City of Jo’burg in alleged dodgy R500m tender deal

The City of Johannesburg awarded a R500-million tender to a consortium that allegedly saw the tender documents six months before the contract was advertised.

The Ener-G Systems consortium was awarded a five-year contract in November 2007 to extract land-fill gas for converting waste to energy.

But Lillian Naicker, the owner of Waste Rite, one of the five companies in the consortium, was shown details of the gas-extraction tender in March that year, six months before it was advertised, according to a former high-level Waste Rite employee.

It is the second questionable deal involving the City of Johannesburg. The Mail & Guardian reported earlier this month that Waste Rite was allegedly defrauding the City’s waste management company, Pikitup.

The former Waste Rite employee claims that a former senior City of Johannesburg employee, whose name is known to the M&G, provided the company with documents about the tender at a dinner with Naicker and another Waste Rite employee.

The city employee came under the spotlight in 2005 after a deal in which he had sat on the panel that awarded a waste-recycling tender to a British company, Thermsave, went to court.

The judge found that Thermsave had treated the employee and two others on the adjudication panel to a three-day holiday in the United Kingdom and the company had received details of the tender a year before it was advertised.

The court ruled that the contract should be put out to tender again.

Both the Waste Rite employee and sources from another consortium competing for the tender, Interwaste, claim that the same employee was on the adjudication panel that chose Ener-G Systems.

The former city employee denies adjudicating the tender and says that, although he knew Naicker before the tender was awarded to Ener-G, they had “no relationship”. He resigned from the City of Johannesburg in December 2007, a month after the tender was awarded, and is now employed in provincial government.

Members of Interwaste say they complained when allegations of irregularities were first made.

“We asked the city a number of times to give us information on how the winning bidder was selected, but very limited information was provided,” said Michael Goldblatt of Palmer Development Group, a partner in Interwaste.

In 2008 Waste Rite made headlines when it was exposed for overcharging an Eastern Cape municipality and winning a contract without a proper tender. Its contract with East London’s Buffalo City Municipality was cancelled after a forensic audit highlighted irregularities in the tender process and that the company had overcharged the municipality by hundreds of thousands of rands.

In an earlier deal Naicker’s company, Crossmoore Transport, was awarded a contract for waste removal by the Ekhuruleni Municipality, but the municipality soon cancelled the contract because of alleged bribery and other irregularities.

Naicker and the city did not respond to the M&G‘s questions.

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.

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Gcina Ntsaluba
Gcina Ntsaluba works from Johannesburg. Investigative journalist, Researcher, Writer

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