REDDY’S CITY POWER DEAL ‘IR­REG­U­LAR’

CityPress - - News - ABRAM MASHEGO abram.mashego@city­press.co.za

A foren­sic in­ves­ti­ga­tion into Johannesburg’s power util­ity has re­vealed that the R1.2 bil­lion con­tract awarded to ANC bene­fac­tor and Pres­i­dent Ja­cob Zuma’s friend Vi­vian Reddy was ir­reg­u­lar.

It has emerged that Johannesburg City Power has paid Edi­son Power Group, owned by KwaZulu-Natal busi­ness mogul Reddy, an es­ti­mated R2.8 bil­lion since the com­pany was awarded a con­tract to in­stall and com­mis­sion smart me­ters in Au­gust 2012.

Ac­cord­ing to the SizweNt­salubaGo­bodo foren­sic in­ves­ti­ga­tion re­port (com­mis­sioned by the city) into the string of al­le­ga­tions of fraud and cor­rup­tion at City Power, which City Press has ob­tained, Edi­son Power Group’s con­tract did not com­ply with “leg­isla­tive and ad­min­is­tra­tive” reg­u­la­tions.

Among the rea­sons cited for the con­tract’s non­com­pli­ance are the let­ter of ac­cep­tance and the orig­i­nal con­tract signed by Edi­son Power Group, which in­di­cate that the com­pany had al­ready been awarded the smart me­ter­ing ten­der even be­fore the fi­nal ad­ju­di­ca­tion re­port was signed off on Septem­ber 10 2012. The in­ves­ti­ga­tion also found ev­i­dence of four pur­chase or­ders that were cre­ated be­fore the ac­tual con­tract was signed, which was ir­reg­u­lar.

“We noted the de­liv­ery of 5 000 me­ters dated De­cem­ber 14 2012 wherein the de­liv­ery was made to City Power premises be­fore the con­tract was con­cluded on De­cem­ber 18 2012.”

But Reddy rub­bished the doc­u­ment, call­ing it a “fake re­port”, while for­mer City Power man­ag­ing di­rec­tor Sicelo Xulu ques­tioned the method­ol­ogy of the in­ves­ti­ga­tion as he was not given the op­por­tu­nity to re­spond or clar­ify crit­i­cal as­pects of the probe. Both have threat­ened to fight the mat­ter in court. The re­port noted ir­reg­u­lar­i­ties dur­ing the ad­ju­di­ca­tion and award­ing of the ten­der, in­clud­ing that the eval­u­a­tion cri­te­ria and score sheets were al­tered dur­ing the eval­u­a­tion process with­out the req­ui­site sup­port­ing doc­u­men­ta­tion. Even Edi­son Power Group’s broad-based BEE scores have come into ques­tion af­ter it emerged that it had sub­mit­ted an in­valid cer­tifi­cate. The re­port found that Edi­son Power Group in­stalled smart me­ters that were “not func­tion­ing or op­er­at­ing as pro­posed and spec­i­fied in their bid and ser­vice level agree­ment con­cluded be­tween them and City Power”. It also found that Xulu had failed to no­tify both na­tional and pro­vin­cial trea­sury, City of Johannesburg and the Au­di­torGen­eral about the ap­point­ment of a con­trac­tor with­out fol­low­ing the rec­om­men­da­tions of the bid ad­ju­di­ca­tion com­mit­tee. The re­port called for him to be rep­ri­manded for hav­ing also in­cor­rectly ap­proved dis­cre­tionary al­lowances to other em­ploy­ees with­out bud­get pro­vi­sions. SizweNt­salubaGo­bodo rec­om­mended that City Power take cor­rec­tive ac­tion against its chief fi­nan­cial of­fi­cer for con­firm­ing the bud­get avail­abil­ity of R600 mil­lion when only R262 mil­lion was avail­able in the 2012 fi­nan­cial year. The re­port, how­ever, has cleared Xulu on other al­le­ga­tions, in­clud­ing that he had forced a hu­man re­sources di­rec­tor to pay R7 mil­lion to Deloitte for ser­vices ren­dered in the de­part­ment, which the di­rec­tor had re­fused to pay, stat­ing that she had not con­tracted the firm. How­ever, sources within City Power de­scribed the foren­sic in­ves­ti­ga­tion as a witch-hunt and ques­tioned why the in­ves­ti­ga­tions ex­cluded two other se­nior of­fi­cials, Mdu Nz­i­mande and Quentin Green, who were al­legedly im­pli­cated. They also ques­tioned how the board made the de­ci­sion to ex­pel Xulu when it had not re­ceived or seen the re­port.

Reddy ar­gued that for­mer City Power chair­per­son Rev­erend Frank Chikane had ap­pointed se­nior coun­sel from a ma­jor law firm and an in­ter­na­tional au­dit­ing com­pany to con­duct an in­de­pen­dent in­ves­ti­ga­tion.

Af­ter seven months of in­ves­ti­ga­tion, they found no ir­reg­u­lar­ity in the award­ing of the smart me­ter con­tract to Edi­son Power Group and no ir­reg­u­lar­ity per­pe­trated by any City Power of­fi­cial. Even the Au­di­tor-Gen­eral’s of­fice had in­ves­ti­gated the mat­ter and found no ir­reg­u­lar­i­ties, Reddy em­pha­sised. He added that al­le­ga­tions that the project had dou­bled in value could not be true as only 80% of the orig­i­nal awarded con­tract had been com­pleted.

“For­mer mayor Parks Tau has pub­licly ac­knowl­edged that the smart me­ters in­stalled by Edi­son have re­sulted in rev­enue from billing in­creas­ing by R950 mil­lion to the City of Johannesburg. Just last week, mayor Her­man Mashaba stated that the rev­enue from billing on elec­tric­ity was at 94%, the high­est in the his­tory of the City of Johannesburg,” he quipped, adding that, when they be­gan the project, elec­tric­ity billing rev­enue was only at 58%.

“The state­ment that the me­ters are dys­func­tional is a to­tal mis­rep­re­sen­ta­tion and mis­chievous. It is ap­par­ent that the Go­bodo state­ment on the smart me­ters is a gross fab­ri­ca­tion and lacks cred­i­bil­ity. We will take the ap­pro­pri­ate le­gal ac­tion against the au­thors and also com­plain to the SA In­sti­tute of Char­tered Ac­coun­tants,” he said.

Mashaba said those im­pli­cated by the re­port would be dealt with and that the city’s foren­sic in­ves­ti­ga­tion de­part­ment was in the process of lay­ing crim­i­nal charges with the po­lice.

Her­man Mashaba

Vi­vian Reddy

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