How friends and family benefitted from OR Tambo Municipality tender that ballooned from R20m to R70m

The Special Investigating Unit (SIU) has revealed how a project intended for the OR Tambo District Municipality, initially budgeted at R20 million, spiralled into a R70 million irregular tender.

On Wednesday, SIU officials provided a briefing to the Standing Committee on Public Accounts (Scopa) about their investigation into three municipalities in the Eastern Cape, KwaZulu-Natal (KZN), and North West.

In 2022, President Cyril Ramaphosa authorised the unit to probe allegations of corruption and maladministration within the OR Tambo Municipality.

The SIU was also tasked with recovering any financial losses incurred by the state or the municipality.

SIU investigation into OR Tambo Municipality

During the meeting, SIU Chief Operations Officer (COO) Leonard Lekgetho indicated that the unit’s investigation into the OR Tambo Municipality focused on the procurement process for a R70 million tender awarded to Ayavelisa Consortium.

The municipality aimed to establish a strategic program and project management office (SPPMO) to achieve clean audits and enhance service delivery within the area.

Lekgetho stated that the SIU initially could not locate any council resolution from the municipality approving the establishment of the office.

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The unit subsequently uncovered irregularities in the procurement process during its investigation.

“The SIU was not provided with the appointment letters of some of the members of the Bid Evaluation Committee [BEC], which sat on 24 May 2018. According to the minutes, 10 bids were received – including that of Ayavelisa Consortium.

“Six bids were found to be responsive by the BEC and were evaluated for functionality. Ayavelisa Consortium quoted R70 270 351.00 and was not the cheapest,” the SIU COO explained.

Watch the meeting below:

Despite this, Ayavelisa was awarded the tender, even though the estimated cost for the SPPMO project was only R20 million.

“The SIU established that there was a contract of employment between the municipality and Ayavelisa Consortium wherein one employee was permanently placed in the office of the municipal manager as an executive assistant,” Lekgetho told the committee.

Irregularities in contract between O.R. Tambo Municipality and consortium

Payments were made to Ayavelisa despite the discrepancies identified in the service level agreement (SLA) between the municipality and the consortium.

“As soon as the SIU discovered that there were irregularities with the SLA, the SIU wrote to the municipality advising them not to process about R13 million to which the municipality agreed.

“The SIU has, however, discovered that, to date, R 70 136 762.85 has been paid to Ayavelisa Consortium. The SIU has analysed invoices amounting to R54 108 406.54,” Lekgetho revealed.

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Ayavelisa’s consortium partners, Laurie Shaw and V3 Consulting Engineers, received payments of R2.4 million (R2 430 583.21) and R117 952.49 respectively.

“Ayavelisa Consulting received into their Absa and Nedbank account payments totalling to R19 240 200.74 for the period between 19 October 2018 to 15 June 2022.”

Additionally, Lazola Media received a total of R13 million (R13 069 255.52) in payments between 2018 and 2020.

“Lazola Media was an entity owned by one of the employees of Ayavelisa Consulting that was tasked to manage all the events of the Ayavelisa Consortium,” Lekgetho said.

R70 million tender used to enrich municipal officials

Lekgetho also noted that the SIU’s investigation uncovered that one official from the O.R. Tambo Municipality received R120,000 from a service provider.

“The SIU is finalising investigation on allegations that the service provider has bought a motor vehicle that is being used by a municipal official. The details of the motor vehicle are known to the SIU.”

The SIU discovered that the municipality paid R2 million (R2 004 008.98) for a boxing tournament that took place before the SLA was enacted in July 2018.

The unit found evidence indicating that the Kuboni Boxing Tournament was instructed to submit its invoice to Ayavelisa Consortium, and the payment was processed under the SLA, despite not being covered by it.

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Lekgetho informed members of Parliament that the SIU concluded that municipal officials effectively used the tender as a means to enrich themselves, along with their friends, family, and relatives.

“A number of payments [and/or] contracts were done via third party subcontracting where no municipal processes were not followed.”

He further indicated that the unit has faced challenges in obtaining documents for the investigation.

“The SIU observed that a number of witnesses were afraid to provide evidence/information for fear of victimisation from their superiors. This was escalated to the mayor who promised to follow up,” Lekgetho added.

SIU referrals

Lekgetho confirmed that the unit was currently gathering evidence to present to the civil litigation case assessment committee.

This committee will evaluate the potential for referring a civil case to the Special Tribunal to set aside the contract and pursue the recovery of approximately R54.1 million.

The SIU has referred 11 officials for potential disciplinary action to the municipality, and six cases have been forwarded to the National Prosecuting Authority (NPA) for criminal prosecution.

Lekgetho added that investigations are still ongoing and are expected to be finalised by 15 December 2024.

Additionally, the most recent proclamation signed by Ramaphosa in August, authorising the SIU to investigate the procurement of five water supply structures at the O.R. Tambo Municipality, was also in progress.

This investigation is anticipated to be completed by 31 August 2025.

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