Contractor manipulated tender system

A Western Cape contractor who manipulated the Overstrand Municipality’s tender system by cover-quoting was jailed for three years by the Bellville Specialised Commercial Crime Court on Thursday. Hermanus Albertus Mostert, who owned the business HM Irrigation CC, was also sentenced to three years conditionally suspended for five years, on 285 counts of fraud involving R3 million, which were taken as one for the purposes of sentence. Haley Lawrence, for Mostert, told the court she would launch an urgent application on Friday for leave to appeal the conviction and sentence, and for Mostert’s release on bail pending the outcome of the appeal.

According to the charge sheet, cover-quoting happens when an individual contractor fraudulently produces his own quotations, in the names of fictitious business concerns, for a project put out to tender. He then presents the quotations as if they were from independent contractors. Cover-quoting ensures that the contractor is awarded the tender, and undermines the three-quotation system by corruptly eliminating competition and making artificially inflated prices appear competitive. Prosecutor Derek Vogel told the court that cover-quoting ensured the purchase of goods or services at inflated prices. The practice increased the risk of fraud, and compromised the integrity of the entire procurement process.

Mostert company was also fined R1 million, suspended for five years. The Overstrand municipality includes Hermanus, Gansbaai, Stanford and Kleinmond. Mostert was responsible for the maintenance of equipment and machinery at the Hermanus sewerage plant, and at the Preekstoel water purification works. Magistrate Sabrina Sonnenberg said a mitigating factor was that Mostert had personally ensured that the maintenance was of a high standard. She said the community expected fraud to be appropriately punished, and that a sentence of a mere caution and discharge, as suggested by the defence, was “laughable”. The fraud had been finely planned for five years, between 2004 and 2009.

Sonnenberg said Mostert’s circumstances were suitable for a sentence of correctional supervision, involving a period of house arrest or imprisonment, but such a sentence would be too lenient. It would suit only Mostert, and not the community, she said. Sonnenberg said the amount involved justified the prescribed minimum sentence of 15 years, but that this would be too harsh in the circumstances. She said she had the discretion to declare Mostert unfit to possess a firearm, but would not do so. “The court wants to give you a chance to learn from your mistake,” she told Mostert.