Municipality faces R20-million lawsuit
A company that tendered for the smart meter project last year decided to sue the municipality for damages after claims of tender fraud surfaced.
“The municipality is being caught with its pants down again,” said managing director of Evnic Data, Pragasan Naidoo, who initiated a multi-million rand lawsuit against the municipality following allegations of tender fraud.
Last year, Evnic Data quoted R55 million to supply and install smart meters in Newcastle and was recommended by both the electrical department and the municipality’s independent consultant, Moteko. It met all of the tender requirements, however, the document recommending this company had never made it to the Bid Evaluation Committee (BEC).
Instead, a different document was submitted to the BEC, and sources claim that this document was intended to support a company that quoted R115 million for the project. This, despite the fact that the company in question had failed to produce a tax clearance certificate with its tender documents, and had been the focus of a fraud investigation involving Telkom in 2010.
It is rumoured that the head of the electrical department, Phumlani Xulu, who has since been voluntarily demoted, was visibly upset when he realised that the department’s recommendation had been ‘changed’ before it reached the BEC.
Sources further claim that the acting strategic director, who allegedly asked Mr Xulu to approve the ‘changed’ document at the last minute, also served as the chairman of the BEC when the tenders were being considered.
Claims that a company that quoted R60million more for the project might have been given an unfair advantage were investigated by Deloitte and Touche after the matter became public through the Newcastle Advertiser.
Asked about the outcome of this investigation, municipal manager, Kebone Masange said that the report submitted by Deloitte and Touche seriously implicated two high level officials but admitted that no action had yet been taken against them.
While Mr Naidoo refused to confirm the amount for which he was suing, reliable municipal sources claimed that the amount stood at R20-million.“We are currently in the pre-trial phase, and we expect to go to trial early next year. All we want is justice. The fraud at the municipality is just so blatant and it shows disregard for the community,” he said.
