An engineering consultancy is bleeding the City of Tshwane dry after being handed infrastructure projects worth R12bn to manage - raking in a quarter of a billion rands in middleman commissions in the past six months.
City officials who spoke to the Sunday Times described the deal as looting on a grand scale.
Now mayor Solly Msimanga wants answers from city manager Moeketsi Mosola, who brought the firm in against legal opinion that suggested doing so was illegal.
The Sunday Times can reveal that Mosola further disregarded resistance from senior officials in the city, some of whom were stripped of their powers when they questioned the move.
Msimang has asked his legal adviser to investigate the contract and has written to Mosola demanding to know how it was entered into.
The engineering consultancy, Midrand-based GladAfrica, has scored R250m in consultancy fees from the city's roads and transport division since it was brought on board in November 2017, according to sources within the city.
The company has overseen the management of mega projects such as the Tshwane bus rapid transport system, the Rooiwal wastewater treatment plant, and all road maintenance and construction projects.
Mosola chose GladAfrica from a list of suppliers he obtained from the Development Bank of Southern Africa (DBSA), using a procurement regulation that allows a municipality to use an existing contract with another state organ to obtain a supplier without going through normal tender processes. He signeda three-year open-ended contract.
In the legal opinion, senior counsel JD Maritz said the city should have followed proper supply chain management processes in contracting the firm, as regulations allowing it to bypass this process did not apply in this case.
Maritz advised that municipal supply chain management regulation 32, which allows for deviation from normal tender processes, could not apply because the contract that Tshwane entered into with GladAfrica differed significantly from the agreement it had with the DBSA.In November, after the consultancy was appointed, the city's COO, James Murphy, warned Mosola that bringing in GladAfrica was not a good idea as the company charged exorbitant consultancy rates, more than what had been paid for similar work in the past.
"The agreed-to tariffs are higher than what the city has been and is paying for similar work. This may result in more money being paid for consultancy fees than actual project implementation, contrary to the directive on cost containment and the curtailment of using consultants," the COO wrote.
In terms of the contract signed with GladAfrica, the company provides a variety of project management services including engineering, systems planning, financial planning and management, and legal and contract management.
Over and above pocketing a fee of 10% of the value of each project that it manages, the company also charges the city between R2,000 and R4,000 an hour for contracting skilled professionals such as engineers, project managers, accountants and legal experts.
An engineer who has done work for the city for years, and who asked not to be named, told the Sunday Times that fees for engineering services are normally between R800 and R1,200 an hour.
The engineer said contractors now had to approach GladAfrica for any Tshwane-related work as the company outsources all projects to outside professionals.
This was corroborated by another official in the city, who also views the contract as unnecessary and costly."These guys don't do the work, they are middlemen. They subcontract all the work. This is looting," said the city official, who asked not to be named.
He said the arrangement was the same as that which Gupta-linked firm Trillian had with entities such as Eskom and Transnet.
Msimanga's spokesperson, Samkelo Mgobozi, said the mayor had "put a number of written questions to the city manager as custodian of the supply chain management process. The questions relate to how the contract was procured, tender specifications and operational risks to the city."
Mosola confirmed that the mayor had asked him for an explanation. He declined to comment further.
"The executive mayor has formally written to me to compile a comprehensive response with regards to the same matter. My comprehensive memo of responses will be submitted on Monday," he said.
GladAfrica said it was a competent project manager with 16 years' experience and had been appointed following a clear procurement process.
"GladAfrica submitted a bid to the City of Tshwane and was appointed after the city followed its supply chain processes. The bid included proposed rates that were accepted by the city and the billing has since been in accordance with the accepted rates and services provided. The appointment is of a multidisciplinary nature and is implemented as such," it said. It did not respond to detailed questions about the nature of its relationship with the city...