Reddy or not, here comes Madonsela

"Independent review panel clears City Power of all media allegations of tender manipulation."

This was the assertion made by Johannesburg power utility City Power’s Booysens headquarters this week, in a statement about the conclusion of a 10-month internal investigation into the award of the city’s biggest ever public tender.

City Power’s insistence that the panel was totally independent and that the corporation had been completely vindicated are, however, open to doubt.

An amaBhungane report in January this year raised questions about the award of a R1.2-billion contract to Edison Power, a company owned by President Jacob Zuma’s friend and benefactor Vivian Reddy, to install new smart meter technology in businesses and homes across Johannesburg.

AmaBhungane published detailed allegations based on internal document it had seen that suggested the tender process was manipulated to favour Reddy’s company.

Key discrepancies included tender scoring, which progressively eliminated better-priced and apparently more experienced companies than Edison, a letter of award to Edison before the tender adjudication was finalised, and a decision to double the value of the contract from R600-million to R1.2-billion after Edison was appointed.

The report also cited sources who claimed that City Power chief executive Sicelo Xulu was close to Zuma. Xulu denied this.

AmaBhungane did not claim to have evidence of any wrongdoing by Edison or Reddy. The press ombud dismissed Reddy’s complaint about the article.

Denying allegations of impropriety, City Power appointed a panel of three advocates to probe the allegations.

Own resources
However, the panel relied on a forensic audit of the tender produced by City Power’s internal auditor, KPMG. In addition, City Power’s attorneys, Whalley & Van Der Lith, assisted the three advocates in their daily administrative duties.

AmaBhungane sources expressed fear that their safety was not guaranteed while City Power was perceived to have any influence over the panel. In 2011, procurement specialist Oupa Matlaba was shot in his driveway shortly after he blew the whistle on fraud and corruption at the utility.

The review panel did not give amaBhungane the assurances it sought that it had been empowered to grant witnesses indemnity in terms of any civil or employment liability.

As a result of these and other concerns, amaBhungane declined to tender documentary evidence to the panel and its sources also did not participate in the inquiry.

The inquiry took longer than envisaged: the review committee was given a deadline of July 31 to complete its work, but City Power released its statement on the findings only this week.

The inquiry did not stop City Power from procuring smart meters from Edison. By August, it had committed to orders of more that R450-million – approaching half the value of the contract.

The claim that City Power has been cleared by the review panel also appears to have been an overstatement. According to a statement issued by City Power itself, the panel had identified "a number of failures to fully comply with supply chain management policy".

The utility declined to share the review panel’s full findings with amaBhungane this week.

City Power’s board will now forward the review panel’s work to public protector Thuli Madonsela, who is conducting her own investigation.

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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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