Johannesburg Mayor Parks Tau has asked both the city's integrity commissioner and the public protector to investigate whether tender irregularities occurred in the awarding of a lucrative tender. This comes after the Mail & Guardian revealed that his wife had links with the company that won the contract.
The M&G reported last week that Pilisiwe Twala-Tau was one of the beneficiaries of Coral Lagoon, a consortium that acquired shares in Capitec Bank in 2006, now worth about R1-billion, with the help of a R285-million loan from the state's Industrial Development Corporation.
The M&G reported that the company that helped to assemble the Coral Lagoon consortium in 2006, Regiments Capital, won a highly lucrative contract to manage the Johannesburg council's R2-billion liability redemption fund, or "sinking fund", in the same year as Tau's wife was included in the consortium.
Tau said this week: "I am confident of my innocence … It is important that when such allegations arise we should subject ourselves to scrutiny. My decision to refer this matter to public inquiry has been motivated by this approach."
Twala-Tau's 1% stake in the consortium is worth about R10-million.
At the time, her husband was the head of the mayoral committee in charge of financial strategy and economic development and as such was politically responsible for the contract awarded to Regiments. Twala-Tau was then the director of community development for the metro.
Responding to M&G questions last week, Tau's spokesperson, Fred Mokoko, said that in terms of the Municipal Finance Management Act councillors were prohibited from participating in any tender process. For that reason "there is no conflict of interest, nor could it arise".
According to the municipality, the contract was advertised in June 2005 and awarded in September.
However, Mokoko refused to say how much Regiments had been paid in terms of the contract, which expired last year, saying that negotiations for the new sinking-fund manager had not been concluded.
According to a notice for the renewal of the tender, published on the city council's website last year, the sinking fund is designed to enable the municipality to "redeem liabilities when they fall due".
This week council spokesperson Gabu Tugwana said the council would not make the tender documents available to the M&G and the newspaper should request them from the public protector.
Three of our articles dealing with the fund management tender won by a division of Regiments Capital from the City of Johannesburg (<a href="http://mg.co.za/article/2012-10-05-00-council-tender-haunts-mayors-wife" target="_blank">Council tender haunts mayor's wife</a>,<a href="http://mg.co.za/article/2012-10-12-00-joburg-mayor-proclaims-innocence-over-tender" target="_blank">Jo'burg mayor proclaims innocence over tender</a>, and <a href="http://mg.co.za/article/2012-10-26-00-regiments-deal-costs-taxpayers-many-millions" target="_blank">Regiments deal costs taxpayers many millions</a>) stated that the tender was awarded in 2006 or "in the same year" that the Johannesburg mayor's wife, Pilisiwe Twala-Tau, was included in the Coral Lagoon consortium also involving Regiments.
In fact, as some of our articles reflected, the Johannesburg tender was awarded in 2005, roughly a year before Twala-Tau was included in Coral Lagoon, and commenced in early 2006.
The first two articles also stated that Regiments had "put together" or "helped to assemble" Coral Lagoon, from which readers could have understood that Regiments was responsible for Twala-Tau's inclusion. Regiments has clarified that while it participated as an investor in Coral Lagoon, did its financial structuring and raised capital for it from state institutions, it did not select its members.
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The M&G Centre for Investigative Journalism (amaBhungane) produced this story. All views are ours. See www.amabhungane.co.za for our stories, activities and funding sources.