The City of Johannesburg is embroiled in a firestorm over three of its biggest fleet procurement contracts, worth billions of rands, which has ignited litigation and an investigation by the Special Investigating Unit (SIU).
AnSIU team descended on the municipality on Monday as part of the unit’s investigation into contracts including the three awarded to Afrirent Fleet, TFM Industries, and Avis Fleet for R1.2-billion,R500-million, and R295-million respectively.All of these contracts were awarded through deviations. The unit confirmed the investigation.
A day after the SIU visit, two of the City’s senior fleet and compliance management officials, acting group head Sanjay Dubru and his acting director, Jimmy Maluleke, were asked by the City to explain their version of events — and why they should not be suspended in connection with allegations of impropriety to do with the contracts and alleged kickbacks.
The SIU also said it had completed four other investigations into Kwane Capital contracts with municipalities in the Eastern Cape. Kwane Capital’s Mcebesi Mlonzi is the majority shareholder of TFM Industries.
The investigations at Amahlathi local municipality, Alfred Nzo district municipality, Raymond Mhlaba local municipality and Mbhashe local municipality were initiated between2016 and 2018.
The City of Johannesburg’s spokesperson, Nthatise Modingoane, said any visit by the SIU would be in relation to the investigations on matters that are proclaimed by the president.
In March, President Cyril Ramaphosa authorised the SIU to investigate alleged wrongdoing in the City.
Modingoane said in response to questions about the potential suspension of Dubru and Maluleke: “We must express our displeasure that you seem to have accessed a confidential document that was shared privately with our employees.”
He added: “We can confirm that in the light of the allegations that were circulating on social media, the employees were requested to give their own version of events. We can also confirm that these employees are not on precautionary suspension.”
Allegationsthat Dubru was receiving bribes to keep the Avis contract going by using an emergency deviation process, instead of the usual procurement procedures, surfaced during the weekend on the Twitter account @AdvBarryRoux. The thread featured photographs of two men — one of whom is allegedly Dubru — sitting at a table with wads of money on it; as well as money on a chair in an office that was described as belonging to Dubru.
The Mail &Guardian tried to contact Dubru and Maluleke for comment but had not been able to get a response by the time of publication.
The SIU’s visit on Monday followed attempts by the City to appoint Avisto provide 435 trucks for City Power, Joburg Water and the Johannesburg Roads Agency’s maintenance teams, as well as 72 motorbikes for the metro police.
The contract was allegedly part of the controversial Afrirent contract to provide a total of 2734 vehicles, but the City approved a request by Maluleke to appoint Avis through the emergency deviation procedure.
This was after he said Afrirent was struggling to meet its obligations on the contract because of a number of problems, including negative media reports, a forensic investigation into the awarding of the contract, difficulty in sourcing vehicles and nonpayment of invoices by the City.
Afrirent was awarded the contract using regulation 32 of the Supply Chain Management Regulation. This allows a state entity to piggyback on the supplier’s contract with another state entity provided the parameters are similar. In this case, the City relied on Afrirent’s contract with Mogale City to provide 123 vehicles for R111-million.
In his submission, Maluleke claimed Afrirent informed the City’s fleet compliance management department in August that the trucks and motorcycles were not part of the contract.
According to Maluleke’s submission, sent on October 30, the City was left with no choice but to implement the emergency deviation to appoint Avis or face the possibility of not being able to provide critical services delivered by City Power, Johannesburg Roads Agency and Joburg Water.
“Without these vehicles, the City will not be in a position to fulfil its constitutional mandate and service delivery will be severely hampered,” he said in his report.
Maluleke then asked City manager Ndivhoniswani Lukhwareni to approve a negotiated deal with Avis to enter into a month-to-month agreement to provide the vehicles until September 30 next year at a price of R295-million.
Maluleke’s version was contradicted by Afrirent’s lawyers, Mesin Inc, in a letter to the City, informing them that if the City extends the contract to Avis it would interdict the award and launch a review of the decision to appoint Avis through the deviation process.
The lawyers argued that Afrirent had informed the City of Johannesburg as early as January this year that trucks and motorcycles formed part of their client’s contract with Mogale City, and should form part of their contract with Johannesburg. They said their communication was ignored.
“It has come to our client’s attention that you have issued a request for approval to deviate in terms of Regulation 36 to appoint Zeda Cars Leasing (Pty) Ltd trading as Avis Fleet Services for the supply and delivery of trucks and motorbikes for the City of Johannesburg.
“It has further come to our client’s attention that you have allegedly decided to extend the contract with Avis Fleet Services from 1 November 2019 until 30 September 2020 to ensure the availability of trucks and motorbikes for service delivery.”
It said the trucks and motorbikes should be sourced from Afrirent, or at least that the company be given the first option to provide such vehicles. “Our client has notified you that you had omitted to include trucks and motorbikes in the rate card, the same that appeared in the Avis rate card that our client is implementing … You are therefore warned not to proceed with the abovementioned deviation, and not to appoint Avis Fleet Services.”
Barloworld, on behalf of Avis, confirmed in a statement that in 2012 they were awarded a five-year contract for the trucks and motorbikes.“The contract ended in 2017 and was extended until 31 October 2019. Avis has recently been approached by the City to extend its supply of trucks and motorcycles under the A400A contract as these vehicles are essential to service delivery.”
But this is not the first seemingly sweet deal Avis has been handed by the City. In March, Avis was the beneficiary of another deviated contract worth R372-million to provide Pikitup with “management services, ad-hoc rentals and maintenance of waste management vehicles” for the next 12 months on a month-to-month basis.
The M&G has previously reported that the City has awarded R3.9-billion in contracts without following the usual tender processes.Instead, it has relied on the much-criticised deviation process.
All of the City’s fleet contracts have allegedly been awarded using the emergency deviation process. In July, the M&G reported on the increasing reliance on the deviation procedure, including for the purchase of 92 specialised fire and rescue vehicles from TFM Industries.
This contract was put on hold two weeks ago by the high court sitting in Johannesburg, after TFM Industries had delivered 25 fire engines.
Marcé Projects, which had bid for the same contract, approached the high court asking it to set aside the R500-million contract between the City and TFM Industries, which was also awarded the contract through the deviation process.
The court’s decision to interdict the signing of a contract, after it found there were grounds for a successful review of the award, leaves the City’s fire department with a shortfall of about 60 fire engines.
Modingoane said the court order may have a negative effect on the City’s fire fighting capacity.
Mlonzi said this matter was between the City and Marcé Projects, but that TFM Industries was appealing the judgment because it had already delivered 25 of the fire engines.