Giyani water project: SIU reveals irregularities and alleged corruption in R4.1bn project

An investigation by the Special Investigating Unit (SIU) has identified a corrupt relationship between state-owned Lepelle Northern Water (LNW) officials, service providers and department officials.

The SIU appeared before the Standing Committee on Public Accounts (Scopa) to give an update on the investigations relating to the department of water and sanitation, specifically the Giyani water project.

The Giyani Bulk Water Project was started in 2014 and is yet to be completed.

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The project, intended to transfer water from Nandoni Dam to 55 communities, saw its budget balloon to R2.2 billion, contrary to the directives of the minister, and without approved budget plan.

The SIU was mandated, in terms of Proclamation No R22 of 2016, to investigate the awarding of contracts by the Lepelle Northern Water and Gauteng Department of Human Settlements.

SIU findings

The SIU found that the appointment of LTE Consulting Engineers (LTE) at a contract value of R2.2 billion was irregular and unlawful.

“It was concluded without due regard to section 217 of the Constitution, the LNW SCM Policy and the directives of the Minister,” said the SIU.

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“It was found that the appointment of LTE by LNW both on 18 August 2014 and 25 September 2014 were irregular and unlawful in that: LTE was not registered with the Construction and Industry Development Board (CIDB) to undertake/carry out construction work for public sector contracts.

“LNW was prohibited in terms of section 18 of the CIDB Act, read together with the Regulation 30(c) of the CIDB Regulations, to appoint a contractor to carry out construction works without a valid registration certificate issued by the CIDB.”

The SIU found that LNW made irregular payments to LTE and there was a corrupt relationship with LNW officials, Department officials and LTE. pic.twitter.com/8xCG5wJOTm

— Special Investigating Unit (SIU) (@RSASIU) November 14, 2023

The SIU investigation also uncovered that the LNW paid R4.1 billion, which far exceeds the original contract value of R2.2 billion.

“The SIU has identified a corrupt relationship between the LNW officials, service provider and departments officials.”

An expert called in to examine five of the 167 installed boreholes found that the costs had been inflated by R893,422,148.17 on the work that was reviewed.

Civil litigation

The SIU has been involved in a legal scuffle since November 26 2018 in an attempt to have the contract to the value of R2.2 billion declared unconstitutional, invalid and set aside.

“The quantum of the contract has subsequently been increased to R4.1 billion,” it said.

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The SIU is also pursuing civil action against LNW officials to recover money lost due to their involvement in the alleged corruption.

The SIU has launched a damages claim in the Special Tribunal against former employees on LNW for the value of R1.9 billion.

As a result of the civil action, pension funds of the implicated LNW executives have been frozen.