Tshwane city manager has five days to respond to damning GladAfrica report

The company has, since August last year received payments totalling more than R455m from the city.


Tshwane city manager Moeketsi Mosola has been given five days to provide documentary evidence against damning preliminary findings by auditor-general (AG) Kimi Makwetu about the city’s controversial project management contract with GladAfrica Project Management.

Moneyweb has learnt that the AG’s office served its 13-page detailed audit findings about the contract on the city on Monday and invited Mosola to respond within five days of receipt of the document after which the AG will finalise the findings.

He also wants Mosola to provide him with a copy of the preliminary report of law firm Bowmans, which is investigating the matter on the instruction of mayor Solly Msimanga.

This follows after Mosola obtained an interim order in the Labour Court to stop Msimanga and city speaker Katlego Mathebe from tabling the preliminary Bowmans report in council last month.

ALSO READ: GladAfrica in a bid to clear its name in Tshwane

The GladAfrica matter has led to tension between Mosola and Msimanga and there seems to be little trust left between the DA-led political leadership and the city administration.

Unless Mosola can provide the AG with compelling evidence to change his findings, Makwetu will rule the expenditure on the contract irregular, which means it was done unlawfully.

GladAfrica has since August last year received payments totalling more than R455 million from the city.

Mosola took ‘total control’

According to the AG’s preliminary findings Mosola took total control of the procurement process that led to the appointment of GladAfrica. He initiated the process, determined the demands of the project management unit and approved the process to be followed. This should have been done by the supply chain management department, according to the AG.

In his preliminary report, Makwetu quotes from the Municipal Finance Management Act. He says the concentration of duties is in contravention of the applicable law and best practice of separating duties in supply chain management “to minimise the likelihood of fraud, corruption, favouritism and unfair and irregular practices” as stated in the Act.

The city appointed Ariya Project Management (GladAfrica) on November 3 last year.

The AG, however, found that some payments were made to another Glad Africa entity, GladAfrica Consulting Engineers – without a valid contract and before GladAfrica Project Management had been appointed. At the time there was no valid contract between the City and GladAfrica Consulting Engineers.

‘Piggy back’ procurement 

The contract the city entered into on November 3 was procured on the basis of paragraph 32 of the Municipal Supply Chain Management Regulations, which provides for an organ of state to ‘piggy back’ on the procurement process of another organ of state when it procures the same goods or services.

In this case, the city obtained permission from the Development Bank of Southern Africa (DBSA) to ‘piggy back’ on its procurement process for the appointment of a panel of companies to assist with the roll-out of infrastructure projects.

The companies on the panel were then supposed to submit quotations to the city for the project management work.

This process bypasses the city and prevents it from following its own competitive procurement process. Such a move is only permissible if there are demonstrable discounts or benefits to the city.

According to the AG the City, however, failed to show such benefits and in fact did no proper financial analysis to determine the cost savings.

The AG has found that the city’s executive adjudication committee resolved that all 29 service providers on the panel should be invited to submit quotations, but the city randomly selected only six of them including Ariya Project Management, the predecessor of GladAfrica.

This rendered the process unfair and inequitable, the AG found.

Once the consultancy agreement with GladAfrica was concluded, the material terms and conditions differed to such an extent from the DBSA agreement that it fell outside the scope of paragraph 32, the AG found. This includes differences in duration, contract value and rates, scope of work and the fact that the city contracted with a different legal entity than the DBSA.

The consultancy agreement the city signed was with GladAfrica Project Managers, but it reflects the company registration number of GladAfrica Consulting Engineers. As a result, the city failed to check the status of the correct entity with the South African Revenue Service (Sars) as required.

The AG also found that the city contravened the Public Audit Act by failing to provide it with certain documentation, including the preliminary Bowmans report.

Moneyweb put some questions to Mosola about the AG’s preliminary report. He responded as follows: “Thank you for the media enquiry. It is not in the character of the City of Tshwane to conduct its internal audit investigations in the media. Suffice to say, the matter is currently under consideration. All the City of Tshwane internal policies are currently being strictly followed and only after the process is concluded and recommendations made, will the City release a formal statement.”

Read: Cash-strapped Tshwane asks National Treasury for help

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