News / South Africa

Virginia Keppler
3 minute read
25 May 2017
6:38 am

Outa alert reveals huge tender ‘scam’ in Tshwane

Virginia Keppler

A job worth about R1.5m was awarded at a cost of R30m.

File picture: Shutterstock

The City of Tshwane has suspended an irregular contract worth nearly R35 million after a whistleblower alerted the Organisation Undoing Tax Abuse (Outa) of various irregularities.

Mayoral spokesperson Sam Mgobozi said the tender in question was awarded by the City of Tshwane’s former administration to Tahal South Africa (Pty) Ltd.

The city initiated its own investigation, which resulted in the suspension of the contract.

The tender was awarded to Tahal SA on April 22, 2015 for three years at a price of R30 664 348 excluding VAT, which would have added another R4 293 008.

Mgobozi said the tender – CPD- 03-2014-15 – is officially named “The identification and packaging of catalytic interventions and projects required to fast-track the development of East Capital to realise the required economic growth”.

Mgobozi said the tender’s terms of reference were for a 10-month contract, but the contract awarded was for three years.

After winning the contract, Tahal SA appointed Aftec Capital Investments at 20% of the full contract cost as a “consultant”.

“Aftec’s sole director is Selwyn Nathan, a former director of Tahal SA.

“Nearly half of the payment to Aftec was paid to Jet Capital. Jet’s sole director is David Hirschowitz, a director at Tahal SA.

“Payments were also made to theLejwe La Metsi game farm in Bela Bela and to Lejwe Game Breeding.

“The Lejwe businesses are co-owned by Hirschowitz and the farm was apparently used to entertain politicians and City of Tshwane officials,” Mgobozi said.

He added that Tahal SA then subcontracted virtually the entire project to another company, which was paid about R1.5 million.

“Experts have indicated that this is about what the full job was worth. Subcontracting the bulk of a contract is irregular and it is unclear why Tahal SA was paid R30m if the actual work could be done for just R1.5m,” he added.

Mgobozi said this contract was for a preliminary feasibility study, raising the possibility that it was to have been the gateway to a substantially larger contract which would also have gone to Tahal SA.

Outa’s chief operating officer, Ben Theron, said: “The involvement of Tahal SA in setting the terms of reference is inexcusable and led to a corrupt relationship, which led to the plundering of state funds.”

Theron welcomed the City of Tshwane’s response to Outa’s alert and believes this contract was the tip of the iceberg and that investigations were needed into all other contracts awarded by the city’s procurement team at the time, more so those that involved contracts which Tahal SA and its directors have with any other municipality, government department or entity.

The city set out the irregularities in the tender process as follows:

  • The tender name was “nonsense, designed to confuse people and reduce the possibility of other bidders”;
  • An initial tender advert request was drafted with a budget estimate of R8 million, but it is unclear how the projected cost jumped from R8m to R30m;
  • In 2014-15 a bid specification committee appointed by city manager Jason Ngobeni developed the terms of reference for the tender. Tahal SA apparently worked with this committee on this;
  • Ngobeni granted a request that the standard period for advertising of the tender be reduced to disadvantage other bidders;
  • The tender was advertised in February 2015 and three bids were submitted, from Tahal SA and two other businesses;
  • In April 2015, the same person who initiated the tender and chaired the bid specification committee was appointed to chair the bid evaluation committee; and
  • Tahal SA was rated at 100% on each of the evaluation criteria by each of the bid evaluation committee members.

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