Hawks bust tender scam

Four people, two of them senior employees of the KwaZulu-Natal Public Works Department, have been nabbed by the Hawks for allegedly awarding contracts to a wealthy Durban building contractor for cash kickbacks. August Carl Gunther, a project leader and works inspector, Omesh Madanjit, also a project leader, both based at the Public Works offices in Mayville, appeared in the Durban Regional Court this week on charges of fraud and corruption. With them were former department employees, Terrence van der Merwe and Leon van Vuuren, former works inspectors. All were released on warning and the matter was adjourned to February 3 to allow for further investigation.

It has been alleged the four colluded with Sea Cow Lake businessman Rajkapoor “Teddy” Lakraj, who was arrested and charged in August for allegedly defrauding the department of more than R87 million. He is presently on R200 000 bail and is expected to appear in the Durban Commercial Crimes Court on February 2. Since his arrest, further investigations and on-site inspections by quantity surveyors have revealed that Lakraj allegedly received R2.5m for 18 projects he failed to deliver on, MEC for Human Settlements and Public Works, Maggie Govender, disclosed on Wednesday. Lakraj was arrested after a probe by the department’s multi-disciplinary anti-fraud and corruption task team led it to believe he had used his domestic worker, her daughter and a Western Cape student as fake BEE shareholders in two of his multimillion-rand companies.

At the time, Steven Nel, head of the task team, said it was believed all three women were in the dark about their involvement in the companies. Lakraj was charged with 147 counts of fraud and one of corruption, relating to the awarding of numerous contracts to Quantum Leap Investments 24 (Pty) Ltd, trading as Teddy’s Construction, and Dream Trading 567 cc, trading as Siyasiza Builders. The companies have been blacklisted by the national Treasury and barred from undertaking business with government departments. According to a detailed report by the department, Gunther was allegedly instrumental in awarding and managing the work performed by Dream Trading 567 cc. It has been alleged he cashed five cheques issued by Lakraj, totalling R32 2000, in 2005. The payments were allegedly made to Gunther for awarding work to Lakraj’s company and processing the payments before performance guarantees were issued by Dream Trading 567 cc. It has been claimed this company quoted, invoiced and was paid R236 515.80 for work it did not do.

Madanjit was allegedly instrumental in managing the work performed by Quantum Leap Investments 24 (Pty)Ltd and Dream Trading 567 cc, and in authorising payments. He allegedly confirmed the completion of work, resulting in full payment for a contract worth R290 530.99 to Quantum Leap. However, it is alleged that more than R26 000 worth of work was not completed. Madanjit also stands accused of cashing two Lakraj cheques totalling R11 500 before and while he was managing several work projects that had been awarded to Quantum Leap. It has been alleged that of the 186 contracts managed by Madanjit in 2005, 183 were awarded to Quantum Leap – with a total value of R861 182.22.

He allegedly authorised two invoices for the same work or allowed the work to be split into separate orders to circumvent the procurement process. When the investigation into Lakraj’s companies began, Van der Merwe resigned and moved to Port Elizabeth. It has been alleged that during 2004/5, Van der Merwe cashed three Lakraj cheques totalling R13 000 – allegedly before payments were authorised to the two companies. Another cheque for R2 000 was allegedly cashed by Van der Merwe subsequent to the awarding of a project to Quantum Leap. He allegedly also made the payments knowing both companies were owned by Lakraj, failed to enforce any penalties against Quantum Leap for not complying with the contract period, and certified payments for work not performed.

Van Vuuren was dismissed from the department in 2009. During 2004/5, he allegedly cashed two cheques from Lakraj totalling R11 000 prior to him authorising payments to Dream Trading or obtaining a performance guarantee. He also allegedly authorised false payments for work not done. Govender told the Daily News these arrests, and more expected in coming weeks, were proof of her department’s commitment to act decisively against fraud and corruption. “Recent investigations have revealed alleged staff collusion with contractors. Payments have allegedly been made without work being completed, payments for materials were allegedly over-inflated, and supply chain management processes were allegedly abused to award contracts to contacts.”

Govender said they were going all out to ensure those found guilty faced the full might of the law. “Bank accounts, tender documents and payments will be scrutinised. This type of behaviour will not be tolerated. Those found guilty of such offences will be brought to book. This is just the start.” She said the employees were in a position of trust which they were now accused of abusing. “Ultimately this has impacted on service delivery and the poor are suffering. Repairs and renovations to schools that were certified as completed have been found not to have been done. Due tender processes were not followed, which resulted in the quality of work being compromised.

“We are tired of talking and issuing warnings. It’s now time for action.” She said the two staff members would be on precautionary suspension until their disciplinary hearings, expected to take place next month.