10 October 2012

South Africa: On-Point Tender Unlawful

Photo: Werner Beukes/SAPA
Julius Malema: OnPoint engineers was awarded a R52 million tender, the process of which Madonsela has since found unlawful.

Pretoria — Tenders awarded to On-Point Engineering by the Limpopo transport department were unlawful, Public Protector Thuli Madonsela said on Wednesday.

"The awarding of [the] tender by the department to On-Point was unlawful, improper and constituted maladministration," she said in Pretoria.

She found On-Point and former ANC Youth League leader Julius Malema benefited improperly from the contract.

Malema's business partner Lesiba Gwangwa is chief executive of On-Point.

Madonsela presented her findings in a report on corrupt practices in Limpopo entitled: "On the Point of Tenders".

Madonsela found the department did not follow proper guidelines in awarding the tender.

"It is mind-boggling that the stark differences between the bid document and the tax clearance certificate did not disqualify On-Point or present a red flag regarding the possibility of tender fraud," she said.

She received three complaints in July 2011 and decided to investigate the allegations that the department of roads and transport awarded the On-Point tender corruptly.

Also under scrutiny were claims that Malema used his political position to influence the awarding of tenders by the department and the Limpopo government in general.

She also investigated whether Malema's Ratanang Family Trust and/or Malema benefited improperly from the tender awarded to On-Point.

The total amount paid by the department to On-Point in terms of the contract at the end of June 2012 was R43,868,900.

Madonsela said she found the awarding of the tender was unlawful after perusing documents relating to its procurement, interviewing officials, and consulting the National Treasury. Relevant laws and records were also analysed.

The bid presented by On-Point in respect of the project management unit (PMU) tender deliberately and fraudulently misrepresented the profile, composition, experience and therefore the functionality of the company.

It was claimed that On-Point was an established and experienced operation with management teams and professional staff that complied with the requirements of the request for proposal.

But at the time of the bid, the company had existed for only a month, and had no employees, or several of the purported key management and staff.

"The conduct of the head of the Limpopo roads and transport department, Ntau Letebele, in respect of the awarding of the bid to On-Point, was improper and constituted maladministration," Madonsela said.

The conduct of On-Point as PMU of the department to enter into agreements with Mpotseng Infrastructure, Baitseanape Consulting Engineers and HL Matlala and Associates respectively constituted corrupt practices as envisaged under section 12 of the Prevention and Combating of Corrupt Activities Act, 2004.

On-Point entered into "back-to-back" agreements in terms of which it received, or was supposed to receive, payments from contractors for designs which it had drawn for projects it was contracted to manage and supervise.

"The shareholders of On-Point, including the Ratanang Family Trust, benefited improperly from the tender that was awarded to On-Point."

Madonsela ordered Letebele to take steps to cancel the PMU tender.

She said the State Attorney should institute legal proceedings against On-Point and shareholders who benefited from the PMU tender to recover money to which the department was entitled.

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