Erwin's company lands tender-free coal deal
A company owned by former public enterprises minister Alec Erwin and his former director general Portia Molefe was appointed, without any tender process, as the interim manager of a coal logistics programme at Richards Bay.
And the consultancy, Ubu Logistics, has now been appointed permanently following a limited bid process, the Mail & Guardian can reveal.
The contract is to administer the Quattro Programme at Richards Bay Coal Terminal. Quattro is an empowerment scheme giving junior black economic empowerment coal miners access to a four-million-tonne coal export allocation at the privately owned coal terminal.
The department unilaterally and summarily dumped Ubu’s predecessor, Mhlatuze Bay Coal Administrators, in February 2011, citing a R5.5-million embezzlement case against an employee. Ubu was appointed immediately.
At the time Mhlatuze confirmed the alleged fraud and said it had laid criminal charges and the matter had been reported to its members and stakeholders, including the department, in July 2010.
At the time of its axing, department spokesperson Bheki Khumalo claimed: “The department acted decisively when it uncovered some maladministrative practices.” It raised eyebrows because the department allegedly had known about the case for six months.
Some in the industry criticised Ubu’s appointment, claiming that it had no “hands-on” experience in coal logistics.
Khumalo would not give the M&G details on what legal processes were followed in Mhlatuze’s replacement.
This newspaper then lodged a Promotion of Access to Information (PAIA) application for all written records that justified the decision to replace Mhlatuze with Ubu.
In a letter, the department confirmed it was “not in possession” of any such records. It could provide only a letter that was written after the fact and sent to the coal-industry task team representing coal industry stakeholders.
The letter outlined that Mhlatuze had been removed “to prevent further misappropriation of funds” and Ubu had been appointed “in the meantime”.
This means that no formal process was followed and Ubu was appointed tender-free.
Industry insiders said Mhlatuze’s members did not legally contest the decision because they believed it would jeopardise their relationship with the department.
The minutes of a task team meeting in March—also provided as a result of the M&G‘s PAIA application—provided the first recorded clarification that Ubu’s appointment was made “on an interim basis”.
It was agreed at the meeting that an open tender process, “which could take several months”, would not be followed in appointing a permanent administrator.
Instead, three companies would be invited to submit proposals. According to an industry insider, invitations were sent to four companies. One declined, one was disqualified, one made a serious bid and Ubu, the fourth, was successful.
Before the permanent appointment was made, Khumalo told the M&G: “Ubu was selected because it was doing a similar project wherein it was assisting junior miners in their bid [for] coal allocation within the Eskom environment.”
But Ubu shareholder Portia Molefe denied this: “No, we were not involved in anything like that.”
Molefe’s husband, Brian Molefe, was appointed Transnet chief executive in March this year, the month after Ubu was initially appointed.
Transnet Freight Rail and Transnet Ports Authority work intimately with Quattro and Richards Bay Coal Terminal.
Also in March Reuters reported that the controversial Gupta family—close to President Jacob Zuma, Brian Molefe and Zuma’s son Duduzane—had entered into a joint venture with Zululand Anthracite Colliers (ZAC) to export coal and that ZAC was a member of Quattro. ZAC immediately denied the Gupta-Zuma partnership.
Asked to respond to the implication that Ubu had benefited preferentially, neither the company nor Khumalo responded.
Khumalo said Mhlatuze was removed “based on serious and material breach of duty on their part” and Ubu was appointed “to ensure that mineral resources’ work was not disrupted”.
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