SIU probes senior officials in textbook shame

The Special Investigating Unit (SIU) is investigating 22 Limpopo education department officials, some of them very senior, over alleged irregularities in textbook and other educational tenders worth hundreds of millions of rands.

A confidential SIU report leaked to the Mail & Guardian shows that the R680-million contract awarded to the politically connected company EduSolutions for textbooks, educational toys, science kits and other materials for the 2011 school year is one of those under scrutiny.

Meanwhile, the M&G has established that Shaun Battlemann, the head of EduSolutions’ parent company, African Access, accompanied President Jacob Zuma on a trip to the United States last year. African Access also donated a house to a close friend of Zuma (see “EduSolutions’ parent a funder of Zuma trust”).

Last week the M&G reported that the government had ignored legal opinion by a senior advocate, Pat Ellis, on January 17 that the EduSolutions textbook contract was probably invalid and alternative ­suppliers should be sought.

The SIU report shows that the unit is also interested in the award of a R95-million management contract to multinational project management company Aurecon for 40 “purported fast-track” educational projects, when the lowest bid was R26.6-million.

A well-placed source estimated the value of the projects, including the construction of classrooms and schools, at between R800-million and R1.6-billion.

Aurecon said it knew from a press article that it had been implicated by the SIU report, which it had not seen. But it said it had co-operated fully with an investigation ordered by the treasury and conducted by Gobodo Forensic and Investigative Accounting and, “as far as we know, there has not been any indication to us that we are party to the allegations”.

The report, by anti-corruption task team SIU national co-ordinator Johann Kluyts, reveals that the unit was mandated to probe the Limpopo education department under Proclamation R21 on March 23.

Among the 22 officials it lists for possible disciplinary charges are chief financial officer Martin Mashaba, senior general manager corporate services Miranda Malele, senior general manager Cecilia Makondo and another very senior official who could not be contacted for comment.

The report indicates that these officials face 44 possible charges ranging from allegedly contravening the Public Finance Management Act and treasury regulations to financial misconduct and misrepresentation.

Fruitless and wasteful expenditure
The report paints an alarming picture of fruitless and wasteful expenditure through the awarding of multimillion-rand contracts without due process, over-payment for services, procedural flaws in the bid adjudication, failure to ensure winning bidders adhere to contracts, duplicate payments to service providers and the fraudulent alteration of approved bids to extend contracts.

The SIU dossier claimed that officials involved in the EduSolutions procurement of pupil and teacher support materials had been “grossly negligent” and guilty of “financial misconduct” in relation to section 81(1) of the Act on several occasions.

It said goods had been signed off as delivered to a warehouse when they had not been, and payments were authorised to EduSolutions on a pro forma invoice and without supporting documentation.

The EduSolutions contract was signed under the watch of former head of department Benny Boshielo, who resigned in July 2011.

Approached for comment, EduSolutions executive director Moosa Ntimba said the company was “concerned about any allegations of untoward conduct” and had “been co-operating with the investigators from various agencies”. He said he was not “aware … about the nature of the allegations or charges”, but added that EduSolutions staff had been approached as possible witnesses.

The company’s lawyer, Ian Small-Smith, said that the “board and management of EduSolutions have seen no proof substantiating” suggestions of collusion between EduSolutions’ staff and departmental officials.

The report alleges that a senior official may have violated the Act by awarding the R95-million contract to Aurecon and its Limpopo joint venture partners, Tubatse Consulting and MOT Professional Service Consultancy, despite their bid being R45-million higher than that of their nearest competitor.

The SIU alleged that the official  “misrepresented, via comparative analysis … that Aurecon JV was ranked number one in terms of price”.

The contract was signed for the period September 1 2010 to August 31 2013. Yet shortly after winning the bid Aurecon JV entered a service-level agreement that exceeded the tendered amount and extended the contract by six months. A source close to the education department put the renegotiated management contract price at R150-million.

Approached for comment, Mashaba and Makondo referred the M&G to the office of Limpopo education MEC Dickson Masemola.

Mashaba said he could not comment because the issue was a departmental one. He is alleged to have acted improperly as chairperson of the bid adjudication committee that approved Aurecon JV’s contract, and for approving Aurecon’s expenses in excess of the allocated budget.

Malele said she could not comment because the allegations had not been made available to her and she needed to study them. She confirmed that representatives of Gobodo had conducted interviews with various staff members.

The M&G has seen a confidential affidavit by Bernard Levenstein, a Gobodo forensic auditor investigating on behalf of the national treasury, who found a “significant deviation” from the tender initially entered into with Aurecon JV.

Levenstein alleged that in some instances the company was paid R1.5-million more than the approved monthly budget limit.

Responding, Aurecon said that additional work based on backlog from previous work and compliance with specific requirements “should not be seen as fraudulent”.

Such allegations
Aurecon’s Ronnie Khoza said “we are concerned if the [SIU] allegations are true. No service provider of our stature could ignore such allegations … as they would damage the reputation of the firm.”

Khoza said it had conducted its own probe to test whether there was collusion “and consistently we have been told our submission was based on the quality of the proposal … and nothing else”.

Spokesperson for the Limpopo educational department, Pat Kgomo, said that the intervention task team sent into the province by national government “continues to satisfy itself that all processes of procurement and supply chain management have been done according to governmental policies”.

To date the department had not received a report on progress in this regard and could not answer the M&G’s questions.

See also: EduSolutions’ parent a funder of Zuma trust

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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