The world’s third biggest metro municipality is still on a corruption ride to nowhere.
The DA-controlled Tshwane Metro Municipality still forks out millions of rands every month to pay service providers for contracts that are riddled with fraud and corruption.
The current DA administration inherited most of these contracts from the previous ANC dispensation. There is simply no value for money within most of these projects, and the DA’s attempts to cancel them have failed in most instances.
The Corporate Fleet Management contract – a public-private partnership (PPP) with the Moipone Group of Companies – is a prime example. The five-year agreement to replace Tshwane’s old vehicle fleet and maintain the proposed new one was signed in March 2016, five months before the local elections in August of that year. At the time the contract was valued at R950 million but it has since allegedly escalated to R1.3 billion.
The tender specified that thousands of vehicles, including passenger cars, light delivery vans, tractors, trucks, ambulances and motorcycles were to be supplied. One hundred and thirty companies submitted bids but surprise and anger greeted the fact that littleknown Moipone won this massive contract. Compared to the big-name bidders, Moipone was shown to have limited experience in fleet management on such a large scale. Some of the bidders took their grievances to court and two other companies were then contracted to fulfil sections of the tender.
The Moipone group’s frontman is its CEO and director Matete Joseph Lebakeng, an entrepreneur who has tried his hand at various business ventures since 1996, over time registering several companies with Cipro, now Cipc.
|CEO of Moipone Mr Joseph Lebakeng|
Moipone Fleet (Pty) Ltd was registered in 2002 but officially changed its name to Moipone Group of Companies in December 2017, almost two years after the fleet contract was signed.
From the outset there were problems with delivery and maintenance, and in December 2016, four months after the DA took over, then acting City Manager Lindiwe Kwele notified the Moipone Group that Tshwane was obliged to issue a notice of breach of the provisions of the agreement. In her letter she said that as a result of Moipone’s poor handling of its contractual obligations the city was unable to deliver services to the community. She also warned Moipone that the city would exercise its right to terminate the contract if the company did not comply and up its performance.
Among the many different categories of vehicles offered in Moipone’s winning bid was the supply of 38 2l Mitsubishi Lancers at R188,775 each, for use as highway patrol vehicles. Three 2.2l Volkswagen Passats at R289,108 each, for the mayor’s office, were also in Moipone’s tender.
Noseweek has however obtained documents revealing a total disregard for the original quantities, description and pricing of these vehicles. Instead of the Lancers and Passats, Moipone delivered 18 BMWs and 3 Mercedes- Benz, thus increasing Tshwane’s monthly instalment for the 21 cars to a total of R453,000 – three times the amount specified in Moipone’s original tender document.
When a private person buys a BMW 320i – Tshwane is leasing five of them from Moipone – the vehicle comes standard with a five-year maintenance plan which is included in the discounted price of R346,534. Under the Moipone agreement the same car is costing the city R745,438 over 60 months plus a R250,000 residual amount that has to be paid at the end of the term. Noseweek has established that the delivered BMWs and Mercs would have included standard factory maintenance plans but Moipone allegedly did not pass this benefit on to Tshwane. Instead the city is paying an extra maintenance levy to Moipone for vehicles that were never part of the company’s bid.
Moipone is also charging Tshwane R400 per vehicle for so-called upliftment but all it has allegedly done in three years was to paint a municipal workshop and use it for private work, servicing vehicles that are not part of the Tshwane contract.
Moipone does not pay rent nor pay for electricity and water and uses his own technicians.
Cilliers Brink, the MMC for Corporate and Shared Services agrees that vehicles obtained under the public-private partnership were far more expensive than those offered in the open market. “When the DA took over from the ANC in August 2016, it found the city’s fleet in a shambles,” he reveals. “We are gravely aware of the defects of this tender, and we are tied to it under protest.”
In 2017 both the Auditor General and a forensic investigation found irregularities with the Moipone contract. “In other words, the contract should never have come about,” explains Brink.
Yet the city failed more than once in court – in 2017 and in 2018 – when it applied for urgent relief from this debilitating deal. To top it all, attempts by the city to purchase its own vehicles outside the contract also got a bloody nose in court.
|Former Mayor of Tshwane, Solly Msimanga|
During his first week in office in August 2016, Tshwane’s former DA-mayor, Solly Msimanga, promised the media that the luxury cars would be allocated to a new anti-hijacking unit because the politicians didn’t need them. If only that plan had been speedily implemented: the mayor’s office has allegedly been using four of the luxury vehicles since 2016 and the rest have been collecting dust at the Metro Police’s fleet logistics building on the outskirts of the Pretoria CBD. They were allegedly hidden away from the auditors for more than two years while ratepayers’ money was servicing the monthly lease instalments. Over the 24 months that they were not in use the 21 cars cost Tshwane more than R10m. As for Msimanga’s antihijacking unit, it was a good quote at the time but has since disappeared into the archives of political-speak.
Tshwane’s general manager for Corporate and Shared Services, Musa Khumalo, denies that the Lancers and Passats were ever part of the tender, saying that the city did in fact order the luxury models. But who signed that obviously fraudulent instruction that was so different from Moipone’s bid? No official or politician in the Tshwane Metro is willing or able to answer that question.
Khumalo also claims that all but two of these vehicles are being used by the Metro Police Department for highway patrols. But what he conveniently forgets to add is that this has only very recently occurred.
Brink and Khumalo are adamant that more than 1,700 Moipone-leased vehicles are currently in use by the city and that they go in and out for maintenance and repairs on an ongoing basis. However, Noseweek has established that many vehicles are in reality out of service because Moipone allegedly does not pay its subcontractors who perform the maintenance and repairs.
In turn they have impounded the vehicles and refuse to release them until their bills are paid. “I have Metro Police vehicles that have been standing at my workshop for three years,” says one angry subcontractor who prefers to stay anonymous. “I have actually chased Moipone away from my premises because they are a corrupt lot.”
And while Moipone seems to have complete control over the Tshwane Metro council – said to be geographically the world’s third-biggest metropolitan authority after New York and Tokyo – Tshwane’s own full-time employed technicians log, at the most, two hours of work a day. “We sit and wait to knock off and go home because there is nothing left for us to do,” says one dispirited and frustrated employee. “Moipone calls the shots and nobody is policing them.”
Noseweek’s sources say the Hawks’ investigation was stopped in 2017 by its former head Berning Ntlemeza, who had given instructions that officers should not investigate corruption cases in Tshwane. At the time they had already done lifestyle audits on at least six people. Cellphone records apparently showed the connection between corrupt officials, politicians and service providers.
While the DA was still the opposition in Tshwane, its spokesperson on finance was Lex Middelberg. He has since resigned from the DA and now speaks on behalf of Tshwane Money Matters, a private citizen pressure group that monitors corruption in the municipality. He says he received a telephone call from the new DA leadership in Tshwane back in 2016 when he was still a councillor, informing him there was no immediate intention to cancel any of the contracts and that the new administration of Mayor Msimanga would first be assessing the situation before it made a call to uphold or cancel any of the contracts. Middelberg says he was told not to address the issue with the media again.
“As it turned out none of these projects currently crippling the city have been cancelled and the DA administration is today still paying millions per day to service providers with fraudulent contracts.”
There may just be a way out for Tshwane. Every company that does business with a government institution has to be registered with National Treasury’s central supplier database for the government before it can become a vendor, bid for a tender or enter into a public-private partnership. The Moipone Group of Companies (Pty) Ltd did obtain the necessary compliance but it appears that this only occurred in May 2016 after the contract was signed and years after the company submitted its bid in 2013. Such a violation of the Treasury directive would make the contract null and void.
A government institution that wants to enter into a public-private partnership also has to register its intention to do so with the Treasury. And then it has to go through a lengthy administrative process of three phases before Treasury would approve the PPP.
Could it be that Tshwane missed the fact that these basic requirements for its public-private partnership with Moipone were not in place?
“If so, the Moipone contract could have been cancelled quickly and with relative ease,” says Middelberg. “The process to appoint them was flawed from the outset and if it is correct that the PPP as well as the company which eventually signed were not yet approved by Treasury then it would have been so much easier.”
Middelberg explains that even if the contract could not be cancelled for lack of compliance, then the terms of the Municipal Finance Management Act (MFMA) could have been used to cancel for performance-related reasons. The MFMA requires that all long-term contracts are reviewable at three-yearly intervals and must have a performance related early exit clause.
“Either there is no intention to pursue options to cancel where they present themselves, or more likely, Moipone’s lawyers are running circles around the talent available on the DA’s Executive and in its Caucus,” says Middelberg.
Brink says the DA-led city government asked for a forensic audit to be done. Deloitte was appointed and they completed their report in 2017. The report addressed the question whether the PPP complied with the applicable regulations. “The forensic audit investigation found that the proposed transaction was in fact submitted to National Treasury for their guidance, and after perusal of the proposal, Treasury approved it and gave the city the go-ahead to conclude the necessary contracts.” He says the forensic investigation could not find any legislative contraventions, but it did discover fraudulent representations in Moipone’s bid which National Treasury would in all probability not have known about.
The review application will be heard next month. Brink says the DA is confident this will be the battle that will win the war. “If the review application succeeds the court will have to impose a just and equitable remedy.”
Noseweek extended its deadline to enable MMC Brink and the Tshwane officials to send the necessary documents that show the city had registered a public-private partnership and received approval from the Treasury, but in the end this is the answer we got from Brink: “The Moipone file is empty.”
Moipone Group of Companies did not respond to questions.
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