Question No. 1476
Mr L Ramatlakane (Congress of the People) to ask the Minister of Public Enterprises:
(1)(a) How many tenders were awarded by a certain person (name furnished), (b) to whom were they awarded, (c) what was the tendered amount (d) for which alleged tender irregularities was the chief executive officer (CEO) of Transnet suspended, (e) what amounts were involved in each case and (f) how many service providers were paid above the original tender amounts;
(2) Whether all service providers complied with company and taxation legislation and value added tax (VAT); if not, why not; if so, what are the relevant details;
(3)whether any companies were paid from R1 million upwards; if not, what is the position in this regard; if so, (a) who signed off the said tender, (b) what is the limit amount to be signed off by the chief executive officer, (c) how many times did the chief executive officer sign tenders above the limited amount, (d) for what amount in each case and (e) for which service provider, (f) what was the name of the company and (g) what was the amount involved;
(4) Whether anyone signed to condone the tender awards; if so, who (a) signed and (b) motivated it;
(5) Whether she and the board have taken any steps with regard to these cases; if not, why not; if so, what steps?
Reply:
1. (a) Current investigations and disciplinary proceedings relate to two separate procurement processes. The first one concerns a contract for the provision of specialised security services. The second concerns a contract for the acquisition of 50 locomotives.
(b) The contract for the provision of specialised security services was entered into between Transnet and General Nyanda Security Risk Advisory Services (Pty) Ltd. The contract for the acquisition of 50 locomotives was entered into between Transnet and the Electro-Motive Sibanye Joint Venture, an unincorporated joint venture between Electro-Motive Diesel and Locomotive Company (Pty) Ltd and Sibanye Trade and Services (Pty) Ltd.
(c) The initial value of the specialised security contract was R18,933,120 million per annum. The value of the locomotive contract was approximately R900 million.
(d) The details of the irregularities alleged are the subject of current disciplinary proceedings and it would not be appropriate to set these out in detail here. In summary, it is alleged that the chief executive of TFR exceeded his delegated authority for contracts concluded without a tender process when he authorised the conclusion of the specialised security contract. In relation to the locomotives contract it is alleged that the chief executive of TFR failed to give effect to a condition determined by the Transnet board in concluding and implementing the contract. It is alleged that in each respect this constituted a failure to carry out duties in the manner expected and that it constituted misconduct contemplated in section 51(1)(e) of the Public Finance Management Act (PFMA).
(e) General Nyanda Security Risk Advisory Services (Pty) Ltd has been paid approximately R55 million in a 20 month period since conclusion of the contract in December 2007. The Electro-Motive Sibanye Joint Venture has been paid approximately R550 million since conclusion of the contract in May 2007.
(f) In respect of the matters which are the subject of disciplinary proceedings there are no further service providers involved.
2. Service providers to Transnet are required to comply with such requirements in respect of taxation as are provided for in Transnet procurement policies. On the information available to Transnet there is, to the best knowledge and belief of Transnet, no indication that Transnet’s procurement policies in respect of the tax status of the affected companies have been breached. It needs to be emphasised, however, that Transnet does not regulate the company and tax law compliance of service providers or potential service providers as such regulation is, in terms of applicable laws, a responsibility of governmental agencies mandated to perform such regulation.
3. (a) As indicated in 1(d) above, the referred to chief executive officer allegedly exceeded his delegated authority.
(b) In the case of the security contract, the limit of the relevant executive’s authority was R10 million.
4. This issue does not arise in the two instances referred to above.
5. Disciplinary steps have been instituted. Further steps will be taken if so advised on the basis of legal advice given.
Issued by: Department of Public Enterprises
9 October 2009
Source: Department of Public Enterprises (http://www.dpe.gov.za/)
