Free State paid a highly inflated R255m for asbestos eradication, Zondo hears

Deputy Chief Justice Raymond 'Ray' Zondo greets the commission before hearing testimony from Trevor Manuel and Siphiwe Nyanda, 28 February 2019. Picture: Karen Sandison / African News Agency (ANA)

The commission’s evidence leader, advocate Paul Pretorius, says the evidence will show the manipulation of procurement processes and cost-ineffective ‘criminal project’.

Evidence leader at the commission of inquiry into state capture, advocate Paul Pretorius on Tuesday told the chairperson of the commission, Deputy Chief Justice Raymond Zondo that for the most part of the week, the inquiry would hear evidence relating to the project to eradicate asbestos in the Free State, which was highly inflated in terms of pricing, and that due processes were not followed.

Pretorius pointed out to Zondo that last year former Free State economic development MEC Mxolisi Dukwana gave evidence before the commission about the project which cost the Free State R255 million.

Pretorius said following Dukwana’s evidence, the commission conducted an extensive investigation which resulted in a comprehensive report placed before Zondo alongside Public Protector Busisiwe Mkhwebane’s finding that the Free State department of human settlements was guilty of improper conduct in relation to the said project.

Pretorius said the commission will also hear evidence from an asbestos expert, Jacobus Roets, whose evidence will show that the project was “more than an issue of procurement and state expenditure” and the distribution of the latter but that the Free State government had a constitutional duty to carry out which entails the preservation of the health and welfare of its residents by eradicating the asbestos at low-cost houses.

Roets’ evidence would also deal with the serious health conditions presented by asbestos and that though millions have been spent on the project, people are still exposed to the dangers of asbestos, Pretorius said.

He said those involved in the project and some who are expected to appear before the commission include the head of the Free State department of human settlements, Nthimotse Mokhesi, the department’s director of Supply Chain Management John Matlakala, the department’s chief engineer Mr Makepe and Edwin Sodi, among others.

Sodi, who is expected to appear before the commission on Friday, and Ignatius Mpambani entered into a joint venture through their entities Blackhead Consulting and Diamond Hill Trading 71, respectively, which scored the R255 million contract in 2014, Pretorius said.

Mpambani was gunned down and killed in broad daylight while driving his Bentley in Sandton in 2017.

Pretorius said the Free State contract was transferred from Gauteng and that with regards to the project at the latter province, there is no evidence of there being any competitive bidding that was done and the Auditor-General declared the “whole procurement” process of the said project as “irregular”.

In the Gauteng project, Sodi’s Blackhead Consulting assessed how many low-cost houses still had asbestos at a cost of R650 per unit, Pretorius said, adding that when the project was transferred from Gauteng to the Free State, there was no contract between Sodi’s entity and the responsible department in Gauteng.

Pretorius said evidence will show that the process was entirely flawed which allowed the Free State department to participate in the Gauteng contract.

According to Sodi’s evidence, he made massive profits from the Gauteng project which cost almost R230 million, with him pocketing almost R100 million, Pretorius said.

Evidence will also show that no competitive bidding was done for the Free State project and that the participation and unsolicited processes were both entirely flawed, Pretorius said.

He said according to Sodi, Mpambani had no knowledge, no expertise nor capacity to perform the work, with the deceased’s contribution being to “unlock” the opportunity of the contract through his contacts with officials in the provincial government. Mpambani was paid 50% for unlocking this opportunity, Zondo heard.

The joint venture charged the Free State department R850 per unit without a contract being signed, Pretorius said, adding:  “On every count, it must have been … apparent to the officials who were dealing with this process that there was no lawful justification … for the contract in the Free State.”

Pretorius said no competitive bidding was done before the awarding of the Free State contract, there was no transparency, the prices were inflated and the participation process was a “clumsy sham to cloak” the contract with a “veneer of legality”.

He said the evidence would also deal with sums of money that were allegedly disbursed through government officials.

The Free State contract did not originate from its department and so was not budgeted for but had been Sodi and Mpambani’s initiative, Pretorius said.

The two approached the head of the department and asked for a proposal and an unsolicited proposal was prepared, a service level agreement entered into, Pretorius said.

The service level agreement had no information on the overall price of the project and it tasked the joint venture to sourcing the funds, which meant Mpambani would continue with unlocking the opportunities to ensure budgetary arrangements were made so the Free State would pay for the project, Pretorius said.

He said ultimately funding came from the national department of human settlements after gross misrepresentations were made to the director-general of the department at the time, Thabani Zulu.

The gross misrepresentations to Zulu were in a new business plan which said the R850 per unit price would be for the assessment and eradication of asbestos at 36,000 households and the proper disposal of the material, Pretorius said.

The evidence will also deal with a prepayment of R51 million and that the cost of the entire project would not have exceeded that amount, Pretorius said.

Furthermore, the joint venture appointed a subcontractor, Master Trade, at R54 million, to do “all the work, chair,” Pretorius said, adding that this subcontractor appointed another subcontractor who actually did the work for R21 million.

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