SIU to probe ‘dodgy’ R200m deal

The Special Investigating Unit (SIU) is to investigate the R200-million contract that LTE Consulting obtained from the Gauteng Department of Human Settlements without bidding for it. The Star understands that the SIU was asked to look into the matter last week after the newspaper published a story about it. The contract was for the construction of water and sewer reticulation in Sweetwaters (Kanana Park 6) for a housing development. The Sweetwaters informal settlement, south of Joburg, became a presidential project after President Jacob Zuma visited the area and saw the shocking conditions in which residents were living. He said he was appalled that people still lived “like pigs”.

LTE wrote to the Human Settlements Department, saying it must cancel the multimillion-rand contract it received in February without following proper procedures. LTE group chairperson Asogan Pillay and other members of the board started asking questions after they became aware in March that the company had landed a lucrative contract. The company commissioned a law firm to investigate the circumstances surrounding the contract. The firm reported: “It appears that the contract that was awarded to LTE was not transparent and cost effective.” The company wrote several letters to the department, asking officials to rectify the contract. LTE, a specialist in design and engineering consultancy, was mysteriously appointed for the construction of water and sewer reticulation for 2 689 stands for the project. Because the company did not have the capacity to execute the work, LTE chief executive Thulani Majola appointed Khato Civils, a construction company.

On February 11, Majola wrote two letters to Khato Civils, appointing it to construct water and sewer reticulation in Sweetwaters valued at R108 300 000, and R66 690 000 to supply water package plant. It comes to R199 791 612 with a budget for geotechnical investigations and maintenance. When appointing Khato Civils, LTE did not give other construction companies an opportunity to bid for the tender or get three companies to submit quotations and compare the prices so the department would get value for money. Majola said there was no need to do this - “we had to appoint a company that we know” - and that everything was above board. However, Pillay, who resigned a week ago following a robbery at his house, told the board: “On two separate occasions, I explained to both Majola and Phiri that I did not want to be associated with such activities and offered to pull out of LTE. I also reminded them, as was the case on a number of previous meetings, that ‘we will make money but we will not loot’. On both occasions I was given the assurance that we will fix the problem.

“I conducted an independent assessment of what is happening on site… The report reveals horrifying irregularities.” Last Tuesday, Pillay e-mailed LTE after his and his wife Samantha’s names (she was also a director at the company) were deleted from its website and they were blocked from the bank accounts. The Pillays are still serving their notices. He said he was convinced that the armed robbery was “linked to the article in The Star”. “The newspaper article contains many truths, and corruption has reared its head.”