A letter dated 20 February 2020 and signed by treasury director general Dondo Mogajane contains a catalogue of irregularities in the City of Johannesburg\u2019s vehicle fleet tender, which was awarded to politically-connected service provider Afrirent in late 2018.<\/p>\n
AmaBhungane first wrote<\/a> about the controversial contract \u2013 and Afrirent payments to a Julius Malema-linked account \u2013 after sources raised allegations of political meddling by the EFF.<\/p>\n Like this story? Be an amaB Supporter<\/a> <\/span>to help us do more. Sign up for our newsletter<\/a><\/span> to get more.<\/em><\/p>\n The city maintained the award to Afrirent was above board and followed proper procurement processes.<\/p>\n Afrirent garnered the main fleet contract, worth well in excess of a billion rand, after the city aborted a competitive bid because of flaws in the tender process.<\/p>\n The incumbent service provider, Avis, was set to be reappointed but the tender was cancelled on 18 May 2018 due to \u201ca material defect in its specification\u201d.<\/p>\n Avis\u2019s existing contract was extended as city officials tried to restart the tender process.<\/p>\n But after further extensions of Avis\u2019s term, the city opted to replace Avis with Afrirent in late 2018 by \u201cpiggybacking\u201d on a tender Afrirent had won with the much smaller Mogale City municipality.<\/p>\n The letter from treasury notes, \u201cThere was no reason provided why the specification was not corrected so the tender could be re-advertised.\u201d<\/p>\n The Municipal Finance Management Act and procurement regulations allow for an organ of state to adopt a contract secured by another organ of state on condition that the other organ of state awarded the contract through a competitive bid.<\/p>\n According to the regulations, this is only permissible where there is no reason to believe that the contract was \u201cnot validly procured\u201d. There should also be demonstrable benefits in doing this and the contracts should be of similar scope.<\/p>\n In previous correspondence with amaBhungane, treasury noted that the \u201cregulation is being abused\u201d.<\/p>\n AmaBhungane\u2019s earlier reports also raised questions about the city\u2019s rationale for choosing to piggyback on Mogale City\u2019s contract.<\/p>\n Now, treasury\u2019s letter casts further doubt<\/a> on the process it followed to arrive at the decision to sign on Afrirent.<\/p>\n Access the documents we used for this investigation, by clicking on the Evidence docket.<\/strong><\/p><\/blockquote>\n Afrirent said it had not seen the letter and defended its appointment, saying, \u201cThe contract with the City of Johannesburg was properly awarded, and we are properly performing in terms thereof.\u201d<\/p>\n However, the treasury letter points out the \u201chuge difference in the size of scope\u201d between Mogale City\u2019s needs and those of Johannesburg. The former required a mere 168 vehicles compared to the 2 732 required by the country\u2019s largest city.<\/p>\n Our sources underscored this disparity from the very beginning.<\/p>\n At the time of amaBhungane\u2019s initial investigation, we were told that it made little sense for Johannesburg to borrow a contract that was so vastly out of sync with the city\u2019s requirements.<\/p>\n The Mogale City contract was worth R100-million, whereas Johannesburg\u2019s was worth over ten times that amount, according to the letter, which adds that this was something flagged as a concern at a City of Johannesburg committee meeting to adjudicate the award to Afrirent.<\/p>\n Another anomaly raised by the treasury letter is that no contract between Mogale City and Afrirent existed at the time the City of Johannesburg asked to piggyback on the contract. \u201cThe letter from [City of Johannesburg] dated 10 July 2018 to [Mogale City] requesting participation was signed before the contract between [Mogale] and Afrirent was signed on 13 July 2018.\u201d<\/p>\n The letter goes on to highlight the discrepancies in the terms and conditions between the Mogale City and Johannesburg contacts with Afrirent.<\/p>\n Mogale City used a finance lease, meaning it would take ownership of the vehicles at the end of the contract. Joburg, on the other hand, is renting the vehicles, meaning it retains no assets at the end of the lease.<\/p>\n Treasury\u2019s letter calls for the contract to be \u201cdeclared irregular and cancelled\u201d, and orders the City of Johannesburg to \u201ccommission a forensic investigation within thirty days of receiving this letter and provide National Treasury with progress reports on the forensic investigation\u201d.<\/p>\n In response to written questions, mayoral spokesperson Mlimandlela Ndamase said, \u201cThe mayor indeed received a letter from the DG of the National Treasury and has subsequently responded on 28 April 2020.<\/p>\n \u201cThe contract remains in place and the City has an active investigation into the contract whose update\/report is yet to be received.\u201d<\/p>\n The city did not provide any details of the investigation or the letter of 28 April, nor did it explain why the contract was not cancelled.<\/p>\n A treasury spokesperson told amaBhungane that they had not received any progress reports from the city.<\/p>\n In amaBhungane\u2019s previous reporting, sources claimed that the EFF were given a say in the running of city departments \u2013 giving them the opportunity to influence procurement \u2013 in return for supporting the then mayor of the DA-led administration, Herman Mashaba.<\/p>\n Backing up the claim of EFF influence in city tenders, our initial article pointed to apparent kickbacks paid by Afrirent to Mahuna Investments \u2013 a slush fund linked to party leader Malema and fronted by a cousin of his.<\/p>\n Subsequent reports<\/a> contained further evidence of payments to Malema.<\/p>\n Mashaba has always vehemently denied the allegation that he allowed the EFF to have a hand in decisions over tenders.<\/p>\n Afrirent claimed to be unaware of Malema being linked to Mahuna.<\/p>\n The company also denied that the payments to Mahuna were in connection with its City of Johannesburg contract, saying that the payments were for work they had subcontracted to Mahuna in connection with a rural development contract in Limpopo.<\/p>\n Our subsequent reporting, however, raised doubts about the company\u2019s alibi for the payments.<\/p>\n *After publication, Afrirent put out a statement<\/a> claiming that it had been exonerated in two “independent investigations” and that the national treasury had been “misled”.<\/em><\/p>\n Also read\u00a0<\/strong><\/p>\n New Joburg mayor could dig up dirt on Mashaba fleet deal<\/a><\/strong> National treasury has deemed a controversial City of Johannesburg fleet contract \u201cirregular\u201d, instructing that it should be cancelled and subjected to a forensic investigation.<\/p>\n","protected":false},"author":7,"featured_media":21485,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[2],"tags":[244,122,384,315,125,385],"class_list":["post-11705","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-stories","tag-afrirent","tag-city-of-joburg","tag-coj","tag-herman-mashaba","tag-julius-malema","tag-national-treasury"],"acf":[],"_links":{"self":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts\/11705","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/comments?post=11705"}],"version-history":[{"count":1,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts\/11705\/revisions"}],"predecessor-version":[{"id":30215,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts\/11705\/revisions\/30215"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/media\/21485"}],"wp:attachment":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/media?parent=11705"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/categories?post=11705"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/tags?post=11705"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nTender comrades part 1: Trailing the Juju tractor<\/a><\/strong>
\nTender comrades part 2: Tshwane tenderpreneur\u2019s R15m \u2018EFF tithe\u2019<\/a>
\nFirm that won R1bn Jo\u2019burg fleet contract paid Malema-EFF \u2018slush-fund\u2019<\/a><\/strong>
\nFleet company that paid Malema fails to deliver on Joburg contract<\/a><\/strong><\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"