South Africa: On-Point Engineers tender report, attacks on the Public Protector and the need to guard the independence of key institutions

In a report on the awarding of contracts for goods and services by the Limpopo Department of Roads and Transport to On-Point Engineers, a company linked to expelled former African National Congress Youth League (ANCYL) president Julius Malema, the office of the Public Protector sheds considerable light on deep-seated corruption in government. The Public Protector’s report is based on documents concerning the contracts; interviews with officials of the department and key role players such as Lesiba Gwagwa, the sole director of On-Point; examination of the relevant legislation; consultations with Treasury; and analyses of newspaper reports. As of June 2012 the Department had paid R43 868 900 to On-Point Engineers in terms of the contracts mentioned above. The sole On-Point shareholder is Guilder Investments (as the holding company), which in turn has two equal shareholders, the Gwangwa Family Trust and the Ratanang Family Trust. Julius Malema’s son (6) is the sole beneficiary of the Ratanang Family Trust and his grandmother (83), is a trustee.

On-Point was awarded the Project Management Unit (PMU) contract for the construction and maintenance of roads in Limpopo. In its bid documents On-Point submitted a tax clearance certificate for Achir Shelf, a five-month-old shelf company that it had purchased a month earlier. However, On-Point stated that it was a 9-year-old engineering company with a solid track record and that it had the requisite skilled personnel as per the requirements of the bid documents. It also claimed youth empowerment points on the basis that it had subcontracted to Dichabe Engineers to the value of R 1,2 million, even though the director of the engineering entity, Mr Dichabe, was one of three shareholders of the newly established On-Point. On-Point also claimed to have used Segwalo Engineering’s premises and its staff, but the staff complement was inadequate and did not have the claimed skills. On-Point was awarded ‘super higher functionality points’ by the bid committee regardless of the falsehoods.

The Public Protector’s report is scathing about the incompetence of the Limpopo Head of Department for Roads and Transport, Ntau Letebele, who took office on 1 September 2009 and advertised the tender on 11 September the same year. As the point of contact for the tender adjudication, the Public Protector’s office rightly states that he should have been able to note that the discrepancies regarding the tax clearance certificate and company registration documents suggested the possibility of tender fraud. This raises questions regarding the relationship between Letebele, the department’s employees who took part in the bid process and On-Point. The Public Protector’s report also indicates the existence of strong evidence that On-Point started preparing for the bid prior to September 2009. This suggests that On-Point had access to privileged information, an indication that it may have had an insider in the department feeding it vital information.

While On-Point was contracted to supervise and oversee the work of professional service providers (PSPs) engaged by the department to plan, design, build, upgrade and maintain roads and bridges in the Limpopo Province, the report points to the existence of ‘incontrovertible evidence’ that On-Point entered into back-to-back deals with the PSPs doing the work it was supposed to be supervising, and that it was paid to do similar work to that of the PSPs. The back-to-back payments, the misrepresentations regarding the staff complement and the tax clearance in the bid documents, and several other fraudulent activities on the part of On-Point, point to a violation of the provisions of the Prevention and Combatting of Corrupt Activities Act. The Public Protector, as a Chapter 9 institution with a mandate to work towards strengthening South Africa’s constitutional democracy, should go even further and ensure that several other individuals and companies are probed for tender corruption and misappropriation of public funds.

More recently anonymous letters sent to Parliament accuse the Public Protector, Advocate Thuli Madonsela, of misconduct. In August 2012 ANC MPs and officials from the South African Communist Party took umbrage when Adv Madonsela gave a speech at a Women’s Day event in Port Elizabeth organised by the Democratic Alliance, arguing that it would affect her impartiality. Recently, Parliament received two dossiers penned by the Deputy Public Protector detailing claims of bias and misconduct. Interestingly, the allegations against Adv Madonsela do not pertain to her findings but are anchored by the notion of misconduct, suggesting that there may be forces that seek her dismissal. If investigated and found guilty of misconduct by Parliament, Adv Madonsela faces dismissal.

Broadly, the recent events surrounding the Public Protector’s office point to how important it is to have impartial and independent key institutions that protect and advance the ideals of South Africa’s constitutional democracy. History has shown that there are powerful ANC political elites who cannot stomach the existence of any institution that stands in the way of their plundering public funds. The disbanding of the Scorpions, a highly effective corruption-busting entity, is a case in point. We have also seen the appointment of people who are unfit to hold top positions in key agencies such as the National Prosecution Authority. Adv Menzi Simelane’s appointment as National Director of Public Prosecutions, which the Supreme Court of Appeal has ruled to be invalid – the Supreme Court concurred in a recent judgement – is a demonstration of the lack of political will to ensure that men and women of integrity who possess the necessary skills and experience are appointed to key posts not only in the criminal justice system but also in other arenas. While there have been accusations of bias and misconduct against the Public Protector, all stakeholders should vigorously defend those institutions and individuals that protect South Africa’s constitutional democracy.

Compiled by the Conflict Prevention and Risk Analysis Division