Madonsela scents something rotten

The Cape Times was berated for publishing a report on a marine tender awarded to its parent company, Sekunjalo, headed by Iqbal Survé. Photo: Gallo

The Cape Times was berated for publishing a report on a marine tender awarded to its parent company, Sekunjalo, headed by Iqbal Survé. Photo: Gallo

News Analysis

Iqbal Survé is only human, so it is likely that at some point after he learned of the death of Nelson Mandela, he would have been visited by a flicker of relief.

After all, only a few hours earlier, the public protector had delivered a report that was deeply embarrassing for his company, Sekunjalo, the new controlling shareholder of Independent Newspapers.

Now all that would be swept off the front pages by Madiba.

Imagine his irritation, then, to discover last Friday that one of his own stable, the Cape Times, had retained its lead story on Thuli Madonsela’s report and opted to deal with Mandela’s passing by publishing a wraparound enclosing the normal paper.

Alide Dasnois was removed as editor the same day and a letter from Sekunjalo’s lawyers followed, demanding that the Cape Times apologise for publishing a story that did not reflect Sekunjalo’s version that the company had been “vindicated” by Madonsela’s report.

More coverage: Falling circulation a sign of the Times, so why did Survé single out Dasnois?

In the wake of these events, it is worth revisiting the report that caused all the trouble.

Docked Vessels
Titled “Docked Vessels”, it details the chaotic process that preceded and followed the awarding to the Sekunjalo Marine Services Consortium of a five-year, R1-billion tender. When it was announced on November 24 2011, Agriculture, Forestry and Fisheries Minister Tina Joemat-Pettersson personally endorsed the contract to run her department’s research and patrol vessels.

On December 6 2011, the previous contract holder, Smit Amandla Marine, launched a high court challenge to set aside the award.

On February 19 2012, Democratic Alliance MP Pieter van Dalen laid a complaint with the public protector.

He included references to a leaked internal department review of the tender by auditing firm PwC.

One of the red flags raised by PwC was that a member of the bid evaluation committee, acting deputy director general of fisheries Joseph Sebola, had scored Smit Amandla 1 (very bad) on all the criteria and had given Sekunjalo 5 (excellent) in all categories. PwC said this was questionable, because Smit Amandla had been doing the work for 10 years.

Just three months after the announcement of the tender award, on February 23 2012, Sekunjalo was constrained to write to the department confirming that it would not oppose the relief sought by Smit Amandla. Thereafter, the department cancelled the tender.

At pains to indemnify
​Joemat-Pettersson was at pains to indemnify Sekunjalo from blame, issuing a statement that noted: “As a result of our own flawed processes, an innocent company, Sekunjalo, has been portrayed as the culprit.”

Madonsela’s report, in the main, also lays the blame squarely with the department. Yet, in doing so, it raises as many questions as it answers.

Contrary to the provisions of the tender, there were two rounds of evaluations on the ability of the companies to do the job.

In the first round, based only on the bid documents, Smit Amandla scored best, receiving 74% against Sekunjalo’s 65%.

In terms of the specifications set by the department, bidders were required to meet an 80% threshold on functionality before price and black economic empowerment factors were compared. None did, so the evaluation committee asked for permission to rescore the bids after oral presentations.

Madonsela’s report reveals just how haphazard the process was: the one panellist with significant relevant expertise, Johann Augustyn, revealed he was asked to be a member of the evaluation committee just 20 minutes before the deliberations.

“According to him, they were given the packs just before the meeting and therefore had no chance to read through the voluminous documents.”

After the rescore, Sekunjalo was elevated to 81% and Smit Amandla dropped to third place with 60%.

Conflict of interest?
Significant to this change was the new 5 versus 1 scoring of Sebola, as well as that of another official, Peter Thabethe, who revised his main score for Smit Amandla down from 3 to 1. Now only Sekunjalo crossed the 80% threshold and was recommended to the bid adjudication committee for approval.

According to Madonsela’s report, the bid adjudication committee queried whether there was a conflict of interest for companies involved in fishing – which included Sekunjalo – to be involved in fishing patrols and other monitoring activities.

It was also pointed out that of the six bidders who qualified, four were controlled by the same parent company: Sekunjalo.

The bid adjudication committee resolved to ask PwC to review the tender process, and the auditors delivered the report on October 17 2011. PwC raised a number of procedural issues and recommended that the department discuss the findings with the treasury prior to awarding the tender. This was never done.

On November 4, Smit Amandla wrote to the department to query the process. It alleged there was “collusive tendering” in that at least four of the six bidders were “connected” parties, referring to Premier Fishing, Premier Fishing Consortium, Sekunjalo Investments Ltd and the successful Sekunjalo Marine Services Consortium.

Premier Fishing is a subsidiary of the main Sekunjalo holding company.

Smit Amandla wrote: “There is a reasonable suspicion that there may have been consultation, communication and arrangement amongst the four entities listed above, since they all tendered for the same contract and they all sit in on one another’s presentations – this is forbidden by the Certificate of Independent Bid Determination, which all the parties had to sign.”

On November 17, the department’s legal adviser noted that the issues raised by Smit Amandla posed significant risks and recommended that a senior counsel’s opinion be obtained.

Unflattering findings
Despite this, on November 21 2011, the department informed Sekunjalo Marine Services Consortium in writing that its bid for the tender had been accepted.

When Smit Amandla’s lawyers requested written reasons for the decision, the department’s legal adviser was again consulted. He said an investigation should be conducted.

On December 20 2011, Sizwe Ntsaluba Gobodo was appointed to conduct a detailed review of the Sekunjalo consortium’s bid.

Its findings, as revealed in Madonsela’s report, are unflattering.

Raising queries about the exact make-up of the Sekunjalo consortium, Sizwe Ntsaluba Gobodo concluded that the department ran the risk of not being able to hold any specific entity liable for wrongdoing.

The auditing firm found that the consortium did not have its own dock space and would use the quay space of Premier Fishing, which would mean tying some vessels up three deep, creating practical and security difficulties.

The review noted: “Sizwe Ntsaluba Gobodo’s discussion with Sekunjalo Marine Services Consortium members showed that members of the consortium have limited knowledge in the operation of vessels of the nature and size specified in the bid documents … all the operations of the main consortium member have been in South African coastal waters and they do not have experience in operating in international waters …

“During interviews with Sekunjalo Investments Ltd representatives, they stated that they planned to capacitate themselves with the required skills by appointing staff members who were at that stage working for Smit Amandla …

“Sizwe Ntsaluba Gobodo identified various instances where the consortium did not respond to information requested in the bid documentation.”

The findings left the department with little choice but to seek senior counsel’s advice.

Predictably, the unnamed advocate concluded that the process was “procedurally and substantively irregular” and the department was “duty bound to set it aside”.

Crucial questions not answered
​Madonsela commented: “On the facts before me, it is difficult to understand how a company with a track record in the fishing industry but none in the specific field that is the subject of the tender, no employees in many of the requisite performance areas and a bidder that left many key questions on the bid document unanswered, scored 80% on functionality, let alone how it ended up being the only company passing the functionality threshold.”

That, crucially, is the question Madonsela does not answer.

Although Sekunjalo has made much of the fact that Madonsela found no evidence of corruption, there is no evidence that she ever investigated this possibility.

Her stated term of reference was whether the “department’s irregular award … [was] an act constituting improper conduct and maladministration”.

Given the department’s admissions, she does not appear to have investigated whether corruption or favouritism played a role in the improper conduct that the department disclosed.

She could only report: “According to Mr Sebola, Smit Amandla’s bid was good on paper, but they had performed poorly in the oral presentation … Mr Peter Thabethe also echoed Mr Sebola’s sentiment … However, Mr Thabethe could not elaborate further to the team when asked whether his lack of technical expertise may have influenced his [scoring] …”

Madonsela – and the department – might have done well to consider the word of a recent judgment of the Constitutional Court in the awarding of the South African Social Security Agency tender.

Irregularities in the tendering process are not to be treated as mere bureaucratic inconveniences, the court held, because, in the words of the judgment, “deviations from fair process may themselves all too often be symptoms of corruption or malfeasance in the process. In other words, an unfair process may betoken a deliberately skewed process.”

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The M&G Centre for Investigative Journalism (amaBhungane) produced this story. All views are ours. See for our stories, activities and funding sources.


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