{"id":15101,"date":"2021-10-14T04:05:31","date_gmt":"2021-10-14T04:05:31","guid":{"rendered":"https:\/\/amabhungane.org\/?post_type=stories&p=15101"},"modified":"2024-09-14T08:40:58","modified_gmt":"2024-09-14T08:40:58","slug":"211014-you-knew-ekurhuleni-community-waste-collectors-ripped-off","status":"publish","type":"post","link":"https:\/\/further.co.za\/amabwp\/211014-you-knew-ekurhuleni-community-waste-collectors-ripped-off\/","title":{"rendered":"You knew, Ekurhuleni! Community waste collectors \u2018ripped off\u2019"},"content":{"rendered":"

Disgruntled waste collectors in Ekurhuleni, contracted on an ambitious R1.2-billion job creation and empowerment programme, told<\/span> amaBhungane in July<\/a> that promises were broken, that they were underpaid \u2014 <\/span>and that companies supposed to mentor them had pocketed most of the money.<\/p>\n

The city dodged the claims then \u2014 <\/span>ignoring repeated questions \u2014 <\/span>and now, confronted by amaBhungane with its own report, the city continues to deny there was anything amiss.\u00a0<\/span><\/p>\n

But the forensic investigation by independent auditors, commissioned by the city itself, gives broad backing to allegations published by amaBhungane \u2014 <\/span>although the report deals only with one of five mentor companies contracted by the city.\u00a0<\/span><\/p>\n

The report was obtained by amaBhungane via a Promotion of Access to Information Act (PAIA) application lodged with the city in which we requested the report by name \u2014 <\/span>after having been tipped off about its existence. \u00a0<\/span><\/p>\n

The investigation raised the same red flags amaBhungane did \u2014 <\/span>and calculated in detail the substantial sums that it said were still owed to community contractors.\u00a0<\/span><\/p>\n

The city received that report three years ago and seemingly chose to brush off its findings.<\/p>\n

Get a full copy of the City of Ekurhuleni’s forensic report here<\/a>.<\/em><\/p><\/blockquote>\n

Our article of 21 July 2021 described how five established local companies were contracted by the city to \u201cmentor\u201d 45 community-based waste collecting contractors and six recyclers to provide comprehensive refuse removal and recycling services across large parts of Ekurhuleni.\u00a0<\/span><\/p>\n

The programme covered five years from 1 July 2016 to 30 June 2021.\u00a0<\/span><\/p>\n

By the end of that time, these small businesses were supposed to have favourable banking profiles, own their plant and equipment, and have the financial muscle and business know-how to go on their own.\u00a0<\/span><\/p>\n

Except, according to the community contractors, that did not happen: the city ignored complaints that the established mentor companies were short-changing them.<\/p>\n

AmaBhungane wrote repeated emails to the city requesting information about the project, including under the Promotion of Access to Information (PAIA).\u00a0<\/span><\/span><\/p>\n

Most of the emails were ignored.\u00a0<\/span><\/p>\n

When the report was finally handed over, it revealed that, just a third of the way through the contract, a group of community contractors had allegedly been underpaid by R2.69-million and their \u201cmentor\u201d had allegedly been overpaid R7.6-million for what were described as \u201cfictitious\u201d services.<\/p>\n

The city would only say that it had \u201cmade all payments for services rendered in line with the approved contract\u201d.<\/p>\n

The report and what it tells us<\/b><\/p>\n

In 2018 the city manager, Dr Imogen Mashazi, contracted an outside auditing company to review the performance by one mentoring company \u2014 <\/span>a joint venture by MCC Security Projects and Before Dawn Property Development \u2014 <\/span>in one area, Tembisa.\u00a0<\/span><\/p>\n

The subsequent review is dubbed a \u201cPhase 1 report\u201d but it is not clear whether others were done. If so, they were certainly not disclosed to us. The audit company referred all queries to the city.\u00a0<\/span><\/p>\n

Read the City of Ekurhuleni’s full response here<\/a>.<\/em><\/p><\/blockquote>\n

Nevertheless, the contractual problems raised in the report apply to most mentor companies and community contractors.<\/p>\n

The 102-page report, dated November 2018 and titled \u201cReview of Possible Non-Compliance with the terms of Contract No. A-WMS 11-2015\u201d was compiled by ARMS-Audit and Risk Management Solutions, a Johannesburg forensic auditing firm that specialises in services to government departments.\u00a0<\/span><\/p>\n

The auditors concluded that the waste collection services the city required were being efficiently delivered \u2014 <\/span>but not with the intended empowerment outcomes.<\/p>\n

We’re a non-profit newsroom that exposes wrongdoing, empowering people to hold power to account. But we cannot do it without <\/em>your support<\/a><\/u><\/em>.<\/em><\/p>\n

The theme of the report was that the contractual terms of the programme had resulted in an \u201cunbalanced\u201d power relationship between the \u201cmentors\u201d \u2014 known as development contractors (DCs) \u2014 and the community-based contractors (CBCs).\u00a0<\/span><\/p>\n

The relationship was not one of sub-contracting an independent entity, but of employment. There was an urgent need for the City to intervene and correct this.<\/p>\n

The development contractor (the MCC – <\/span>Before Dawn joint venture) had also not yet signed the city\u2019s service level agreement.\u00a0<\/span><\/p>\n

And eighteen months into the contract, the formal relationship between the development contractor and the community-based contractors remained in an unsigned draft form.\u00a0<\/span><\/p>\n

The report recognised that the community-based contractors lacked the legal skills to enter into such relationships.<\/p>\n

\u201cWe concluded that the purpose of the contract is not being achieved and this is a result of the power relationship between the Development Contractor and the Community Based Contractor being unbalanced. We recommend that the City of Ekurhuleni assist the Community Based Contractors with legal advice which can be outsourced\u2026 for the purpose of contract negotiations.\u201d<\/p>\n

The city seems unconcerned about this power imbalance, telling amaBhungane,\u00a0<\/span>\u201cThe service providers were appointed in different areas with different quantities and rates. The different contracts with the CBCs were in line with the Tender requirements. The City had a contractual relationship with the Development Contractor and did not have any direct contractual relationship with the CBCs.\u201d\u00a0 \u00a0<\/span><\/p>\n

Tabelo Timse goes live with Newzroom Afrika.<\/p>\n

The contract made provision for payments to be calculated on the basis of the number of waste collection points serviced. The problem was establishing how many there really were.\u00a0<\/span><\/p>\n

The auditors examined municipal valuation rolls, GIS maps and physical counts by the city\u2019s waste management department.\u00a0<\/span><\/p>\n

Much of the report was a neighbourhood-by-neighbourhood breakdown of stands, yards, tuckshops (which generate a great deal of waste) and other local businesses.\u00a0<\/span><\/p>\n

The report concluded that there were 57\u00a0762 formal service points. But the development contractor had claimed for 76\u00a0000 formal service points.<\/p>\n

\u201cThe claims submitted by MCC Security Projects and Before Dawn Property Development CC JV were inflated and it resulted in the overpayment of R7\u00a0610\u00a0484.00 up to July 2018,\u201d the auditors noted.\u00a0<\/span><\/p>\n

\u201cWe recommend that officials at MCC Security Projects and Before Dawn Property Development CC JV be informed of the confirmed Formal \u201cService Points\u201d and the amount of R7\u00a0610\u00a0484.00 that was paid for non-existent service points to date and that the money be recovered.\u201d<\/p>\n

The city did not do this.\u00a0<\/span><\/p>\n

In response to amaBhungane\u2019s questions the Ekurhuleni spokesperson Zweli Dlamini said, \u201cThere was a count of the service points and everything was found to be done in line with the SLA. There was no overpayment but instead the municipality saved money in this regard.\u201d<\/p>\n

They did not explain the discrepancy between the auditor findings and their own or how it was resolved.<\/p>\n

Before Dawn chief executive Velani Magagula, responding on behalf of his joint venture with MCC Security, said he was not aware of the forensic report and was also constrained by a confidentiality clause in his contract with the city.<\/p>\n

\u201cThe Joint Venture has not seen the 2018 Audit and Risk Management Solution Forensic Investigation\u2026 As a result, the Joint Venture is not aware of the alleged R7.6 million overpayment.\u00a0<\/span><\/p>\n

\u201cIf this were true, the Joint Venture assumes that it would have been advised to repay the overpayment back, the Contract Cancelled and that it would appear in the City of Ekurhuleni Financial statements.\u201d\u00a0<\/span><\/p>\n

\n

See Dawn chief executive Velani Magagula’s full response here<\/a>.<\/em><\/p>\n<\/blockquote>\n

The auditors\u2019 other key finding was that the municipality had oversight over the amount paid to the development contractor, but not over the amount paid to the sub-contractor, which was therefore more arbitrary.<\/p>\n

\u201cWe concluded that the money paid for the management services by the Development Contractor is fixed and does go to the Development Contractor and\u00a0 <\/span>that the money collected for services rendered by the Community Based Contractor is appropriated by the Development Contractor.\u201d<\/p>\n

The report\u2019s astonishing conclusion was that over a period of only 17 months, each community based contractor \u2014 <\/span>averaging a staff of about 14 workers \u2014 <\/span>had been underpaid by R2.69 million.<\/p>\n

\u201cWe calculated that in the Tembisa area, each Community Based Contractor will be owed R2 690\u00a0119.14 ON AVERAGE by the development contractor. The Development Contractor is liable in total (on average) to the Community Based Contractors for an amount of R32\u00a0281\u00a0429.70 \u2026\u00a0<\/span><\/p>\n

\u201cWe recommend that the Development Contractor \u2014 <\/span>MCC\u00a0 <\/span>Security and Before Dawn JV \u2014 <\/span>be informed that they should provide proof that they have paid the money to the Community Based Contractors.\u201d<\/p>\n

The city dodged amaBhungane\u2019s question on this recommendation, noting only it had\u00a0 <\/span>\u201cmade all payments for services rendered in line with the approved contract\u201d.\u00a0<\/span><\/p>\n

That left unanswered the issue of whether the development contractors had met their obligations to CBCs.<\/p>\n

Magagula, on behalf of the development contractor, repeated that he was not aware of the report or any such finding.<\/p>\n

\u201cIt would have been proper that if there were a forensic report that adversely affected the Joint Venture, that the Joint Venture would have been asked to comment. As a result, the Joint Venture is not aware of the alleged R2, 690, 119.14 on average owed to each of the Tembisa Community Based Contractors by the Development Contractor.\u201d<\/p>\n

He said forensic investigation may not have considered the costs associated with the waste collection services \u2013 which the mentor companies were entitled to deduct from their payments to the community-based contractors.\u00a0<\/span><\/p>\n

These included \u201ccapital redemptions for plant and vehicles\u201d, fuel and maintenance.\u00a0<\/span><\/p>\n

The investigation report also identified a problem of more ambiguous \u201cinformal\u201d service points, often rubbish dumped in places inaccessible to trucks.\u00a0<\/span><\/p>\n

There were contradictions in the definitions of collection points in these areas, no reliable count of the number of shack dwellings or backyard rooms, and no understanding of how many families lived in each. Numbers seemed to fluctuate month by month:<\/p>\n

\u201cWe established and concluded that as a result of Tembisa residents having \u201cback rooms\u201d that result in more than one family occupying one stand, thus a \u201cService Point\u201d results in the volume of refuse being very high that has an impact on the Community Based Contractors in that it increases operational costs and reduces the life-span of equipment used.\u201d<\/p>\n

In other words, this worked to further disadvantage the CBCs.\u00a0<\/span><\/p>\n

If you like this story and want more, subscribe to our newsletter<\/span><\/a> and be the first to get our latest news and investigations.<\/i><\/em><\/p>\n

The auditors also recommended that the city look into a previous, similar waste collection contract, and ascertain whether those community based contractors had been underpaid. If necessary, the report recommended that \u201ccivil action\u201d be taken.<\/p>\n

There is no indication this has been done \u2014 <\/span>nor that the lessons learned from the 2016 contract have been incorporated into the design of a new five-year contract to be awarded soon.<\/p>\n

The city would only say that it had taken note of recommendations to strengthen supervision of the implementation of the contracts and that \u201csupervision and monitoring staff has been included on the approved [council] structure\u201d.<\/p>\n

Municipal spokesperson Zweli Dlamini said the report and its recommendations \u201cwere dealt with according to our internal systems.\u201d<\/p>\n

He said the programme was assessed \u201con an annual basis to ensure that the goals of the City are achieved and we are satisfied with the progress recorded\u201d.<\/p>\n

Magagula said the joint venture filed its own report to the municipality at the close of the project, and three months later, had received no adverse comments from city officials.\u00a0<\/span><\/p>\n

\u201cSuffice to say the Joint Venture never received any penalties for service delivery failures as stipulated in the contract document. The Joint Venture is proud to say it fulfilled all its obligation in terms of the spirit of the contract, signed contracts and bid specification.\u201d<\/p>\n

Read more investigations by Tabelo Timse<\/strong><\/p>\n

Hushed up: Mayor Masina\u2019s high speed crash in \u2018borrowed\u2019 blue light car<\/a>
\nCashing in on Ekurhuleni\u2019s money for the poor?<\/a><\/em><\/p>\n<\/blockquote>\n","protected":false},"excerpt":{"rendered":"

The City of Ekurhuleni repeatedly dodged claims by amaBhungane that a waste collection programme to empower the city\u2019s poorest instead short-changed them. But city officials knew all along. Their own investigation, now obtained by amaBhungane, had told them the same thing.<\/p>\n","protected":false},"author":4,"featured_media":20983,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[2],"tags":[231,3,674,749,225,750,618,679],"class_list":["post-15101","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-stories","tag-amab","tag-amabhungane","tag-city-of-ekurhuleni-waste-removal","tag-dawn-property-development","tag-ekurhuleni","tag-imogen-mashazi","tag-tabelo-timse","tag-waste-management"],"acf":[],"_links":{"self":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts\/15101","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\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/comments?post=15101"}],"version-history":[{"count":1,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts\/15101\/revisions"}],"predecessor-version":[{"id":29960,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts\/15101\/revisions\/29960"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/media\/20983"}],"wp:attachment":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/media?parent=15101"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/categories?post=15101"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/tags?post=15101"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}