in the approval of the deviation report.”

Dyakala recommended that Leseane should “rescind all the letters of appointment associated with the irregular deviations” and that all the tenders should be advertised for 14 days.

In June, Maile placed the municipality under administration for the second time in two years.

In his letter to the council, Maile said: “It is common cause that on June 13 2018, the Gauteng executive council took a decision to invoke section 139 of the constitution of the Republic of South Africa. The intervention has not produced the desired outcomes up to now, with the municipality continuing to experience serious challenges which require a stronger, firmer hand in order to turn things around.”

Maile pointed out violent service delivery protests, the collapse of waste management services, poor revenue collection, sewer spillage, allegations of corruption, and ailing water and electricity infrastructure as some of the reasons which prompted the province to place the council under administration.

“The dire situation has dictated that exco review its intervention and subsequently resolved to appoint Mr Willy Bhila as the new administrator with immediate effect. The duration of the appointment of the new administrator is subject to the progress made in turning around the situation at the municipality, but should ideally not exceed a period of 12 months from the date of his appointment,” he wrote.

In 2018, the Hawks had launched an investigation into R870m worth of irregular expenditure awarded by the council during the 2016/17 financial year.

Several investigations last year by Comperio, a firm of forensic auditors, uncovered potential fraud, corruption and maladministration involving a number of contracts with a value of over R300m.

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