Afrirent says it was exonerated by independent investigations, Treasury was misled

Correction and apology: An earlier version of this article incorrectly stated that Afrirent had “exonerated itself” with two internal inquiries. However, the company had said in their statement this week that they had done an internal review that relied on two independent inquiries conducted by the City of Johannesburg and had not done their own investigations. We apologise for the inaccuracy and confusion caused. The article and headlines have been updated accordingly.

Fleet management company Afrirent said in a statement this week that National Treasury was allegedly given inaccurate and incomplete information about its contract with the Johannesburg municipality.

The company said its own internal review had shown that the National Treasury was given inaccurate and incomplete information regarding its contract with the City of Joburg (CoJ) municipality.

National Treasury director-general Dondo Mogajane last month instructed CoJ mayor Geoff Makhubo to cancel a R1.2 billion fleet contract that was awarded to Afrirent by the previous coalition administration.

The tender was controversially awarded through regulation 32, which allows a municipality to essentially piggyback on a contract awarded to a company by a different municipality. Treasury found that this was done irregularly and not in line with National Treasury’s norms and standards.

Mogajane instructed the city to commission a forensic investigation into the tender within 30 days.

The CoJ became involved with Afrirent by participating in a contract signed by the Mogale City municipality. National Treasury pointed out that Mogale City and Afrirent appeared not to have actually signed a contract at the time the CoJ applied to participate in the contract.

Mogale City’s contract was ultimately worth R111 million, while the CoJ’s was worth as much as R1.4 billion or more.

“According to the bid evaluation committee minutes dated 6 June 2018 from [Mogale City], a total of 168 vehicles were required,” said Treasury, but CoJ needed 2,732 vehicles from Afrirent, “which makes a huge difference in size of scope”, wrote Mogajane.

Former Johannesburg mayor Herman Mashaba has defended the procurement, saying the final report of forensic investigations conducted by the city’s forensic investigations unit “dismissed any notion that there was political interference in the awarding of a contract to Afrirent”.

Afrirent was linked to donations to the EFF last year, through among other things a tractor that the EFF went on to donate to communities in Seshego and Blood River in Limpopo.

The R1.2 billion fleet contract became the subject of an amaBhungane report in 2018 that alleged Afrirent had made payments into an account used for the benefit of the EFF and its leader, Julius Malema.

AmaBhungane’s earlier reports also appeared to substantiate longstanding rumours that Mashaba had essentially bought the EFF’s loyalty in the city, which he was governing with the unofficial support of the EFF at the time.

An earlier amaBhungane report alleged payments from Afrirent were made to accounts belonging to a company fronted by Malema’s cousin, which were believed to have been used as a “slush fund” for the EFF and Malema.

The company, Mahuna Investments, was the same one that reports by Daily Maverick’s investigative journalism wing Scorpio said received payments resulting from the alleged looting of VBS Bank.

Malema and the EFF denied having benefited from kickbacks relating to the Afrirent tender, and the company likewise denied knowing of any link between Mahuna and the party or Malema.

In their statement dated 2 June, Afrirent continued to protest its innocence and complained that the adverse findings against them by Treasury had been inaccurate and unfair.

Although they were “constrained by the confidential nature of our contracts”, Afrirent said they felt the need to “correct the misleading information and resultant inaccurate findings by Treasury”.

The company listed the following points in its defence:

• “The CoJ, on several occasions, confirmed with various authorities that the type of agreement entered between the City and Afrirent is a Vehicle Fleet Financing contract, similar to the one awarded by Mogale City to Afrirent.
• “Before the appointment of Afrirent using Regulation 32, CoJ conducted an open tender process, which was abandoned later. The number of vehicles specified in the tender document and all subsequent discussions between Afrirent and the CoJ was 2,734. At no point was the requirement of only 168 vehicles communicated to Afrirent and other bidders.
• “Afrirent was appointed by Mogale City on 28 June 2018 through an open, competitive bid. A letter confirming Afrirent’s appointment was submitted to the CoJ.
• “The letter from the National Treasury inaccurately states that the original tender process was cancelled due to material defects in the specification. However, our understanding is that the process was cancelled because it was seemingly conducted in such a way it unfairly excluded certain bidders, among other things.
• “Our understanding, based on legal advice obtained, is that Regulation 32 does not require the contract an entity is piggybacking on to be exactly the same, nor does it require the monetary values involved to be the same.
• “We are aware of similar Regulation 32 contracts at the CoJ where the goods and the monetary values differed.”

They concluded that Treasury was “deliberately misled to cast aspersions on Afrirent”, according to the company’s CEO, Senzo Tsabedze.

“For over two years now, we have been subjected to various investigations by the media and the CoJ. Nothing has been placed on the table proving that Afrirent’s conduct was inappropriate or unlawful,” complained Tsabedze.

Afrirent said they had still not received any communication from National Treasury or the CoJ about any pending investigation, but nevertheless committed themselves “to cooperate fully with any lawful enquiry”.

They said two independent investigations done by the CoJ had exonerated them.

“We are concerned that Afrirent is used to fight political battles. In the process, our reputation is impugned, thus making it difficult to conduct our business. These attacks are unwarranted and we appeal to those involved to stop. It is unfair as there are many people whose livelihoods depend on Afrirent being able to conduct its business without undue hindrance,” added Tsabedze.

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