A company linked to the fiancée of Gauteng ANC provincial secretary Jacob Khawe was awarded a lucrative contract by the struggling Emfuleni municipality despite having been eliminated during an open tender process.
Opulentia, a company of which Nthabiseng Khabutlane was a director, scored the contract earlier this year to provide insurance brokering services after the municipality ditched the tender process.
The contract has been flagged as irregular by the municipality’s internal audit report and a legal opinion.
Among the irregularities identified by Emfuleni internal auditors was that Opulentia had performed dismally in the open tender process.
Other companies were shortlisted.
Despite this, the municipality embarked on a parallel process to appoint Opulentia, based on a contract the company had with Matjabeng local municipality in the Free State.
Khawe and Khabutlane are due to tie the knot next month.
Khabutlane refused to comment saying the matter was “personal”.
Khawe, a former mayor of Emfuleni who now wields power across the province as ANC provincial secretary, did not respond to specific questions but said he felt wrongly targeted about the matter.
“My attitude on this matter is that if there is something irregular Emfuleni must cancel the contract,” said Khawe.
“But maybe your target is me ...”
My attitude on this matter is that if there is something irregular Emfuleni must cancel the contract.
— Gauteng ANC provincial secretary Jacob Khawe
After the fallout over Opulentia’s appointment by Emfuleni, Khabutlane resigned as a director of Opulentia in August.
But she remains CEO of Fezi auditors and consultants who are part of the Emfuleni contract which is a joint venture between Opulentia and Fezi.
The tender was advertised last year and seven bidders responded, including Opulentia which did not make it among the shortlisted companies.
By late last year, only Kunene Makopo Risk Solutions and Lateral Unison remained in the race.
“Lateral Unison was by all accounts set to become the recommended bidder having prevailed over Kunene Makopo Risk Solutions on price. Lateral Unison offered R16.2m whereas Kunene Makopo offered R51.6m,” wrote Emfuleni legal adviser Tando Mbono in a legal opinion on the matter.
But that tender process was abruptly abandoned with the municipality invoking regulation 32 in the supply chain management policy which paved the way for Opulentia to be brought in via the back door through an appointment in February this year for a period of 18 months.
Opulentia thus entered into a service level agreement with Emfuleni the following month.
But Mbono found an anomaly in the stipulated contract length, which was to be 18 months ending in August 2022.
“A close examination of the contract period calculated from February 2020 to August 2020 reveals that this is in fact a period of two and a half years,” he wrote adding that this was “in excess of the original contract term between Opulentia and Matjabeng”.
Furthermore, Opulentia had quoted Matjabeng R3.3m per month but the price for Emfuleni was R3.6m, Mbono observed.
“Emfuleni local municipality should not have placed reliance on this figure without ascertaining the true nature of the services to be performed by Opulentia for Matjabeng.
“However, the most concerning issue about the R3.6m is that it is more than double the monthly rate of the R16m per annum Lateral Unison had tendered. Worse still, said amount is more than Opulentia’s own tendered amount of R18.3m (before their elimination in the open tender).”
Mbono’s legal opinion was followed by Emfuleni’s own internal audit which also flagged the contract with Opulentia.
Among other irregularities, the internal audit report highlighted the “lack of procurement plan”, adding that there was “non-compliance with regulation 32” on the process followed by the municipality in appointing Opulentia.
The internal audit report also concluded that the “preferential procurement policy framework” employed to appoint Opulentia was offside.
But just like Mbono, most concerning for the internal auditors was that the money paid to Opulentia on a monthly basis by Emfuleni “exceeds the value of the original contract”.
The fallout over Opulentia within Emfuleni has not been without casualties.
Municipal manager Lucky Leseane, who protested against Opulentia’s appointment, was suspended.
Leseane was reinstated by Emfuleni mayor Gift Moerane, who had suspended him “unlawfully and irregularly” on September 21.
Municipal manager Lucky Leseane, who protested against Opulentia appointment, was suspended.
But Leseane was again sent packing only for the labour court to intervene ordering that he be reinstated more than two weeks ago.
“I have been favoured with a legal opinion advising against the unlawful and irregular decision taken by council in instruction the executive mayor to place you on suspension without following due process,” wrote Moerane in Leseane’s reinstatement letter.
Furthermore, the municipality’s manager of supply chain management, Jason Mkhwane, has been at loggerheads with Emfuleni CFO Andile Dyakala.
Mkhwane accused Dyakala of aiding the appointment of Opulentia and charged that the CFO “continues to act with impunity with no regard to the rule of law”.
Dyakala said Mkhwane’s claims had no basis and he denied his links to Khawe.
“I do not take any political instructions from Mr Khawe, I am just an CFO,” he said.
“The manager supply chain decided to involve me in that Opulentia report as if I was the person that approved of which I was not. It was approved by the municipal manager.”
The municipality confirmed that the internal auditors had flagged the matter, adding that municipal manager Leseane was attending to it.
Said spokesperson Makhosonke Sangweni: “We can confirm that the internal legal department has filed a report advising the municipal manager on the matter.
“Mr Leseane has referred the matter to the financial misconduct disciplinary board for processing.”
