Contractor paid R26m before even starting work

Several officials in the Gauteng Department of Roads and Transport face the axe after more than R26 million was illegally paid to a construction company before it could do the required job. The punitive action is due to follow after the head of the department, Ronald Swartz, admitted to the office of the Premier David Makhura that some officials had irregularly made payments of more than R26.5m to Lubbe Construction. The revelations came after Makhura had instituted a preliminary investigation into the payments, after a whistle-blower, Bonga Majola, alerted him to the alleged fraud in two dossiers dated June 14 and 28. In the dossier, Majola - who is chief director of registration and operating licensing in the roads and transport department - requested Makhura to lay criminal charges.

Spokesperson for the office of the premier Thabo Masebe said departmental officials had confirmed the veracity of allegations contained in the Majola dossier. “The premier is awaiting a full report on the matter before determining his next step of action,” Masebe said. When Majola raised the alarm, the department was already entangled in a dispute with engineering firm Knight Piesold Consulting about the advance payment of R26 531 592.60 to Lubbe. Lubbe was contracted to do the upgrade of Phase 2 of William Nicol Drive in Diepsloot in Joburg. Knight Piesold was the implementing agent of the government when it lodged a dispute about the advance payments.

The premier’s office and Gauteng treasury were apparently not aware of this dispute. Initially, the department had, through its deputy director-general Andre Killian, in a letter dated May 17 to Knight Piesold, tried to absolve the department from any wrongdoing. But Knight Piesold director Leo Furstenburg then wrote to Swartz, on May 25, stating that his firm had “accurate records of each individual instruction as to the quantum instructed for each payment". In his letter, Furstenburg was adamant that the payment was made on the instruction of departmental officials. “The advance payment has been made in a number of monthly payments in an attempt by the department to 'assist' the contractor with operational cash flow,” he said, also warning the department about difficulties in recovering the money.

On June 6, Swartz replied to Furstenburg in a letter in which he insinuated that some of the officials of the consulting firm could have been complicit in the payments. “The department has instituted an internal investigation to determine the factual veracity of the issues pertaining to the ‘advance payments’ made; the conduct of your company in applying the contract due care and diligence; the conduct of the department’s officials in executing the project and the instructions issued to your company by such officials”. But three days later, Swartz changed his tune, saying “the department hereby officially retracts the letter(s) prepared and issued by Mr Killian to Knight Piesold on the K46 project’s disputed matters pertaining to the “advance payments, over estimation of quantities and the alleged concomitant conduct and aspersions cast pertaining to the conduct of the professional engineering firm and its representatives in applying the contract with due care and diligence”. Swartz also indemnified Knight Piesold against any lawsuit arising from failure to recover R26.5m.

Despite the confirmed existence of the dispute and the payments, MEC for Roads and Transport Ismail Vadi rubbished the Majola Dossier before the Gauteng Scopa on August 11. Vadi said Majola had no legal grounds to make such allegations as he was employed in a different section of the department dealing with the registration of vehicles and operating licences for taxis and buses. Gauteng Scopa chairman Mbongeni Radebe has given Vadi until Tuesday this week to give is committee a full report into the alleged fraud.