Transport and logistics giant Imperial, which is being investigated by the Scorpions and the Department of Transport for alleged illegal actions in its car fleets contract with the government, is facing another probe — in Lesotho.
The Lesotho government, which also has a car fleet contract with Imperial, is investigating whether the charges ”imposed” by Imperial were ”in accordance with agreements”.
The company signed the contract to manage the entire fleet of the mountain kingdom in 2000.
Almost a year after the contract was signed the Lesotho government appointed a consultancy firm to ”review” the contract to ”test whether charges paid by government … to Imperial Fleet Services [a subsidiary of Imperial Holdings] were reasonable”.
The Lesotho administration, which is led by Prime Minister Pakalitha Mosisili, is also investigating whether Imperial charged for cars that were out of service. Imperial provides full maintenance leasing and manages maintenance on the entire government fleet.
Imperial Fleet Services MD Walter Hill said the Lesotho government had the ”right to investigate any contract to assess whether they are getting value for money”. He said there was nothing irregular in the contract.
In South Africa Imperial won the government fleet tender in 1999 through Rentals to Government (RTG), a consortium it majority owns. Notable about the contract is the provision for a profit-sharing agreement in terms of which the government receives 50% of RTG’s net profit.
At the heart of the allegations is that Imperial stripped profits from RTG and transferred them to entities within the Imperial group that are not subject to profit-share with the government, effectively depriving the government of its share.
Imperial has since rejected the allegations as ”unfounded”, saying they were disseminated by a ”disgruntled former employee”. It also said it was cooperating fully with investigators and had offered the Scorpions access to documentation.
Auditing firm CVMP Ramathe Forensic Accounting Services was appointed by the transport department to conduct the probe. Last month Dan Pretorius, the department’s financial officer, said the firm had started probing RTG’s books. He would submit a preliminary report soon.
The firm appointed to probe the Imperial deal in Lesotho, MMR Advisory Services, submitted its report to the government there last April. A representative of the privatisation unit of the Lesotho government this week declined to give the Mail & Guardian a copy of the report, saying it was ”still confidential”.
”The contents of the report are still confidential and cannot be publicised while it is still under the consideration of the government of Lesotho. Please be assured that you will be furnished with the report and its outcomes as soon as the government’s consideration is completed,” said Makalo Ntsasa, senior information officer for the privatisation unit.
The terms of reference of the review included, among other things, an investigation into ”whether the charges imposed by Imperial Fleet Services were in accordance with the agreements”.
The review was also aimed at examining the ”reasonableness of the charges by Imperial Fleet Services as well as applicable fee structures in comparison with sector practice in the Southern African region”.
MRR Advisory Services was also asked to probe ”the accuracy of the billing records on a test basis”. The Lesotho privatisation unit said government participants in a presentation of the review also raised several concerns about Imperial.
These include:
The continuing charges for vehicles that are out of service while with Imperial for repairs and maintenance.
Slippage of the direct control and responsibility for management of vehicles by departments because of over-centralised accounting systems.
The non-existence of the monitoring board that should have been established at the beginning of the partnership.
The residual value and method of disposal of vehicles.