Former Newcastle mayor’s brother denies allegations he benefited from two-day electrical blackout

Former Newcastle mayor’s brother denies allegations he benefited from two-day electrical blackout

Lennoxton substation. Image: Newcastle Advertiser

Riaz Rehman denies any business dealings with his brother, despite the owner of a business that provided generators to the municipality saying he was approached by Riaz.

Riaz Rehman, the brother of former mayor Afzul Rehman, allegedly profited R2,411,000 from the electrical blackout on July 18, 2014, following an electrical surge at the Lennoxton substation. The area’s electricity supply was disrupted for more than 48 hours, reports Newcastle Advertiser in part six of its investigative series.

The mayor and municipal manager, Kebone Masange, allegedly deviated from regular tender processes to purchase three generators to restore power urgently. Three businesses quoted the municipality.

Source: Newcastle Advertiser

The preferred business was paid R1,256,977 for a generator and R2,568,000 for two more after that. In total, the preferred business received R2 million more than the two competing ones. The municipality believed that the second two generators were 371kva and 412kva, but a physical inspection indicated one was 337.5kva and the other 375kva. According to the report, all three generators were Chinese imports that an independent supplier estimated had cost about R350,000 each.

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The owner of the business whose generators had eventually been used stated in the report that he was never contacted by the municipality for the generators, but that Riaz Rehman had approached him.

Of the R1,256,877 the Newcastle Municipality paid to the business for the first generator, R373,285 was paid to the retail outlet for the generator, R50,592 was left in the business bank account allegedly for Riaz’s use of the company name and bank account, and R833,000 was transferred to Phonetastic.

Of the R2,568,000 paid for the second and third generators, R940,000 was paid to the retail outlet for the generators. It is alleged that R50,000 was left in the business bank account for Riaz’s use of the company’s name and bank account, and R1,579 000 was transferred to Phonetastic. Altogether, the R2,411,000 paid to Phonetastic was apparently meant to cover the transport costs of the generators.

In this instance, “transporting the generators” had cost more than the generators itself. A director told investigators the over-pricing of the generators meant they could not be recorded in the asset register.

He further reported that one of the generators fell off the truck, but repairs to the generator could therefore not be claimed from insurance.

The team from Treasury recommended that action be taken against the director involved and Kebone Masange, and that council consult with its legal advisors to institute criminal action against Riaz Rehman. Masange “failed to take reasonable steps to ensure that the resources of the municipality are used effectively, efficiently and economically,” reads the forensic report. An investigation initiated by AfriForum led to the Hawks probe into the contract.

“Through the investigation initiated by AfriForum, we hope to see that anyone involved in corruption faces the full might of the law.”

He also said that he did not see eye-to-eye with his brother, and that they had not spoken in years. He denied ever doing business with his brother. Rehman was dismayed at people’s habit of looking at him “through his brother”.

“It’s not going to work and I’m tired of this bulls**t,” he lamented.

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