Are you sitting down for this?
The Road Accident Fund has pushed through a contract for the rental of 300 office chairs for almost half a million rand a month, in what amounts to R1 666 per chair, the Sunday Times has reported.
Another furniture contract with the same company, Gxakwes Projects, for R60 million, did not go ahead. Both contracts did not have a tendering process.
The fund is technically insolvent, with contingent liabilities totalling almost R190 billion, hence its attempts to make money by renting out office furniture.
The RAF takes R1.93 of every litre of South African petrol sold.
This has not helped them avoid a R34.7 million loss last year.
While the fund admits that renting furniture was “not the best option”, they say they need to do so “to settle claims immediately, resulting in a creditors book of about R8 billion.”
Transport Minister Blade Nzimande dissolved the fund’s board this week, declaring it dysfunctional and affected by “serious divisions”.
Gxakwes Projects, the company involved in the furniture contracts, has been red flagged by the National Treasury after a similar deal was entered into with Eskom, who wanted R24 million for the purchase of 9 217 chairs.
An inspection by the Treasury found that only 500 chairs were needed.
The attempt to secure a five year, R60 million contract without a tender was thwarted by some board members concerned that the “process is fraught with legal concerns.”
Reports of the goings on at the struggling state insurer are a bit like a car crash. As horrific as it is, you can’t look away.