BCM pays millions in dubious road upgrade tender

BUFFALO City Metro is paying millions to a company that did not meet all the requirements to upgrade 2.3km of Mdantsane Qumza Highway.

Diphatse Trading and Projects – a company which, according to the Construction Industry Development Board, is graded with 7GB (general building), 7CE (civil engineering) and PE (potential engineering) status – won a R117million road tender which was supposed to have gone to a company with a Grade 8CE or higher.

It mysteriously took over the work from a joint venture (JV) it had with Sedtrade after the latter abruptly pulled out of the project, barely a month after the JV received a letter of award from BCM.

A source close to the project said the metro knew that the tender was meant for Diphatse, not the JV.

“We knew from day one that this tender was for Diphatse, there was no legitimate JV. The two had two JV agreements in a space of 24 hours that were submitted to BCM, that explained everything.

“When they [Sedtrade] pulled out of the JV a month after the tender was awarded in May, that tells you the story,” said a senior BCM official.

Here is a timeline of how the tender was advertised and how it fell to Diphatse, a company owned by Gauteng businessman Louis Maphutha:

● September 2016: tender to upgrade Qumza Highway is advertised and a number of companies responds;

● September 29: Compulsory briefing is held at BCM engineering and planning offices;

● October 19: Diphatse and Sedtrade enter JV and sign agreement after Diphatse says it does not meet key requirements;

● October 20: Another JV is signed between the two companies;

● October 21, noon: Tender closes; and is opened to the public at 2pm;

● October 21, 2pm: opened to the public;

● May 31 2017: JV receives letter of award from BCM;

● June 29: JV management meets and mutually agrees that Sedtrade cedes the project;

● July 3: BCM receives a letter from Sedtrade stating is no longer part of the deal or the JV agreement;

● July 17: Letter with Diphatse Trading letterhead furnishes BCM with banking details;

● August 2: Diphatse Trading invoicesBCMR6 294 404 for “material on site”;

● August 2: BCM official stamps the invoice, confirming that the goods/ services were received;

● August: Maphutha visits BCM asking for the invoice to be paid as it was delaying his work;

● August: BCM e-mails Maphutha asking for correction on wrong account number but he resends the same account number;

● August 16: an argument ensues between officials about the invoice; and

● August: The money is paid to Diphatse Trading and Projects.

Maphutha said he knew nothing about the latest letter that cut their deal with Sedtrade. “As far as I know I am still in the JV with them. I am not aware of the letter you [are] talking about and I visited the offices, that I can’t deny,” he said.

Asked if it was legal for directors to go and demand their money or invoices to be paid at their finance department, BCM spokesman Sam Ngwenya said: “Those directors are in a better position to respond on their travels.” Tender is a