Mpisane still raking in millions

Wealthy businesswoman Shauwn Mpisane, who is facing dozens of tax and tender fraud charges, is still raking in a lion’s share of lucrative eThekwini municipality contracts, scoring work worth R445 million without the normal tender processes over the past nine months. The contracts were awarded in terms of section 36 of the municipal supply chain management policy, which is only meant to be used in exceptional circumstances. Abuse of the regulation by certain municipal departments has recently been severely criticised by opposition parties and the municipal manager, S’bu Sithole.

According to a report tabled recently before the finance and procurement committee, Mpisane’s company, Zikhulise Cleaning, Maintenance and Transport, was awarded three section 36 contracts between last July and March this year relating to an uMlazi housing project. On Sunday, city treasurer Krish Kumar said the contracts were as a result of an out-of-court settlement the city had made with Zikhulise. While details of the settlement were never made public, it is understood that the agreement allowed Zikhulise to continue with the project, including new phases of construction. The company took the city to court after Mpisane, who has a 2005 conviction for VAT fraud, claimed the project was stalled by city officials who questioned whether it should do business with a convicted person.

Kumar added that the city was entitled to award the contracts using section 36, as Zikhulise was the original contractor and a decision was taken that it was appropriate for the company to continue with the project. Kumar added that there were no legal grounds preventing the city from awarding contracts to Mpisane’s company. DA ward councillor Dean Macpherson said it was alarming that Zikhulise was the single biggest awarded contractor, having received 37.6 percent of section 36 contracts from the housing department, getting R445m of a total of R1.2 billion. “Clearly, section 36 awards to Mpisane’s company is controversial, to say the least, due to her having a previous tax evasion conviction. It is unthinkable that one single company can receive such a large portion of housing awards when so many unanswered questions remain. Sithole has never explained why he agreed to the out-of-court settlement because there was no mandate from exco or full council to do this.”

He added that the Municipal Finance Management Act clearly stated that a municipality may not do business with an individual who had a criminal conviction, but the city continued to flout the law. Contacted for comment, Mpisane said she could not comment on matters that are sub judice. “It is difficult to comment on allegations that are before the court. The previous fraud conviction is part of the current case against me. I cannot say more than that,” she said, referring to the fact that one of the charges she faces is that she continued to run her business after her conviction, allegedly in contravention of the Companies Act and the Close Corporations Act. The report on the section 36 awards also said that 752 awards were made using section 36 between last July and March, and 376 of those were made by the housing department.

The report said the majority of the section 36 awards were made on the basis that it was an exceptional case where it was impractical or impossible to follow official procurement processes”. Kumar said the statistics showed that the use of section 36 was being “contained”, and that the city had put in extra measures to prevent abuse of the regulation. “There are additional processes, including that all section 36 contracts have to go to exco and the bid adjudication committee before it is awarded.” Mpisane is set to appear in court this week for one of her tax fraud cases, where she is charged with submitting incorrect documents to Sars. In a separate case, she is also charged with forging documents which led to her company being fraudulently awarded contracts by the Public Works Department. She is also facing charges of corruption, as the State alleges she tried to persuade a State witness in one of the tax fraud cases to tamper with evidence.