Pikitup still enmeshed in tender riddles

WASTE utility Pikitup has misled the public about its reasons for awarding a R263-million tender to a company that forensic auditors said should face criminal charges.

Two years ago, after an SA Municipal Workers Union strike that left rubbish lying uncollected for weeks, Pikitup hired professional services firm Ernst & Young (EY) to probe allegations of tender rigging in 11 contracts worth R365.9-million. Irregularities in 10 of the contracts were found, including those awarded to Aqua Transport and Plant Hire.

EY prepared a draft report, which found that Aqua had defrauded Pikitup through double-billing and raising invoices for equipment that was never delivered. It recommended that Pikitup bring criminal charges against Aqua. EY also recommended further investigations, but its mandate was cut short before it could prepare a final report.

Earlier this year, Pikitup handed Aqua a new tender for the supply and delivery of yellow plant equipment, which is used on rubbish dumps.

When news of the questionable tender broke, Amanda Nair, Pikitup’s boss, took out full-page advertorials in several newspapers, reportedly at a cost of R228 000 in ratepayers’ money, defending the award.

“A firm of forensic auditors was appointed to conduct a full due diligence of every step relating to the tender process,” she wrote. “The final assessment of the forensic auditors was that the process was fair, open and transparent as there was no reason for myself as the accounting officer to not award the tender to Aqua.”

However, Business Times has established that the report prepared by the forensic auditor, Gobodo Forensic and Investigative Accounting, did not include any of EY’s findings on Aqua. Gobodo was brought in by Pikitup’s bid adjudication committee to look into possible tender collusion between the four bidders short-listed for the tender.

Minutes of committee meetings seen by Business Times showed that Gobodo was worried about the fact that Aqua,

Crossmoor and Waste Rite submitted the same fixed price

Waste Rite, Midmar and Crossmoor were owned by members of the same extended family. They were all based in the same city, and three picked up the bid documents at the same time.

More red flags were raised by the fact that Crossmoor and Waste Rite submitting the same fixed price, to the cent, for the tender, with the only difference being amounts for fuel consumption. Midmar submitted documentation belonging to Aqua in its bid, which it claimed was based on a “standard webbased methodology and would therefore possibly be the same as Aqua’s”.

After a preliminary investigation, Gobodo prepared a draft report saying that none of the bidders had provided sustainable explanations for the similarities “to warrant a finding other than that possible collusive tendering occurred and that the bids were not independently compiled/submitted.” It recommended that Pikitup investigate further or report this to the authorities.

But in the final report, Gododo changed its tune after speaking to Aqua and Midmar. It is not clear what happened to Crossmoor and Waste Rite.

Gobodo concluded that explanations provided by Aqua and Midmar were “feasible”, and that there was insufficient evidence to conclusively prove collusive tendering. Based on this, it said there was no reason not to award the tender.

Satisfied, the bid adjudication committee then asked Nair for written feedback on the resolution of all matters raised against Aqua in the EY report, refusing to award the tender until it was satisfied that these had been dealt with.

Internal correspondence seen by Business Times showed that Nair refused to write the “assurance letter”.

Instead, Lester Peter, Pikitup’s executive director of legal compliance, wrote back to them saying Gobodo had cleared the company, and the committee was not complying with its legislative mandate by refusing to award the tender.

Four days later, Nair wrote a letter of appointment to Aqua indicating the committee decided to appoint Aqua the day after Peter’s letter.

A source within Pikitup claimed Nair had dissolved the committee and formed a new one staffed with “her friends”.

Nair has denied this, and said only the chairman of the committee resigned “to avoid governance concerns”.

Peter said last week that EY’s recommendations “included the need for possible further investigations, which resulted in Aqua being cleared”.

He failed to answer questions on how and when Aqua was cleared.

This week, both Peter and Nair did an about-turn and refused to answer detailed questions sent to them.

The elite Hawks crime-fighting unit is investigating matters arising from the EY report.