/ 26 August 2008

Why is Balfour protecting Bosasa?

The catering company, the interests of which Correctional Services Minister Ngconde Balfour is enthusiastically protecting, is under investigation for tender fraud by the Special Investigating Unit (SIU).

Balfour has always styled himself as an enemy of corruption and until now has been a staunch supporter of the SIU’s work in his department. But this week he was slammed for defending Bosasa Operations’ multimillion-rand contract to provide food for South Africa’s seven main prisons.

His protection of Bosasa caused a stand-off between him and prisons’ boss Vernie Petersen, with Balfour writing to the commissioner that ”something must break” if they cannot ”trust and work together in this department”.

The feud was caused by Balfour’s ”interference” in the working of the department when he wrote Petersen a letter prescribing how the tender award was to be handled. The result was a further extension of Bosasa’s already prolonged catering contract.

Petersen opposed a further extension of the company’s tenders. He refused to comment this week. Balfour didn’t respond to the Mail & Guardian‘s questions about his relationship with Bosasa and his perceived interference in the Department of Correctional Services’s (DCS) tender processes.

The tension in the DCS intensified last week when an anonymous email was sent to the department’s top management, claiming that Petersen is playing into the hands of ANC president Jacob Zuma’s supporters and trying to show that he is a ”Zuma man”.

The M&G previously reported that Bosasa is under investigation by the SIU for alleged tender fraud relating to DCS contracts. At the end of 2007 President Thabo Mbeki ordered the SIU to investigate massive procurement tenders issued by the department during the tenure of former prisons’ boss Linda Mti.

Mti quit his job and was appointed head of security for the 2010 Fifa World Cup after Beeld revealed that he was a director of a company started by Bosasa’s company secretary, Tony Perry.

Since 2004 Bosasa Operations and its subsidiaries have been awarded tenders totalling more than R1-billion by the DCS.

The catering tender was originally awarded to Bosasa Operations in May 2004 for R240-million a year. This was to provide ”catering and training services” at the Durban-Westville, Pollsmoor, St Albans, Johannesburg, Pretoria, Modderbee and Krugersdorp prisons.

When the contract expired in July last year, it was extended for another 12 months. According to the chair of DCS’s portfolio committee, Dennis Bloem, the department’s former chief financial officer Patrick Gillingham told him that the contract was ”value for money” and ”doing very good”.

The portfolio committee, however, began to question the contract after it was asked for a further extension in July this year.

”When the department appeared before us in February this year, they said they were going to advertise the tender before [the Bosasa contract] expires on July 31. But they did not.”

It was reported this week that a deal was reached whereby Bosasa would continue providing food for six months until a new tender process had been finalised by a committee chaired by deputy commissioner Sibushini Moodley, and not Gillingham as Balfour had wanted.

Gillingham is perceived by department insiders to be close to Bosasa as he was regularly seen at the company’s Krugersdorp premises during his tenure as chief financial officer. He was transferred to become regional commissioner of Mpumalanga, Limpopo and North West after it was revealed that he was managing the DCS’s multibillion-rand budget with only a matric qualification.

Last week government advertised the new contract for ”full food provisioning services, full maintenance of food services unit equipment, cleaning services of food service units and training of offenders” at the seven prisons.

Bloem fully supports Petersen’s efforts to ”clean up” the department and credits him for the SIU’s ”big and serious” investigation.

Bosasa Operations is led by chief executive Gavin Watson, a politically connected businessman from Port Elizabeth’s well-known Watson family.

According to the company’s shares register, Bosasa Operations is wholly owned by Bosasa Empowerment and Management Services, the shareholders of which are Mpako Investments (26%), Mela Womens Investments (33,3%), Nzunzo Investments (18,5%) and the Bosasa Employees’ Trust (22,2%).

Further investigations of these companies show that Mpako is fully owned by Watson’s family trust; Mela is owned by Port Elizabeth businesswoman Carol Mkele; and Nzunzu by Bosasa director Joe Gumede.

This means that Watson and Mkele together effectively own 59,3% of Bosasa Operations, Gumede 18,5% of the company and the beneficiaries of the Bosasa Employees’ Trust hold the rest of the shares.