Tender storm over basic education
A storm over two tenders worth hundreds of millions of rands, awarded by the basic education department to a company tied to its director general’s future mother-in-law, is tearing the department apart.
Bobby Soobrayan, the basic education director general, is in the firing line over an apparent conflict of interest in the tender awards, which were for workbooks and assessment booklets. And many schools have not received theirs a fortnight after the school year started (see sidebar).
Sources sympathetic to Soobrayan and the company that won the tenders claim the controversy is being stoked by those who want their favourite to take Soobrayan’s place. One senior official said that Soobrayan was the “victim of a much bigger conspiracy” and that he could be ousted over the present controversy. “Whoever runs things in the national department is going to be sitting on a lot of power. There are billions of rands worth of tenders,” the source said.
The two tenders at issue are worth more than R250-million this year and printing companies are jockeying to be awarded them—and others—in the future.
Soobrayan is engaged to be married to the daughter of former education department official Salama Hendricks, who left the department under a cloud. She co-owns Lebone Group Holdings, a sister company of the winning bidder, Lebone Litho Printers. Soobrayan is to marry Fathima Hendricks, his former personal assistant in the department, in March. Fathima’s sister has since taken over as Soobrayan’s PA.
Higher Education Minister Blade Nzimande’s brother-in-law, Muzi Ntombela, is also a shareholder in Lebone Group. Nzimande’s department was split from the basic education department in 2009, meaning Ntombela’s involvement does not give rise to a direct conflict of interest in this case, but it compounds the suspicion that the Lebone companies have traded on who they know.
Hendricks and Ntombela joined Lebone Group several years ago to “solicit new business” from the private sector and the government.
Lebone Litho and Lebone Group are both majority owned by self-made millionaire Keith Michael. Lebone Litho, jointly with printing giant Paarl Media, won the two tenders in November. The first, for R243-million, was to print, package and distribute 26-million maths and English workbooks to 19 000 public primary schools countrywide—part of Basic Education Minister Angie Motshekga’s drive to improve literacy and numeracy.
The second tender, for R12-million, was to print and distribute the annual national assessments tests.
The department and Michael, who also manages both Lebones, maintain that there is no conflict of interest because:
- Soobrayan did not personally participate in the tender adjudication
- External auditors monitored the tender process
- Hendricks was involved with Lebone Group, not Lebone Litho, which got the tenders.
Regarding Hendricks’s possible involvement, Granville Whittle, the departmental spokesperson, said: “We are not aware of any relationship between Salama Hendricks and any of the bidders involved with this tender.”
Michael claimed that Lebone Group, which involved Hendricks and Ntombela, and Lebone Litho, which won the tenders, were “two separate companies which own different assets”, and that Hendricks played no role in securing the tenders.
He admitted that he was very close to Hendricks. He took her under his wing after she left the education department, where she was a senior official, about six years ago amid accusations that she had misappropriated money.
Whittle refused to clarify the circumstances under which Hendricks departed and said they were “irrelevant”. Michael said it was “old news”.
Attempts to get comment from Hendricks were unsuccessful and it later emerged that Michael had gagged her.
He said: “I am the CEO [chief executive officer] of this whole operation and I told Salama not to say a word to anyone. I have given Salama strict instructions that if she comments to any journalist I will take her to court.”
He said he had also warned her that she would lose her directorship and shareholding in Lebone Group.
The department and Michael’s comments stand to be challenged as:
- Even if Soobrayan did not participate in the adjudication of the tenders he could make implementation decisions affecting Lebone Litho’s profit. Whittle said that although the contracting price for the workbooks was R243-million, an escalation “not beyond R300-million” was on the cards because of “changes in the specifications of the workbooks” made by the department.
- Although Lebone Litho, which won the tenders, and Lebone Group are formally distinct entities, they appear to be closely entwined and used interchangeably by Michael, who controls them.
Lebone Group started out in 2005 as Lebone Litho and was renamed a year or two later. Lebone Litho was started under a different name in 2004 and then took the name Lebone Litho, company registration records show.
Lebone Group and Lebone Litho share the same address in Selby, Johannesburg, where Hendricks was based. The company would not answer questions about her whereabouts.
Michael and Ntombela fell out late last year over accusations by Michael that Ntombela had “colluded” behind his back to divert a KwaZulu-Natal provincial tender, previously awarded to Lebone Litho, to another company.
Michael subsequently initiated court proceedings.
‘Soliciting new business’
In an answering affidavit provincial education official Rejoice Mcuma said that Lebone Litho, which Michael had used to tender for the renewal of the tender, had been disqualified because the evaluation committee “did not know which corporate entity it was dealing with”.
She added: “It is significant to point out that the applicant states that its capacity and the current infrastructure servicing the contract would revert to Lebone Group Holdings, of which Michael is the majority shareholder. Michael states that Lebone Litho Printers does not have the capacity to perform the contract on its own and would have to revert to Lebone Group Holdings — “By Michael’s own admission any contract awarded to [Lebone Litho] is really going to be performed by Lebone Group,” Mcuma said.
The Lebone Group shareholders’ agreement attached to the court papers show Hendricks and Ntombela each holding 10% of Lebone Group, with Michael holding the balance. The agreement specified that Hendricks and Ntombela should “introduce new business to the company” and manage client relations. This included “soliciting new business for the company from both the public and private sectors”.
Michael told the Mail & Guardian that the court matter was later dropped but a decision was taken in December to dissolve Lebone Group.
It is not clear how this squares with Michael’s threat this week to strip Hendricks of her share in and directorship of the company.
Ntombela declined to comment, but insisted that Lebone Litho and Lebone Group were distinct entities.
Basic Education Minister Angie Motshekga announced last year that maths and English workbooks would be introduced in schools nationally as part of a massive intervention to boost poor levels of numeracy and literacy in primary schools. She told Parliament in March that many learners were leaving primary school without the basic skills they needed to succeed in life.
But a fortnight after schools started many are still without the books and educators have complained that crucial teaching time is being lost.
Department of basic education spokesperson Granville Whittle said in response to questions this week that 69% had been delivered by Monday.
A consortium involving Lebone Litho Printers and Paarl Media, the latter owned by Media24, controversially won the tender to supply the notebooks in November. The bid documents stated that the first batch of workbooks would be delivered to all primary schools one week before the January 2011 school year started.
Lebone Litho’s Keith Michael, however, claimed the deadline was January 15. He said “all the printing is done” but “rain and flooding” had hampered deliveries. Other bidders have cried foul, claiming that the job should have been divided because no single printer had the capacity to perform the huge task.
This article was produced by amaBhungane, investigators of the M&G Centre for Investigative Journalism, a nonprofit initiative to enhance capacity for investigative journalism in the public interest. www.amabhungane.co.za.