‘War room’ activated to cope with Bosasa liquidation
The department of correctional services has set up a “war room” to handle the fallout from the liquidation of embattled facilities management company Bosasa.
And with the company responsible for the provision of food to nearly 50,000 prisoners in seven prisons across the country, the department is scrambling to make sure the prisoners remain fed.
Bosasa, now known as African Global Operations, announced early on Monday that it had gone into voluntary liquidation after both Absa and FNB shut its bank accounts.
The company found itself embroiled in allegations of state capture when its former chief operations officer, Angelo Agrizzi, appeared before the Zondo commission and testified about corruption and bribes relating to the firm’s contracts with the government.
Agrizzi was Bosasa CEO Gavin Watson’s right-hand man. He told the commission that every government contract with Bosasa was marred by bribery and corruption.
He also told the commission how officials from the department of correctional services and the National Prosecuting Authority (NPA), ministers and former president Jacob Zuma were allegedly paid bribes by Bosasa.
The company said on Monday it had received formal notification from its financial institution of the decision to distance itself from the group and that it would close its bank accounts by the end of February.
“To avert a situation whereby the group would not be able to further operate as of March 1 2019, [the] African Global group board applied with various financial institutions, locally and internationally for a trading account,” it said in a statement.
“The extensive reputational damage in the past few months, occasioned by negative media reports, has resulted in financial institutions’ determination that the African Global group poses a reputational risk for them as client.”
African Global Operations said the decisions made by the financial institutions were not based on the company’s liquidity status, financial stability, operational performance or growth forecast.
However, it said “tragically” the company would not be able to trade without a bank account.
Correctional services spokesperson Singabakho Nxumalo said it had urgently set up the war room and implemented an operational plan to ensure that there was no disruption to services.
He said the war room had activated an emergency response plan to deal with any “identified risks and those that may accidentally emerge”.
“A security plan has also been activated, which will ensure that safety and security is maintained,” he said, adding that correctional services officials would be meeting National Treasury officials.
“The department is at an advanced stage in terms of developing an alternative food services plan,” Nxumalo said.
He said it was critical to ensure that correctional centres continued to operate without disruptions.
In October, Times Select reported that the quality of the food served by Bosasa Operations at some of the country’s biggest prisons had been criticised by inmates.
African Global, the holding company, responded that no complaints had been raised.
The company entered into a new R479m feeding tender with the department in 2017.
Since the 2013/2014 financial year, the department has paid the company R2.9bn, according to Times Select.
Since Agrizzi’s testimony, there have been arrests in relation to Bosasa’s contracts.
Former correctional services commissioner Linda Mti, former correctional services chief financial officer Patrick Gillingham, Agrizzi, and former Bosasa chief financial officer Andries van Tonder have already appeared in court on charges of money laundering and corruption.
The case relates to a Special Investigating Unit report into Bosasa and correctional services that was handed to the NPA and the Hawks a decade ago. –