Tender abuse persists in eThekwini

Irregular expenditure in the eThekwini Municipality carries on unabated, with revelations that the city continues to award tender contracts through the controversial section 36 regulation. To rub salt into the wounds, some of these contracts are being approved with “blank cheques”, with the total value not divulged. About eight such contracts were tabled before the city’s executive committee (exco) on Tuesday, but the committee deferred five of them, “noting” or accepting three. A report by the city’s audit committee, tabled before Tuesday’s exco meeting, had flagged the issue of the flagrant practice to councillors and officials. The former chairman of the committee, Peter Christianson, who presented the report with new committee chairwoman Londiwe Mthembu, said the concern had been raised before but had evidently fallen on deaf ears.

This comes during an investigation by Public Protector Thuli Madonsela of the city’s alleged abuse of section 36. The investigation will probe all such contracts awarded in the past 10 years. When he was accused early this month of not co-operating with the public protector’s office, city manager S’bu Sithole said the request for contracts dating back 10 years was “ridiculous”, and he had asked that investigators be “specific with documents they required”. He told The Mercury he would co-operate with the investigation. Madonsela’s office, frustrated by delays, has asked the KwaZulu-Natal Co-operative Governance and Traditional Affairs MEC, Nomusa Dube-Ncube, to “intervene”. Section 36 of the procurement regulations allows for deviation from normal tender processes in the awarding of contracts in situations deemed emergencies, but there have been ongoing concerns that city officials are abusing these regulations.

In the report, the audit committee says it noted an “alarming increase” of section 36 “procurement transactions”. “These transactions include tenders awarded with no value,” the report reads, adding that this “promotes irregular expenditure”. The report urged the management to pay urgent attention to the problem. However, it was not all doom, with the committee noting “a significant decline” - in rand value - in the abuse of the regulation. “The real test is in proper procurement planning and only legitimate use of section 36 as intended by the legislature,” the report reads. In the same report, the audit committee recommended that the municipality set up a “centralised contract management unit”, as the management of contracts was a concern. “The lack of proper contract management… increases the risk of non-compliance with SCM (supply chain management) requirements,” the report reads. The establishment of the unit would “reduce/minimise the risk of irregular expenditure and misuse of section 36 by auditee”.

Seeking clarity, DA provincial and eThekwini caucus leader Zwakele Mncwango asked: “We always get these reports for noting with no amounts. Are you suggesting to exco that if a report does not have an amount, we reject it?” Christianson responded with a nod and a “Yes”. Mayor James Nxumalo warned that if the problem persisted, “the city should forget about the clean audit we always complain about”. “If you can check in the agenda today, there are a number of section 36 contracts. While we are busy with the issue, we are bringing more section 36 contracts. It’s a concern,” he said, adding that exco previously agreed to “prioritise” contracts on merit. “The audit committee raises these issues, yet we keep bringing them. We said we don’t have a problem applying our minds on section 36, but we said any department official bringing a section 36 matter, there must be convincing reasons why it has to go through and not the other sections. If we don’t do that, it will keep coming back.”

IFP councillor Mdu Nkosi pleaded with the executive committee to be “seen to be taking seriously the advice we get”. “It looks like we form these bodies for the sake of forming them. We are not implementing (recommendations). Right now we have so many section 36 contracts with no value. Let us be serious,” he said. ANC councillor Fawzia Peer welcomed the report.