South Africa | Free State asbestos project a flawed process with no evidence of competitive bidding, Zondo commission hears

A businessman, who was killed in broad daylight in Sandton in 2017, had no knowledge, experience or capacity to deal with the questionable R255 million "asbestos auditing" contract from the Free State Department of Human Settlements, the Zondo commission heard on Tuesday.

Ignatius "Igo" Mpambani was shot dead while driving down Sandton's Bowling Avenue in a Bentley, News24 previously reported.

According to the commission's legal team head, advocate Paul Pretorius SC, Blackhead Consulting director Edwin Sodi said Mpambani "contributed nothing to the contract at all".

But Mpambani had unlocked opportunities in the Free State through his contacts. 

"For that, he got 50% of the income".

However, Pretorius said anyone, who examined this contract before signing it, in the Free State could have questioned it and asked: "Why must we pay double the price charged by Blackhead for doing all the work".

He added they did not do all the work.

"Why would we pay double the price to a joint venture. This does not make sense. The participation contract is significant".

News24 reported previously documents from the provincial Department of Human Settlements showed a joint venture between Gauteng-based engineering consultancy firm Blackhead Consulting and Mpambani's company, Diamond Hill Trading 71, scored a R255 million contract in 2014 for the "audit and assessment of asbestos housing units". 

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Records from the department also showed it had paid the joint venture R230 million in 10 tranches between the end of 2014 and August 2016. 

In his lengthy opening statement about what the commission is set to hear relating to the allegations of corruption in the Free State, Pretorius told inquiry chairperson Deputy Chief Justice Raymond Zondo Gauteng and the Free State had extended the multimillion-rand asbestos contract to each other, adding the process was flawed.  

In Gauteng, he said, a panel of service providers was appointed, adding there were two panels appointed, one doing work in general housing and another to eradicate asbestos.

Pretorius added the idea was to identify the extent of asbestos in low-cost housing to meet the needs of people who could not afford housing of their own.

However, there was no evidence of any competitive bidding that occurred in relation to the appointment of either panel, he said.

"A panel of eight contractors was appointed to do an audit of asbestos in Gauteng and they did so on the basis of instructions to perform work. The price that Blackhead charged, or the assessment not the eradication, was R650 per unit".

Pretorius said the whole procurement at that stage was declared irregular by the Auditor-General.

"Importantly, there was no individual contract in existence between Blackhead and the Gauteng department … at the time that contact was transferred to the Free State.

"Nor is the evidence that a fair tender process preceded the conclusion of any contractual arrangement between Blackhead and the Department of Human Settlements in Gauteng".

He added millions were spent on eradication but the asbestos was still there.

"People are still exposed to the danger of asbestos," Pretorius said.

A procurement process was entered into, which allowed Blackhead and the Free State Department of Human Settlement to participate in the contract in Gauteng, he added. 

"That process was entirely flawed for a number of reasons … the other aspect of Gauteng is the evidence of Mr Sodi shows that the profits were massive. 

"Sodi is clear he was paid for his investigating, assessment of the prevalence of Gauteng and other areas he was asked to do. He was paid almost R230 million and his profit on his own version was in the region of R100 million".

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