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City of Johannesburg

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a world class African city

orensic I vestigatio

Strictly Privat e & Confidential

PRIVILEGED

eport

ALLEGED POLITICAL INFLUENC E IN THE AWARDING A CONTRACT TO AFRIRENT

THROUGH REGULATION 32 OF THE MFMA.

REPORT

29 MARCH 2019


J.

Jobur~ Group Forensic and Investigation Services

FORENS IC INVEST/GA TION REPORT

DISTRIBUTION LIST

Name To Secure For Action For Designat ion information Act ion

Mr. Ndivhon iswani Lukhwareni

City Manager X

Mr. Herman Mashaba

Execut ive Mayor X

ALLEGED POLITICAL INFLUENCE IN THE AWARD ING A CONTRACT TO AFRIRENT THROUGH REGULATION

32 OF THE MFMA.

Page 1

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29 March 2019

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a world class African city

Date : 29 March 2019

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Our Reference

TO:

: GFIS 220/10/2017

COPIED TO:

Cllr. Herman Mashaba Mr Ndivhoniswani Lukhwareni

Executive Mayor City Manager

This report is confidential and NOT for p11blicalion

I LI I / '

ALLEGED POLITICAL INFLUENCE IN THE AWARDING A CONTRACT TO AFRIRENT

THROUGH REGULATION 32 OF THE MFMA INCLUDING AN EXTERNAL LEGAL OPINION

ON THE REGULATION 32 PROCESS.

It is with great pleasure to present to you our report into alleged political influence in the

cancellation of the open tender process for proposed contract A733 and awarding of the

Fleet Management Contract to Afrirent PTY (Ltd) through regulation 32 of the MFMA.

The attached report records the results of our forensic investigation and recommends the

actions we deem appropriate to be taken. We would appreciate your written response on

suggested recommendations of the investigation, within 10 working days after receipt of

this report.

Should you have queries or questions regarding the content of this report, please contact

Mshiwa Sibande on 081 301-4341 or email him at email address: mshiwas @joburg .org. za.

Email: shadracks@joburq .org.za


J,

Jobur3 Group Forensic Investigation Services

FORENSIC INVEST/GA TION REPORT

TABLE OF CONTENTS

SECTION HEADING PAGES

1. BACKGROUND 4

2. PURPOSE AND OBJECTIVES OF OUR INVESTIGATION 5

3. SCOPE OF OUR INVESTIGATION AND PERIOD UNDER REVIEW 5

4. APPROACH AND PROCEDURES PERFORMED 5

5. LIMITATIONS AND RESTRICTIONS 6

( 6. EXECUTIVE SUMMARY 7

7. REGULATORY FRAMEWORK 12

8. FINDINGS 13

9. CONCLUSIONS 42

10. RECOMMENDATIONS 43

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Group Forensic and Investigation Services

FORENSIC INVESTIGATION REPORT

LIST OF ABBREVIATIONS USED:

CoJ/Citv City of Johannesburci

GFIS Group Forensic and lnvestiaation Services

GRAS Group Risk Assurance Services

BEC Bid Executive Committee

BSC Bid Specification Committee

EAC Executive Adiudication Committee

SHELA Safetv Health Environment

FCM Fleet Compliance Management

GCSS Group Corporate Shared Services

GSCM Group Supplier Chain Management

AFRIRENT Afrirent Pty (Ltd)

EM Executive Mayor

AO Accounting Officer (City Manager)

MAHUNA Mahuna Investments

MFMA Municioal Finance Management Act

EFF Economic Freedom FiQhters

VBS Venda Banking Society

ROLE PLAYERS IN THE INVESTIGATION

Lucas Tshibalo (Tshibalo) Director Loaistics

( Sanjav Dubru (Dubru) ActinQ Grouo Executive Director GCSS

Suleiman Ghanchi (Ghan chi) Former Director Fleet

Kabelo Mashabela (Mashabela) Suspended Fleet Soecialist

Dr Shaun Ramrooo (Ramrooo) Former Head SHELA and FCM

CLLR. Herman Mashaba CCLLR. Herman Mashaba) Executive Mavor

CLLR Funzela Naobeni (CLLR Funzela Ngobeni) MMC

Senzo Tsabedze (Tsabedze) CEO Afrirent

Deputv Director Leshoka (Leshoka) Group Supplier Chain Manaaement

Mr Mashoabane (Mashoabane) Member Mahuna

Pringle Raedane (Raedane) City ManaQer Moqale Citv

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Ratha Ramathla1Je (Ramathla1Je) Actina CM Mogale City

Paul Richards (Richards) Emolovee Afrirent

Refik Bismila (Bismila) GED Health Department

Smanaaliso Vilakazi (Vilakazi) Grouo Leaal and Contracts

Cornelius Jamela (Jamela) Director SCM

Sethlab i Leso (Leso) Director SCM

Israel Maluleke (Maluleke) Fleet Controller

Jacaues David Rabie (Rabie) Fleet Manaaer City Power

Zwelithini Lazarus Khumalo (Khumalo) Lead Transoort Joburg Water

Sioho Makhanye (Makhanve) Deoutv Director GRAS

Thomas Sambo (Sambo) Senior Soecialist Public Safety

Gerhard Booysen (Boovsen) Manaaer Fleet Operations: Pikituo

Mark Truter (Truter) Manaaer Fleet: City Parks and Zoo

Andre Geen {Geen) Fleet Manaaer: J RA

Tsheoo Mohati {Mohati) Fleet Manaaer: EMS

Zelda Verwev {Verwev) Deoutv Director: GCSS

Sandile Sibaya {Sibava) Officer Sunnlv Chain

SM Xulu {Probitv) Probitv Auditors

BACKGROUND 1.

1.1 Group Forensic and Investigation Services (GFIS) received a request from Cllr Herman

Mashaba, the Executive Mayor (EM) of the City of Joburg Municipality (City) to conduct an

investigation into alleged political interference with the awarding of a contract to Afrirent Pty

(Ltd) (Afrirent) for Fleet Management Services of Non-specialised fleet through a Regulation

32 process of the MFMA (Regulation 32). The EM requested the investigation after an article

appeared in the Mail and Guardian newspaper alleging that during the appointment of the

current service provider, Afrirent, there was political interference in the tender process which

resulted in the appointment of Afrirent irregularly.

1.1.1 It was further alleged that Afrirent had made payments amounting to R500 000.00 to Mahuna,

a company that is owned by a cousin of Mr Julius Malema (Malema) the President of

Economic Freedom Fighters (EFF) a political party. It is also alleged that this company was

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part of the Venda Banking Society (VBS) looting scandal. The newspaper article highlighted

the fact that it was very co-incidental that Afrirent made payments to Mahuna which was

owned by Malema's cousin just before the tender process was cancelled by the CoJ and was

Afrirent appointed through the alternative Regulation 32 process of the MFMA which allows

for Government in all spheres to appoint a supplier that is providing services to another state

institution without following a competitive tender process.

2. PURPOSE AND OBJECTIVES OF INVESTIGATION AND REPORT

2.1 The primary objective of our investigation was to independently and objectively investigate

the allegation that Afrirent was appointed through political pressure from the EFF through a

compromise reached by the EM and the EFF so that the City's 18/19 budget could be

approved .

2.2 This report is not a court document, and has been prepared solely for the purpose of this

investigation. It is to be used solely as a discussion document and should not be used for

any other purpose. No part of this report may be quoted, referred to or disclosed, in whole

or in part, other than to competent authorities in terms of due legal requirements, without our

prior written consent.

3. SCOPE OF INVESTIGATION

3.1 Our mandate was limited to analysing the circumstances that lead to the Regulation 32

appointment of Afrirent by reviewing all available documentation and interviewing individuals

that played a role in the process to specifically determine if political pressure was exerted on

them to cancel the open tender process for proposed contract A733 and then following the

Regulation 32 process to appoint Afrirent. Neither the validity nor legality of the open tender

process or the Regulation 32 process was probed in this report.

3.2 The allegation of corruption between Afrirent and the EFF is outside the scope of this

investigation.

3.3. Our investigation does not constitute an audit in terms of Generally Accepted Auditing

Standards nor was it required to.


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4. APPROACH AND PROCEDURES PERFORMED

4.1 The nature of our investigation was based on the analysis of the documentary evidence, the

extraction of relevant information there-from, the determination of the nature of the relevant

transactions, interviews with various persons and ultimately summarising the results in order

to conclude on our factual findings.

4.2 We reviewed the following documentation.

a) Report for the approval of the Regulation 32 process

b) Bid Adjudication Committee meeting minutes provided by SCM and GCSS

c) Bid Evaluation Committee meetings minutes provided by SCM and GCSS

d) Probity Report of the appointment of fleet management services

e) Report compiled for submission to the Executive Adjudication Committee for the

appointment of the fleet management service provider for non specialised fleet

f) Report to the Executive Adjudication Committee for the cancellation of tender for fleet

management services for non specialised fleet.

g) Reports and Documents related to the Regulation 32 appointment of fleet management

service provider, provided by SCM and GCSS.

5. LIMITATION AND RESTRICTIONS

5.1 GFIS have attempted to obtain all information relevant to our investigation, but cannot at this

stage guarantee that all relevant documentation had been obtained, despite diligent efforts

made.

5.2 Although GFIS have attempted to test the accuracy of all information provided to us, we take

no responsibility for the accuracy or the veracity of other information provided to us by other

parties.

5.3 GFIS requested and were not provided with the contracts between Mahuna and Afrirent and

therefore we could not ascertain that there was a business relationship between the

companies although this was confirmed by the CEO of Afrirent.


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5.4 GFIS requested and we were not provided with the scope of work, the invoices and the sites

for which Mahuna was contracted to perform services, by Afrirent, as such we could not

confirm the assertion that payments made to Mahuna were for services rendered.

5.5 GFIS could not compel the Department of Rural Development and Land Reform to provide

contracts or invoices regarding Afrirent 's contract with them despite the Deputy Director Mr

Leshoka: SCM, Department of Rural Development and Land Reform confirming that such a

contract exists.

5.6 Mr Mashoabane from Mahuna Investments was contacted telephonically and he refused to

speak to GFIS referring all questions to Afrirent.

5.6 Non - availability of the Probity Officer for analysis, Group Risk and Assurance was asked to

assist but at the time of writing this report they had not responded.

5.7 GFIS was limited by the fact that key role players in the process viz: Dr Ramroop, Ghanchi

and Mashabela have resigned and been suspended respectively. Attempts to source

documentation and interview these individuals were limited to emails and telephonic

conversations, the current employees at GCSS have not been able to obtain complete

documentation regarding the process followed.

6.

6.1

6.2

EXECUTIVE SUMMARY

On 31 January 2012, the City approved the award of contract A400A for the provision of non

specialised vehicles and fleet support services to Zeda Cart/a Avis Fleet Services (Avis). For

a period of sixty (60) months, commencing on 01 November 2012 and terminating on 31

October 2017, valued at R830 479 683.00 {excluding Value Added Tax (VAT), fuel and ad

hoe rentals).

As a result of the delay in the commencement of the tender process combined with the delays

in the approval of the various committees the timeframes for the procurement process was

affected and as such contract A 400 was extended three (3) times as follows:

• On 31 October 2017, the City extended the contract for a period of five (5) months with

effect from 1 November 2017 to 31 March 2018 to a total value not exceeding R124 571

000(excluding VAT, fuel and ad-hoe rentals). At this stage the User Department

attempted to use Regulation 32 for the utilisation of a fleet contract from Oudtshoorn

Municipality however this request was not approved by EAC. Instead EAC approved the


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FORENSIC INVEST/GA T/ON REPORT

extension for five (5) months through circular 62 of the MFMA. The Regulation 32 report

was authored by Mashabela and supported by Ramroop, this is an indication that the

User Department already determined that Regulation 32 was an acceptable option for

the procurement of goods and services.

• And further extensions for a period of one ( 1) month and six (6) months with effect from

01 April 2018 to 31 April 2018 and 01 May to 31 October 2018 respectively

6.3 The extensions of the contractA400 from 1 November 2018 to 31 October 2018 were granted

due to the fact that the City could not execute service delivery without fleet and the extension

of the contract A400 allowed for the tender process to continue without denying the City

access to fleet.

6.4 Ramroop, Director Fleet, GCSS, the official with delegated authority to supervise the

functions of fleet management did not execute his function with due diligence and care as a

result the tender process to replace A400 was excessively delayed.

6.5 BSC meeting took place from 13 July 2017 to 20 October 2017, this resulted in the

compilation for the term of reference for the tender for the provision of non specialised

vehicles which were approved on 14 September 2017. Subsequently, the tender was

advertised on 22 September 2017.

6.6 The tender proposals received were evaluated by the BEC meetings which took place

between13 December 2017 and 04 April 2018. The BEC took a decision to recommend the

appointment of Avis trading as Zeda Cars as the successful bidder initially. However this

recommendation by the BEC was changed when they received the probity report which had

material negative findings and was recommending the cancellation of the tender process.

The Chief Audit Executive of CoJ and the Managing Director of SM Xulu confirmed that the \

information contained in their probity report was authentic and that they stand by their findings

and recommendations.

6.7 Due to the adverse findings in the probity report, the BEC submitted a cancelation of

proposed contract A733 and the recommencement of the process to EAC and this was

approved on 18 May 2018. The EAC approved the recommendations of the BEC and

recommended the cancellation of the process to the Accounting Officer for approval. This

was done on 18 June 2018.

6.8 When proposed contract A733 was cancelled, approximately four (4) months remained

before the last extension granted for contract A400 was to expire on 31 October 2018. The


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tender process for proposed contract A733 began in April 2017 and the BEG only compiled

a report for EAC approval in March 2018 this process took 11 months. Therefore the

timeframe of four (4) months to re-start the tender process afresh was very optimistic.

6.9 A meeting was held between Tshibalo, Dubru and Ghanchi wherein it was decided that while

the open tender process be re-started a parallel Regulation 32 process also be considered

in case the open tender process was not concluded before the expiry of the extension

granted on A400. This was due to the limited timeframe that remained between the

cancellation of proposed contract A733 and the expiry of the extensions already granted on

contract A400. No further extensions could be approved on the current contract and if there

was no contract in place then the City would not be able to execute service delivery.

6.10 According to Mr. Lucas Tshibalo, the process of determining which entity had a suitable fleet

management contract which could be used for Regulation 32 was completed by Ghanchi and

Mashabela. According to Tshibalo the following municipalities were approached:

NUMBER NAME OF MUNICIPALITY Rl8PONIE

1 Tshwane Metropolitan Municipality The Non-specialised vehicles contract was under review.

2 Mogale City Municipality Specialised and non-specialised contract in place which could be used bv the Citv.

6.11 On 06 July 2018, the City Manager, Dr Lukhwareni, wrote a letter to Readane: City Manager,

Mogale City. In the letter, Dr Lukhwareni requested permission to utilise Mogale City's

contract number 1 (f) 01/2018:- Vehicle Fleet Financing in line with Regulation 32 of the

~ . MFMA.

6.12 On 19 July 2018, the Acting City Manager, Ramathlape from Mogale City granted the City of

Joburg consent in writing to utilise their vehicle fleet contract. Furthermore, Mogale City

indicated that tender number I (F) 01/2018 for Fleet Financing was for a period of three years

and had been awarded to Afrirent (PTY) Ltd.

6.14 On 20 July 2018, Dr Lukhwareni granted Dubru permission to engage Afrirent (PTY) Ltd as

per the requirement of Regulation 32 of the MFMA.

6.16 On 26 July 2018, a meeting was held between Afrirent and the City of Johannesburg to

negotiate a discount from Afrirent. Subsequent to that meeting, Afrirent provided a proposal

for the provision of leasing and support service for a period of 36 months. The proposal


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provided for leasing of fleet and support services to the City and its Entities by Afrirent was

at the following costs:

R1 387 213 335.50 R1 487 325 475.29 R100 112 139.79

6.18 According to Tshibalo, Afrirent (Pty) Ltd was requested to provide a guarantee from the bank

with respect to their financial position to enable support this of this contract and ASSA granted

them conditional reserved funds of R1 billion.

6.19 On 03 October 2018 a report requesting the appointment of Afrirent in terms of Regulation

32 was tabled before the EAC. The report recommended that the Accounting Officer approve

the City's participation on contract (IF) 01/2018) between Mogale City and Afrirent for vehicle

fleet financing on a full maintenance lease for a period of 36 months or a period deemed fit

by the Accounting Officer at a total cost of R1 387 213 335.50. A period of 30 months for this

request was approved by the Accounting Officer on recommendation by the EAC.

6.20 During the interview with Tsabedze, he indicated that Afrirent was established in 2003 in

order to participate in the fleet management environment. Tsabedze indicated that Afrirent

has 19 municipal clients, three national and two provincial government clients. In addition, he

indicated that 60% of those contracts were current.

6.21 In addition to the above Tsabedze confirmed that Afrirent has a contract with the Department

of Rural Development and Land Reform in Limpopo Province. The value of the contract is

R2 181 734 100.00 for the provision of tractors, implements and equipment for a period of

thirty six months.

6.22 According to Tsabedze the implements and machinery have to be delivered to various farms

within the province. In addition, Afrirent had to train the farmers of the co-operatives on how

to use the implements and machinery.

6.23 Tsabedze indicated that initially, Afrirent used their suppliers to deliver the implements and

machinery to the farms in Limpopo and an additional cost and Afrirent's Project Managers

provided the training, however, this proved to be counter-productive and costly as there was

a language barrier between the Project Managers and the members of the cooperative at the

farms.


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6.24 The project managers employed by Afrirent were White Afrikaners and the farmers receiving

the implements spoke Venda, Tsonga or Pedi. Therefore, Mahuna Investment, a company

in Limpopo was contracted to provide logistic and interpretation services to Afrirent at a

reduced cost and are 100% Black owned.

6.2.5 Tsabedze further indicated that for the work that was completed, Mahuna Investment

submitted invoices and were paid accordingly . The first invoices were paid around April or

May 2018 and the second in June or July 2018. The appointment of Afrirent in CoJ happened

in October/ November 2018.

6.26 Tsabedze indicated that at no stage did he or Afrirent have any knowledge of any relationship

between Mahuna Investments and any political party in South Africa. Specifically, he was not

aware of any link between Mahuna Investment and Mr Julius Malema or the Economic

Freedom Front (EFF).

6.27 The following officials Tshibalo, Dubru, Mashebela and former official Ghanchi who played a

role in the procurement process for proposed contract A733 and the Regulation 32 process

for the appointment of Afrirent were approached in person or telephonically and they provided

the following submission:

• That there was no interference in the open tender process or in the Regulation 32 process

by any political party or political figure.

• The decision to cancel the proposed contract A733 was entirely a decision taken by

officials of the City through a prescribed process as contained in the cancellation report

tabled before the EAC.

• The decision to pursue the Regulation 32 process was a decision made by GCSS

management who recommended it to the Accounting Officer.

6.28 Ramroop who was also approached for comment provided a statement where he levels

allegations of corruption against Dubru indicating that he was appointed to manipulate the

tender process, however he is not specific on how this happened or which political party or

politician was responsible for his agenda.

6.29 Thirteen (13) members of the SEC confirmed that they were not influenced in any way into

cancelling the open tender process, proposed contract A733 .

6.30 The City Manager confirmed that there was no political influence regarding the cancellation

of the open tender process for proposed contract A733 and the Regulation 32 appointment

of Afrirent. He indicated that he was satisfied with the process followed.


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6.31 On the allegation that the negotiations with EFF on the tariff proposal for the 2018/2019 City

of Joburg budget were based on the awarding of fleet management tender, Executive Mayor,

Cllr Herman Mashaba indicated that the allegations are without base. In fact, on 12 June

2018, a meeting was held between the Executive Mayor, the Member of Municipal Council

(MMC) Cllr Funzela Ngobeni and representatives of the EFF. During the meeting, EFF had

indicated that the tariff increase on water and electricity was too high. A compromise was

reached whereby the "proposed decrease retail increases" were decreased by 0,2 % for

electricity and 1 % for water. Based on the compromise, the budget and tariff proposal were

ultimately adopted by Council on 21 June 2018. MMC Cllr Ngobeni confirmed the

engagement and the compromised reached with EFF representatives.

6.32 The Executive Mayor indicated that he became aware of the fleet management contract

challenges at a meeting on 05 October and the City Manager had assured him that the matter

was under control. Since the Executive Mayor had no rights and responsibilities in the supply

chain management process, he was satisfied with the response from the City Manager.

6.33 The Executive Mayor indicated that he had never heard of the company Afrirent prior to the

publication of the ama-Bhungane article on 29 November 2018 and this was the first time he

had been alerted to potential irregularities in the awarding of the fleet management contract

to Afrirent. Given the nature of the allegations, the Executive Mayor instructed the Head of

Group Forensic Investigation Services to conduct an investigation into the allegations.

6.34 According to the external legal opinion obtained from MNS Attorneys in regards to the

regulation 32 process the following was concluded:

A. "CoJ was justified in cancelling the tender A733 as advised by the Probity Report.

However, CoJ must in future consider appointing a probity advisor at the beginning of the

procurement process to ensure that each and every stage of the procurement process is

vetted to minimize risks of belated tender cancellations and legal challenges;

B. CoJ still had an option of further extending contract A400A , per Regulation 36 as the

reasons for the initial extension on Regulation 36 still prevailed as at 31 October 2018;

C. CoJ complied with the procedural requirements of the MFMA Regulation 32 when it

appointed Afrirent;

D. There are sufficient mitigating grounds to argue that substantively CoJ complied with

Regulation 32 and CoJ's SCM Policy;


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E. There might, however, be a debate raised on whether the material price difference

between Mogale City/ Afrirent contract and the CoJ/Afrirent contract impact on the

substantive compliance with MFMA regulation 32 and CoJ policy; and

F. CoJ must consider engaging National Treasury to affirm the substantive compliance with

MFMA Regulation 32 in the conclusion of the Afrirent contract."

7. REGULATORY FRAMEWORK

7 .1 GFIS obtained and reviewed the Regulation 32 of the Municipal Supply Chain Management

(MFMA) and it states the following :

(32) Procurement of goods and services under contracts secured by other organs of state:

(1) A supply chain management policy may allow the accounting officer

to procure goods or services for the municipality or municipal entity under a contract

secured by another organ of state, but only if -

(a) the contract has been secured by that other organ of state by means of a

competitive bidding process applicable to that organ of state;

(b) the municipality or entity has no reason to believe that such

contract was not validly procured;

(c) there are demonstrable discounts or benefits for the municipality or entity to do

so; and

(d) that other organ of state and the provider have consented to such procurement

in writing.

(2) Sub-regulation (1 )(c) and (d) do not apply if-

(a) a municipal entity procures goods or services through a contract secured by its

aren't municipality; or

(b) a municipality procures goods or services through a contract secured by a

municipal entity of which it is the parent municipality

7.2 GFIS obtained and reviewed the Regulation 36 of the MFMA and it states the following:

(36) Deviation from, and ratification of minor breaches of, procurement processes

(1) A supply chain management policy may allow the accounting officer-


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(a) to dispense with the official procurement processes established by the policy

and to procure any required goods or services through any convenient process,

which may include direct negotiations , but only -

(i) in an emergency;

(ii) If such goods or services are produced or available from a single provider

only

(iii) for the acquisition of special works of art or historical objects where

specifications are difficult to compile

(iv) acquisition of animals for zoos; or

(v) in any other exceptional case where it is impractical or impossible to follow the

official procurement processes; and

(b) to ratify any minor breaches of the procurement processes by an official or

committee acting in terms of delegated powers or duties which are purely of a

technical nature.

(2) The accounting officer must record the reasons for any deviations in

terms of sub-regulation (l)(a) and (b) and report them to the next meeting of the

council, or board of directors in the case of a municipal entity, and include as a

note to the annual financial statements.

(3) Sub-regulation (2) does not apply to the procurement of goods and services

contemplated in regulation 11 (2).

8. FINDINGS

8.1 GFIS established that on 31 January 2012, the City approved the award of contract A400A

for the provision of non-specialised vehicles and fleet support services to Zeda Cart/a Avis

Fleet Services (Avis). The duration of the awarded contract was sixty (60) months,

commencing on 01 November 2012 and terminating on 31 October 2017. The total value of

the contract was R830 479 683.00 {excluding Value Added Tax (VAT), fuel and ad-hoe

rentals).

8.2 Group Corporate and Shared Services Department (GCSS) were the custodians of the

contract and are responsible for fleet management including non-specialised fleet.

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8.3 Group Corporate and Shared Services (GCSS) requested approval to go out on tender to

replace the existing non-specialised fleet management contract A400. The approval was

granted on 18 April 2017, this was five (5) months before contract A400 was to expire. The

bid specification committee (BSC) was approved in 18 May 2017. However the first BSC

meeting took place on 13 July 2017. The appointment of the bid evaluation committee (BEG)

took place on 30 October 2017. The fact that contract A400 was expiring on 31 October 2017,

meant that in order to accommodate the new tender process for the replacement of contract

A400 had to be extended with Avis.

Contract A400 was extended three (3) times as follows through submissions to the Executive

Adjudication Committee (EAC):

• On 31 October 2017, the City extended the contract for a period of four (5) months with

effect from 1 November 2017 to 31 March 2018 for a total value not exceeding

R124 571 000 (excluding VAT, fuel and ad-hoe rentals) (Refer to annexure A1). GFIS

further obtained a report requesting the extension of contract A400 through Section 116

(3) of the MFMA from the EAC (Refer to Annexure A2), however there are no

corresponding EAC minutes or resolution for this report indicating that report may not

have been submitted to EAC.

Subsequently a report dated 25 October 2017 requesting the EAC to approve the

recommendation of a Regulation 32 utilisation of a fleet contract from Oudtshoorn

Municipality (Annexure A3). This report was authored by Mashabela and supported by

Ramsaroop. The corresponding EAC minutes and resolution indicate that the

recommendation for a regulation 32 utilisation of contract SCM22/2016 (Oudtshoorn

Municipality) was not approved. The EAC recommended that the Accounting Officer (AC)

approve an extension of contract A400 through MFMA circular 62 providing for the

variation of the contract from 1 November 2017 to 31 March 2018 (Annexure A4).

The AC approved the EAC recommendation however expressing his concerns about the

lateness of the action taken by the User Department and suggested a letter of reprimand

be issued.

• And further extensions for a period of one ( 1) month and six (6) months with effect from

01 April 2018 to 31 April 2018 and 01 May to 31 October 2018 respectively (Refer to

annexure B and C respectively)


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Joburg Group Forensic and Investigation Services


8.4 It shou ld be noted that GCSS had 60 months from 01 November 2012 to 31 October 2017

(for the duration of contract A400) to plan, prepare and procure the replacement contract for

contract A400. The extensions above were granted due to the fact that the City could not

execute service delivery without fleet and the extension of the contract A400 allowed for the

tender process to continue without denying the City access to fleet. However, if Dr. Ramroop:

Group Head (SHELA and FCM), the individual with overall responsibility for Fleet at GCSS

and his direct reports executed their function with diligence and due care by ensuring that

there was amp le time for the tender process to be completed then there would be no need

for extensions of contract A400.

8.5 The time line for the completion of the open tender process for proposed contract A733

to replace contract A400 was as follows:

Event Date

Approva l of the tender to commence for the procurement of un- 18 April 2017

specialised fleet services

Bid Specification Committee (BSC) appointed on (Refer to 18 May2017 annexureD)

BSC met between (Refer to annexure E) 13 July 2017 and

20 October 2017

Addendum to bid specification 20 October 2017

Bid Specification approved on (Annexure F) 14 September 2017

Tender advertised on (as per report to EAC from BEC) 22 September 2017

Compulsory briefing session 11 October 2017

Bid Evaluation Committee (BEC) Appointed on (Annexure G) 30 October 2017

BEC met between (Annexure H) 13 July 2017 and

20 October 2017

Closing of tender (as per advert) (Annexure /) 7 November 2017

Public tender opening (as per advert) (Annexure I) 7 November 2017

BEC report prepared for Executive Adjudication Committee 9 March 2018

approval but not submitted (Annexure J)

Presentation of the probity report to BEC prior to submission of 4 April 2018

BEC report to EAC for approval (Annexure K)


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Request to cancel proposed contract A733 presented to EAC for 18 May 2018

cancellation after the probity report showed material defects with

the specification (Annexure L)

Proposed contract A733 Accounting Officer approve the 18 June 2018

cancellation of proposed contract A733 (Annexure M)

8.6 From the above process it is clear that an attempt to secure a replacement contract for contract

A400 through an open tender process was undertaken by GCSS, however the process had

to be cancelled due to the fact that there were material negative findings made by the Probity

Auditors. This audit was conducted by an independent Auditing Company, SM Xulu. It should

be noted from above that the User Department supported by the Head SHELA and FCM,

Ramroop attempted to use the Regulation 32 process as early as 31 October 2017. The

contract from Oudtshoorn that was proposed in the Regulation 32 process was between

Oudtshoorn and Avis, this was not approved by EAC.

8.7 Timeline for BSC resolutions for proposed contract A733 (open tender process):

Not provided

Anita van der Merwe -GCSS Andrie Geen -JRA Liner Seleise - GSSCM Israel Maluleke - Joburg Market Tsakani Mohale-GCSS Mervin Martin - Metro Bus Johan Maree - JCPZ Jacques Rabbie - City Power Tshepo Mphati - EMS Kabelo Mashabela -GCSS Zweli Khumalo - Joburg Water Zama N owo - GCSS

n/a

Minutes not provided


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M Zondo - Group Accounting Amanda Gxwala -GRAS/ Probity Advisor Pumla Ganca - SSCM Petra Smit- GCSS Sean Coetzee-JMPD Lindiwe Nkosi - GSSCM

02 August Anita van der Merwe - The committee deliberated on the contract 2017 GCSS period presentation made by GCSS-FCM and an

Andrie Geen -JRA agreement was made that a number of factors Liner Seleise - GSSCM be incorporated then the item be discussed in Israel Maluleke - Joburg the next meeting. However, amongst other Market issues raised with regards to the contract period Tsakani Mohale - GCSS was that having the contract running for 36

(

Mervin Martin - Metro months is likely to make the lease of each Bus vehicles more expensive. Other members of the Dumisane Chauke - committee felt that 36 months' contract will be GDED less complicated due to the fact there will not be Jacques Rabbie - City a public participation. A decision for the contract Power period was put on hold until the next meeting. Tshepo Mphati - EMS Kabelo Mashabela - All proposals that will score less than 70 points GCSS out of one hundred ( 100) points for functionality Zweli Khumalo - Joburg will not be considered further. Water Gerhard Booysens - Bidders proposals must be divided into two Pikitup envelopes for submission: Amanda Gxwala - Functionality envelope - provides for the GRAS/ Probity Advisor bidder's submission in line with the functions of Philani Zamia - GSSCM the bid as outlined in section 4, all returnable Petra Smit - GCSS documents, full and properly completed RFP Sean Coetzee - JMPD document in line with Annexures and the Lindiwe Nkosi - GSSCM proposal documents in line with the conditions

(

spelt out in the bid document. B-BBEE Envelope - provides for the bidders' submission in terms of Preferential Procurement Regulations 2017 as outlined in section 6 and B-BBEE status level contribution of the bidder .

The chairperson adjourned the meeting, and concluded the finalisation of the terms of reference .

The next meeting will be held on the 04 August 2017.


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Jobur~ Group Forensic and Investigation Services


04 August Anita van der Merwe - The chairperson of the committee has presented 2017 GCSS the estimations in terms of how the contract will

Andrie Geen - JRA cost the city when it is structured for 36 months Liner Seleise - GSSCM period when compared to a 60 months period. Amanda Gxwala - The committee then agreed that it is more GRAS economically sound to have the contract for a Israel Maluleke - Joburg period of 60 months. Market Tsakan i Mohale - GCSS This will not be applicable to a non-specialised Mervin Martin - Metro fleet contract. Bus Thulani - Ndlovhu - The insurance premiums will be part of monthly Core Admin lease for all the FML vehicles and the insurance

( Jacques Rabbie - City history of the history of the city will be provided Power to the bidders to assist in determining the Zweli Khumalo - Joburg premiums for each vehicles. Water The Chairperson adjourned the meeting, and Kabelo Mashabela - concluded the finalisation of the terms of GCSS reference . Smangaliso Vilakazi -Group Legal The committee has agreed that bidders will be Gerhard Booysens - given 45 days to submit their proposals and no Pikitup subm ission that will be made after the closing Lindiwe Nkosi - GCSS will be considered. Sean Coetzee - JMPD The chairperson thanked everyone for their time Petra Smit- GCSS and cooperation in BSC meetings. Finance A report will be written to request the approval of

the final bid document.

Meeting officially closed.

07 Anita van der Merwe - The BSC has resolved that the following

( September GCSS elements be used as the disqualifying criteria for 2017 Andrie Geen -JRA bidder:

Liner Seleise - GSSCM a) Failure to submit a Valid Tax clearance Israel Maluleke - Joburg certificate or One Time Pin for tender Market purposes. Tsakani Mohale- GCSS b) Failure to comp lete and sign the form of Mervin Martin - Metro bid Bus c) Incomplete pricing schedule Johan Maree - JCPZ d) Failure to attend the compulsory briefing Jacques Rabbie - City section. Power e) Failure to complete and sign MBD 4, Tshepo Mphati - EMS MDB 5, MDB 8, AND MDB 9 Kabelo Mashabela - f) Failure to adhere to sub-contracting GCSS requirement as regulation 9 of PPPFA,

2017 .


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Zweli Zwane - The SSC committee agreed and resolved that Economic the contract period will be 60 months. Development The BSC committee agreed and resolved that Zwe li Khumalo - Joburg the closing date for the bidder's submission will Water be in 45 days after the advert has gone out due Smangaliso Vilakazi - to the complexity of the contract i.e. PPPFA Group Legal Regulation on sub- contracting requirements. Thulani Ndlovu - CORE Gerhad Booysens - Proposals will be evaluated in terms of the PIKITUP Preferential Procurement Policy Framework Zandile Dlamini - Act's requirements of the 90:10 points system. GSSCM 'Nkosikhona Mnguni -Probity Sipho Makhanya-GRAS

(

Lindiwe Nkosi - GSSCM

20 Anita van der Merwe - The committee then thoroughly discussed the October GCSS rate card and at the end of the all members 2017 Andrie Geen -JRA agreed to adapt the amended rate card in a

Liner Seleise - GSSCM summarised version. Luxolo Ntisana - Probity Israel Maluleke - Joburg The committee resolved that an approval Market request will be send to the Accounting Officer of Tsakani Mohale - GCSS the City before the amended rate card could be Mervin Martin - Metro communicated to the bidders that attended the Bus briefing sessions. Johan Maree - JCPZ Jacques Rabbie - City The committee resolved that the communication Power of the amendment will be limited to the bidders Tshepo Mphati - EMS that attended the briefing session. Kabelo Mashabela -GCSS It was then agreed by all members of the Zweli Khumalo - JHB committee that the bidders will be given two Water weeks extension so that they are afforded Smangaliso Vilakazi - enough time to complete the revised pricing Group Legal schedule. Thulani Ndlovu - CORE Gerhad Booysens - The chairperson officially adjourned the meeting. PIKITUP Philani Zamia - GSSCM

8.8 The SSC meetings above lead to the compilation of the term of reference for the tender

(specifications) (Annexure F).The terms of reference was approved on 14 September 2017


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by the Accounting Officer. Which meant that the tender could be advertised. The tender was

advertised on 22 September 2017.

It must be noted that after the advertisement of the tender 22 September 2017, there was a

subsequent BSC meeting as a result of amendments being made to the rate card. This

resulted in an extension of two weeks for submission granted to all bidders that attended the

briefing session.

GFIS confirmed that all members that served on the BSC were officials from the City and its

Entities. No political office bearers or representatives are allowed to serve on these

committees.

Timeline for BEC resolutions for proposed contract A733 (open tender process):

13 December 2017

• ""''"' '1 • Ill Mark Thute - JPCZ Nkosikhona Mnguni -Probity Thulani Ndlovu - GCSS Gerhard Booysen -Pikitup Smangaliso Vilakazi - Group Legal Zweli Khumalo - Joburg Water Israel Maluleke - Joburg Market Kabelo Mashaba -COJ/GCSS Louis Shitllela - GSSCM Jacques Rabie - City Power Tshepo Mphati -COJ/EMS Zelda VerweySHELA+FCM Andrie Geen - JRA

Chairperson enquired whether the committee forms a quorum. The approved members of the BEC are fifteen (15), and a confirmed that there was 8 members plus, therefore the committee formed a quorum.

Chairperson raised a concern regarding the committee member's time keeping. Late coming will not be tolerated. The concern was raised directly to Supply Chain and the fact that it is not possible to open the meeting without them.

The next meeting was scheduled for the 14 December 2017.


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14 Jacques Rabie, - City The committee resolved that should it be December Power identified that bidders did not submit compliant 2017 Tshepo Mphathi - key returnable documents that are not a

COJ/EMS disqualifying criteria; bidders will be given an Mark Thute-JPCZ opportunity to re-submit. Nkosikhona Mnguni -Probity However, it was further resolved that a Thulani Ndlovu - GCSS permission will be requested from the Gerhard Booysen - Accounting Officer before that process can take Pikitup place. Jabulile Sibeko - Group Legal Smangaliso The Committee further resolved that the invalid Vilakazi - Group Legal tax clearance or one-time pin will results in Zweli Khumalo - Joburg bidders been disqualified due to the fact that it is Water a disqualifying criterion as set out in the bid Israel Maluleke - Joburg spec. Market Kabelo Mashaba - Joint venture can be requested if it is not in the COJ/GCSS document. Power of attorney should be Bheki Mabelo - GSSC requested. Louis Shitllela - GSSCM Sipho Makhanya - GRAS The committee resolved that in as much it is not Andrie Geen-JRA a key returnable document nor disqualifying

criteria, the profile of the company is important and it will assist for ease of reference. Members were urged to put a sticker of where they actually found the document.

15 Gerhard Booysen - The committee resolved that a request for December Pikitup permission to communicate with bidders whose 2017 Sipho Makhanya - GRAS municipal accounts are not in order will be made

Nkosikhona Mnguni - to the Accounting Officer. Probity Thulani Ndlovu - GCSS Bidders will be given three days to re-submit Mark Thute - JPCZ after the authorization was provided. Zweli Khumalo - Joburg

(

Water The committee resolved that the following Zelda Verwey - SHELA+ meeting was due to be conducted after the FCM bidders have re-submitted. Israel Maluleke - Joburg Water The meeting adjourned. Kabelo Mashaba -COJ/GCSS Smangaliso Vilakazi -Group Legal Andrie Geen - JRA Jacques Rabie - City Power


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Louis Shitllela - GSSCM

19 Ziyanda Mncanca - The chairperson enquired whether the members

January Probity reached a quorum, as the approved members 2018 Gerhard Booysen - are 13 excluding Probity and Legal. The

Pikitup members formed a quorum. Nghezimani Samba -Public Safety JMPD There were 2 new members that joined the Male Thule - JCPZ committee namely: Zweli Khumalo - Joburg • Ziyanda Mncanca taking over on behalf Water of the probity consultant (SM XULU) Jabulile Sibeko - Group • Sandile Sibiya taking over from Group Legal Supply Chain. Thami Mbuzo - GSSCM

( Kabelo Mashaba - The committee resolved to deliberate on the COJ/GCSS functionality evaluation matrix before the actual Jacques Rabie - City evaluation so that all members scoring Power understands exactly what is expected: Sand ile Sibiya - GSSCM Zelda Verwey - It was resolved by the committee that when it SHELA+FCM comes to all requirements in the functionality Louis Shitllela - GSSCM scores, members are expected to score in line Tshepo Mphati - with the bid specification. COJ/EMS Israel Maluleke - Joburg The functionality threshold for the tender is 70% Market and any bidder that will score below 70% will be Sipho Makhanya - GRAS disqualified as the bid specification. Andrie Geen -JRA

The bidders below were evaluated for functionality:

• Zeda Car leasing

• 58 fleet PTY LTD

• Absa Vehicle Management solutions

( • Fleet Data technologies CC

• Afrirent Fleet Management Services

• Dataqwip Rentals Pty Ltd

• Amasondo Fleet Services, Fleet Africa a division of super group

• Bidvest Bank Limited

• Tallis Fleet

• Springs car wholesalers

Next meeting scheduled for 22 March 2018.

Meeting adjourned.


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22 Ziyanda Mncanca - The chairperson welcomed all members and January Probity has indicated that functionality evaluation was 2018 Nghezimani Samba - proceeding .

Public Safety JMPD Members of the committee were reminded of Mark Thule - JCPZ their responsibility to ensure that functionality Zweli Khumalo - Joburg evaluation is in accordance with the Water specification . Jabulile Sibeko - Group Functionality evaluation continued. Legal Kabelo Mashaba - Meeting adjourned. COJ/GCSS Jacques Rabie - City Power Sandile Sibiya - GSSCM Zelda Verwey -SHELA+FCM

(

T she po Mphati -COJ/EMS Israel Maluleke - Joburg Market Sipho Makhanya - GRAS Andrie Geen - JRA

23 Ziyanda Mncanca - The chairperson has indicated that there is an January Probity approved member who has not been part of the 2018 Nghezimani Samba - process of evaluation from inception and he has

Public Safety JMPD only joined the team on the 23 January 2018 Mark Thule - JCPZ Zweli Khumalo - Joburg The name of the official is Allan Ndzamela Water representing JPC. Jabulile Sibeko - Group Legal The committee inquired with Mr Allan Ndzamela Kabelo Mashaba - on why he has not been attending the meetings . COJ/GCSS The member indicated that he has been unable Jacques Rabie - City to receive all the invitations due to a technical

(

Power error of computer. Sandile Sibaya - GSSCM Zelda Verwey - The committee resolved that Allan will continue SHELA+FCM to join the committee in the sessions . T she po Mphati - However , he was not allowed to score due to COJ/EMS the fact that the process of scoring has already Israel Maluleke - Joburg begun. Market Sipho Makhanya - GRAS The chai rperson briefed Allan with regards to Andrie Geen - JRA progress thus far.

The functionality evaluation continued. Next meeting scheduled for 26 January 2018


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24 Ziyanda Mncanca - The chairperson welcomed all members and January Probity has indicated that functionality evaluation was 2018 Nghezimani Samba- proceed ings.

Public Safety JMPD Members of the community were reminded of Zweli Khumalo - Joburg their responsibility to ensure that functionality Water evaluation is in accordance with the Kabelo Mashaba - specification. COJ/GCSS Functionality evaluation continued . Sandile Sibiya - GSSCM Israel Maluleke - Joburg Meeting adjourned. Market Andrie Geen -JRA Thulani Ndlovu - GCSS

( 25 Ziyanda Mncanca - The chairperson welcomed all members and January Probity has indicated that functionality evaluation was 2018 Gerhard Booysen - proceeding .

Pikitup Members of the committee were reminded of Nghezimani Samba - their responsibility to ensure that functionality Public Safety JMPD eva luation is in accordance with the Andrie Geen - JRA specification. Zweli Khumalo - Joburg Water Kabelo Mashaba - Meeting adjourned. COJ/GCSS Sandile Sibiya - GSSCM T she po Mphati -COJ/EMS Allan Ndzamela - F.M.O Israel Maluleke- Joburg Market Smangaliso Vilakazi -Group Legal Thu lani Ndlovu - GSCC

( Jacques Rabie - City Power

26 Ziyanda Mncanca - The chairperson welcomed all members and January Probity has indicated that functionality evaluation was 2018 Gerhard Booysen - proceedings.

Pikitup Nghezimani Samba - Members of the committee were reminded of Public Safety JMPD their responsibi lity to ensure functionality Mark Thule - JCPZ evaluation is in accordance with the Zweli Khumalo - Joburg specification . Water Kabelo Mashaba -COJ/GCSS Functionality eva luation continued. Sandile Sibiya - GSSCM

Meetinq adjourned.

ALLEGED POLITICAL INFLUENCE IN THE AWARDING A CONTRACT TO AFRIRENT THROUGH REGULA TION 32 OF THE MFMA. Page 25

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Tshepo Mphati -COJ/EMS Sipho Makhanya - GRAS Andrie Geen -JRA Thulani Ndlovu - GCSS Smangaliso Vilakazi -Group Legal Allan Ndzamela - JPC

30 Ziyanda Mncanca - The chairperson briefed members that January Probity functionality scoring has been completed and all 2018 Nghezimani Sambo - members have their set of functionality scoring

Public Safety JMPD sheets ( 11 Bidders). Mark Thule - JCPZ Zweli Khumalo - Joburg Members were advised that they needed to Water ensure that their hand-writing is visible and

( Kabelo Mashaba - where there is an alteration it must be COJ/GCSS accompanied by signature or initials. Sandile Sibiya - GSSCM Andrie Geen-JRA Discrepancies were presented by GSCM Thulani Ndlovu - GCSS together with the probity advisor. Smangaliso Vilakazi -Group Legal All members corrected and amended their Allan Ndzamela - JPC scoring sheets where necessary. Tshepo Mphati -COJ/EMS Not all the elements of the functionality scoring Israel Maluleke - Joburg matrix were attended to at the session.

Further discrepancies were to be dealt with in the following meeting .

Next meeting scheduled for 31 January 2018

31 Ziyanda Mncanca - The chairperson briefed the committee and has January Probity indicated that since the closing of all the issues 2018 Gerhard Booysen - was not completed on the scores , the process

Pikitup was set to continue in that meeting . Nghezimani Sambo -Public Safety JMPD GSCM was given an opportunity to present all Mark Thule - JCPZ the discrepan cies. Zweli Khumalo - Joburg Water Kabelo Mashaba - All committee members engaged and discussed COJ/GCSS all the issues . Sandile Sibaya - GSSCM T she po Mphati - All committee members engaged and discussed COJ/EMS all the issues. Andrie Geen - JRA Thulani Ndlovu - GCSS


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Smangaliso Vilakazi - Some members needed to amend their scores Group Legal and sign each time they alter the scoring. Jabulile Sibeko - Group legal contract The committee set parameters for the BBBEE Allan Ndzamela - JPC and pricing evaluation which was due to take Zelda Verwey - place the following meetings. SHELA+FCM

The committee resolved that as per the bid document incomplete pricing schedule is a disqualifying criterion and bidders who will provide incomplete prices are going to be disqualified An expl~nation was made to members that bidders were requested in the spec to provide

( quotations for manuals FMLs, Motorcycles FMLs, Trucks FMLs and MM on city owned non-specialised vehicles. The pricing schedule is per individual category of a vehicle.

The final price to be used for evaluation from the bidder's proposal will be the price that appears in the bid document.

Group risk has to advice on insurance premiums and excess as per the bidder's proposals .

Zelda Verwey _apologised that she was not going to be able to attend the meetings until the 28 February 2018 as she will be on leave. Zwelithini Khumalo apologised that he was not going to be able to attend the meeting until the 13 February 2018 as she will be on study leave.

( Next meeting scheduled for 05 February 2018.

05 Ziyanda Mncanca - The chairperson has indicated that the following February Probity 8 companies were to be evaluated for pricing 2018 Gerhard Booysen - and BBBEE :

Pikitup Nghezimani Sambo - • Fleet Africa a Division of Supplier Group Public Safety JMPD (PTY) LTD Mark Thule - JCPZ • Bidvest bank limited Kabelo Mashaba - • Afrirent fleet Management Services COJ/GCSS • Dataqwip Rentals (Pty) Ltd Sandile Sibaya - GSSCM • Talis Fleet PTY LTD

• Zeda car leasing (Pty) Ltd t/a Avis fleet


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T shepo Mphati - • Absa Vehicle Management Solutions COJ/EMS PTY LTD Andrie Geen -JRA • Amasondo Fleet Services Thulani Ndlovu - GCSS Smangaliso Vilakazi - It was brought to the attention of members that Group Legal as part of the spec. bidders were requested to Allan Ndzamela - JPC provide pricing both on automatics and manual Jacques Rabie - City for the majority categories of vehicles. Power A counter view was raised that should it be Louis Shitllela - GSSCM found that certain vehicles do not exist, the two Israel Maluleke - Joburg bidders might have been found misleading. Market

Further clarity was provided that for hybrid vehicles, bidders were requested to quote both on automatic and manuals units.

The committee resolved that in line with the specification , bidders that did not quote on certain vehicles and they did not give reasons as to why they didn't quote on them they will be disqualified as their pricing schedule is incomplete.

The committee further resolved that for the bidders that gave a reason why there is no prices for certain vehicles will have to be considered as their pricing schedule is complete.

The meeting schedu led for 07 February 2018

Meeting adjourned.

06 Ziyanda Mncanca - The committee resolved that a report to be sent February Probity to the Accounting Officer , explaining that there 2018 Larry Manels - Group seems to be a challenge with the spec. The

Legal Accounting Officer be requested to grant the Nghezimani Sambo - committee permission on the following Public Safety JMPD Mark Thule - JCPZ 1. That the Accounting Officer grants Kabelo Mashaba - permission to the Bid Evaluation COJ/GCSS Committee to conduct a verification of Sandile Sibaya - GSSCM the automatic vehicles category that Tshepo Mphati - bidders indicated they do not exist with COJ/EMS the OEM's. Andrie Geen - JRA 2. That the Accounting Officer grants Thulani Ndlovu - GCSS permission to the Bid Evaluation Allan Ndzamela - JPC Committee, that upon verification the


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Jacques Rabie - City vehicles categories that are existing and

Power bidders indicated they do not exist the Israel Maluleke - Joburg said bidders be disqualified in line with Market the disqualifying criteria in the bid

specification of the "Incomplete Pricing Schedule".

3. That the Accounting Officer grants permission to the Bid Evaluation Committee, that upon verification the vehicles category that are not existing as per the response of the OEM's and some bidders have given pricing on such categories the said bidders be disqualified because of misleading

( pricing. 4. That the Accounting Officer grants

permission to the Bid Evaluation Committee to evaluate bidders pricing on the basis of the current Manual and Automatic make -up of the vehicles categories for fleet user departments and Municipal Entities in the City .

The committee resolved that a meeting will be convened upon receiving response from the Accounting Officer.

Next meetina will be communicated.

21 Ziyanda Mncanca - The committee resolved that let all available

February Probity avenues be looked at first.

(

2018 Larry Manels - Group Legal The chairperson requested that all departments Nghezimani Sambo - supply chain, probity, and legal, should provide Public Safety JMPD the reasons for their decisions, or lack thereof, Kabelo Mashaba - in writing as per the instructions by the COJ/GCSS accounting officer. Gerhard Booysen -Pikitup There was a proposal that for the bidders that Andrie Geen- JRA did not provide pricing on certain vehicles in as Thulani Ndlovu - GCSS much as they have given reasons they should Allan Ndzamela - JPC be disqualified. Jacques Rabie - City Power This notion was on the basis of the view that in Israel Maluleke - Joburg as much as the vehicles are not there in the Market market for the bidders that gave pricing on Zweli Khumalo - Joburg everything it would mean they went an extra Water mile to try and ensure that alterations be done

on the vehicles when ordered.


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The committee then became of the view that evaluating only the bidders that completed the pricing schedule in full would be ideal.

The resolution was that legal will once more be given an opportunity to study the bid specification to ensure that the committee is safe in proceeding with route of evaluating only the two bidders.

The committee further resolved that all the pricing schedules and pricing principles of the bidder's proposals be evaluated again. This was in an effort to try and check if the bidders gave reasons for the incomplete pricing. (

Next meeting will be on the 26 February 2018

26 Ziyanda Mncanca - The committee resolved that bidders cannot be February Probity evaluated outside the offer that was made in the 2018 Amanda Gxwala - Probity bid document.

Nghezimani Samba -Public Safety JMPD The final price of the bidder becomes the offer. Mark Thule - JCPZ A thorough engagement took place around Kabelo Mashaba - ensuring that the manner at which the above COJ/GCSS companies are going to be evaluated, it has to Sandile Sibaya - GSSCM be in line with the spec and it has to be fair. Zweli Khumalo - Joburg The committee felt that a lot of views and Water concerns were raised many times and the Andrie Geen - JRA committee doesn't seem to agree. Thulani Ndlovu - GCSS It was then resolved that members from outside Allan Ndzamela-JPC the committee be consulted and perhaps a Jacques Rabie - City positive way forward might come out of the Power consultation. Israel Maluleke - Joburg Market It was resolved that the chairperson and the Smangaliso Vilakazi - three members were delegated by the Group legal committee to consult with Group Head Legal ,

Group head GSCM and Group Head: SHELA and FCM. The delegated members will come back to report to the committee in the next meeting.

Next meeting will be communicated after the consultation meeting.

02 March Nghezimani Samba- The committee therefore resolved to use the 2018 Public Safety JMPD offer with manual combination to ensure that


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Kabelo Mashaba - there are fair comparisons with the order COJ/GCSS bidders. Sandile Sibaya - GSSCM Tshepo Mphati - The committee therefore resolved to use the COJ/EMS offer with a combination of manua l vehic les, Andrie Geen -JRA Trucks, Motorcycles and managed maintenance Thulani Ndlovu - GCSS of the city owned vehicles in order to ensure that Smangaliso Vilakazi - there is a fair comparison with the other bidders . Group Legal Allan Ndzamela - JPC The EAC report will be drafted and all the risk Louis Shitllela - GSSCM and challenges will be explained in the report. Zweli Khumalo - Joburg The EAC will then take a decision . Water Zelda Verwey - GCSS It was further noted that the tender validity

( SHELA+FCM period was expiring on the 22 March 20:18 and the EAC is seating on the 29 March 2018.

GSCM was requested to request for the extension of the tender validity per iod.

The meeting was adjourned and members were thanked for their participation .

09 March Nghezimani Sambo - The committee found that there could have 2018 Public Safety JMPD been a discrepancy on the Bid Specifications

Mark Thule - JCPZ regarding the Pricing Schedules and a form of Kabelo Mashaba - bid, as well as the Bidders ' responses on the COJ/GCSS availability or non-ava ilability of automatic Sand ile Sibaya - GSSCM vehicles in the market. This was required by the Tshepo Mphati - specifications as bidders were expected to COJ/EMS quote on both. Andrie Geen -JRA Thulani Ndlovu - GCSS The decision to evaluate bidders on the as it

( Allan Ndzamela - JPC appears in the form of bid was on basis that all Zweli Khuma lo - Joburg bidders have provided pricing with a Water combination of manual vehicles, trucks, Smangaliso Vilakazi - motorcycles and managed maintenan ce of city Group Legal Contracts owned vehicles. The committee therefo re

resolved to use the offer with manual combination to ensure that there is a fair comparison.

The decision of the committee was taken to minimize the potential risk as we ll as fina lising the bid process as almost all qua lifying bidders had submitted their forms of bid on manual vehicles.

ALLE GED POLITICAL INFLUENCE IN THE AWARDING A CONTRACT TO AFRIRENT THROUGH REGULATION 32 OF THE MFMA. Page 31

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FINANCIAL IMPLICATIONS

The preferred bidders pricing on the provision of non-specialised fleet on a full maintenance lease for 2915 vehicles and fleet support services amounts to R1 235 672 186.84 (excluding Vat, fuel, Ad-hoe rentals and actual maintenance of city owned non-spec ialised vehicles) for a period of 60 months

CONTINGENCY OF THE CONTRACT VALUE

The contingency put in place for the provision of non-specialised fleet on Full Maintenance Lease and fleet support services is 15% of R1 235 672 186.84 contract value amounts to R 185 350

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828.03 (excluding Vat, fuel , ad-hoe rentals and cost of city owned vehicles ( e-tools, actual maintenance and licensing ) the reason for a 15% contingency is that the lease cost of vehicles is non-firm prices and they are subject to a lot of economic factors like price hikes, interest rate changes and price escalations.

All members were happy with what was contained in the EAC Report, the report was adopted.

The meeting was officially closed.

03 April Nghezimani Samba - The chairperson of the committee reported that 2018 Public Safety JMPD the new acting GED GCSS has indicated that

Mark Thule - JCPZ the final probity report will provide comfort on Kabelo Mashaba - where the process was followed or not. COJ/GCSS

l Sandile Sibaya - GSSCM The chairperson wants to present the final T she po Mphati - recommendations of probity; this will even be COJ/EMS presented to the EAC. Andrie Geen -JRA GSCM has indicated that there will be no need Thulani Ndlovu - GCSS for them to respond to the findings but what will Allan Ndzamela - JPC be captured in the response to the probity audit Amanda Gxwala - GRAS findings will be the resolutions of the BEC. SM Xulu Jacques Rabie - City Probity said that BEC members can still respond Power to the findings, as the response from the

chairperson representing the committee are not final.

ALLEGED POLITICAL INFLUENCE IN THE AWARDING A CONTRACT TO AFRIRENT THROUGH REGULATION 32 OF THE MFMA. Pag e 32

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J. Group Forensic and Inve stigation Services

Joburs FORENSIC INVEST/GA TION REPORT

Meeting adjourned.

Next meeting 4 April 2018

04 April Sipho Makhanya - GRAS The committee resolved that looking at all the 2018 Mark Thule - JCPZ findings a final decision has to be made on

Kabelo Mashaba - where the tender get cancelled or not. COJ/GCSS Sandile Sibaya - GSSCM A proposal was made from the committee that Tshepo Mphati - the tender be cancelled and all the COJ/EMS shortcomings of the bid specification be taken Andrie Geen - JRA into consideration when the tender is re-Thulani Ndlovu - GCSS advertised. Allan Ndzamela - JPC Zweli Khumalo - Joburg The motion was seconded and finally the Water committee resolved that the tender be cancelled Smangaliso Vilakazi - and re-advertised . Group Legal Contracts A report was due to be written and taken to the Israel Maluleke - Joburg EAC for cancellation. Market Jacques Rabie - City Meeting adjourned. Power Ziyanda Mncanca -Probity/ GRAS

8.1 O Each tender proposal received after the tender was advertised were evaluated in the above

meetings. It is important to note the committee consisted of representatives of various

Departments of the City including representatives from the Entities.

The deliberations during the meetings lead to the committee making a decision to appoint

Avis as the successful bidder. This lead to the compilation of a BEC report recommending

Avis as the successful bidder to the EAC. However, this recommendation by the BEC was

changed when the BEC received the probity report (Annexure K) which indicated that there

were material findings that suggested that the process was not compliant with section 217 of

the Constitution of the Republic of South Africa, Act 105 of 1996 and recommended the

cancellation of the tender process. The CoJ, Chief Audit Executive, Mr Vusi Ndlovu and the

Managing Director of SM Xulu, Mr Sandile Xulu, confirmed that the information contained in

their probity report was authentic and that they stand by their findings and recommendations.

(Refer to Annexures AG1 and AG2)


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The report compiled by the BEC for EAC was not tabled at the EAC but rather the BEC

compiled a subsequent cancellation report, for cancellation of the proposed contract A733 as

recommended by the probity report. The cancellation report from BEC was submitted to EAC

and the recommended cancellation approved on 18 May 2018 for action by the Accounting

Officer.

After the EAC recommendation for the Accounting Officer to cancel the tender process for

proposed contract A733, it was cancelled a month later on 18 June 2018 (Refer to Annexure

M). It must be noted that this cancellation has to be placed in the press before an

advertisement for the same goods or services can be placed again.

GFIS confirmed that all members that served on the BEC were officials from the City and its

Entities. No political office bearers or representatives are allowed to serve on these

committees.

8.11 The cancellation of the open tender process to secure contract A 733 to replace contract A400

on, 18 June 2018, meant that the open tender process had to restart . There was only four (4)

months left before the last extension granted for contract A400 was to expire on 31 October

2018. It must be noted that the cancelled process for proposed contract A733 began in April

2017 and the BEC only compiled a report for EAC approval in March 2018 this process took

11 months .

8.12 Against the above background there was a real possibility that the City could run the risk of

not having fleet to execute service delivery.

8.13 Due to these circumstances, a meeting was held between Tshibalo (Refer to annexure N),

Dubru and Ghanchi on June 2018, wherein it was decided that while the open tender process

be re-started a parallel Regulation 32 process also be considered in case the open tender

process was not concluded before the expiry of the extension granted on A400. This was due

to the limited time that remained between the cancellation of proposed contract A733 and the

expiry of the extension being approximately five (5) months. This was confirmed by Ghanchi

(Refer to Annexure 0)


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8.14 In addition Ghanchi in an email (Refer to annexure P) to Tshibalo and Dubru dated 31 July

2018 expressed his concern that the open tender process may not be completed before the

31 October 2018, the scheduled expiration of the third extension granted on contract A400 .

8.15 According to progress report (Annexure Q) provided by Ghanchi on the open tender process

dated 16 August 2108, the BSC session for the new open tender process had commenced

on 9 July 2018 and was due to be concluded on 15 August 2018. There was, however,

outstanding issues around section 197 staff transfer still outstanding. Besides these issues

there still the process of advertising, BEG evaluation and EAC and Accounting Officer

approval outstanding . Therefore there was limited time for the new tender process to be

completed.

8.16 According to Tshibalo, it was decided that he manage the Regulation 32 process specifically

and Ghanchi, as the project manager will ensure the open tender process continued.

However Ghanchi was also involved in the Regulation 32 process. He was responsible for

the determining whether there were any contracts at other organs of state that could be

utilised by the City in the regulation 32 process.

8.17 According to a feedback report (Annexure R) provided to GCSS Group Executive, dated 20

November 2018, on the justification of the appointment of Afrirent in terms of Regulation 32,

prepared by Tshibalo, the circumstances that were considered by Tshibalo, Dubru, Ramroop

and Ghanchi at the time when it was decided to follow the Regulation 32 process were as

follows:

a) "It was highly unlikely if not impossible to complete a bidding process before the expiring

of the current contract which was end of October 2018;

b) However business had to continue at the end of October 2018;

c) For business to continue, it was not feasible or workable to give a shorter period like

six months through Regulation 32 and also did not make business sense to the service

provider;

d) This contract has been extended three (3) times already on a shorter period to give

opportunity for the bid process to be finalised with no success;

e) Enough time was also needed to finalise bid process which normally takes six months;

f) Placement of orders also required times and service provider will take approximately

six months to replace the entire fleet estimated at +-2732.

g) Delivery of vehicles might takes another three months once order is place and finalised;

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h) Branding and replacement of vehicles is not an easy process;

i) Afrirent (Pty) Ltd and A vis who is a current service provider are not business related

and not one company, meaning that transitional arrangement between the two service

providers will take some times to a period between three to six months;

j) The bid process was taking place at the wrong months as we are approaching festive

period from November 2018 to January 2019, the businesses (City and Service

Providers) will actual recommence with work in February 2019 which another delay of

three months;

k) Entering into SLA and sub-contracting to be completed in an estimated

I) The department has recently got capacity and limited resources problem which

emanating from resignation, termination of services, suspension which even makes it

difficult to set up and supervise bid process of this magnitude;

m) The probity report of the contract of this magnitude would have required time to have

quality report done that will identify all risks associated with the bid process, and for that

to happen soon was unlikely as GRAS are reported to have not fully resourced and was

to rely on external service providers that would have taken two to three months to be

done."

8.16 Tshibalo indicated that during the Regulation 32 process Tshwane Municipality was

approached by Ghanchi with the intention of establishing whether they had a fleet

management contract for specialised and non-specialised vehicles (Refer to annexures N

andO)

(

8.17 Tshibalo indicated that although Tshwane Municipality had specialised and non-specialised

vehicles contracts with Fleetmatics VMS (PTY) Ltd and Moipone Group of Companies l respectively, their non-specialised fleet contract was under legal review. This was confirmed

by Ghanchi (Annexure 0). According to Tshibalo and Ghanchi the following municipalities

were approached formally:

NUMIIEtt NAME OF MUNICPM.nY MIPONN

1 Tshwane Metropolitan Municipality Specialised vehicle contract was in place

Non-specialised vehicles contract was under review.


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]obur~ Group Forensic and Investigation Services


2 Mogale City Municipality Specialised and non-specialised contract in place that could be used by the City.

8.18 Tshibalo further explained that although he confirms that the above Municipalities were

approached formally, there were attempts by Ghanchi to engage other organs of state but he

cannot comment on which organs of state were approached as Ghanchi had done this prior

to Tshibalo getting involved in the process. Ghanchi in his response confirmed that he,

Ramroop and Mashebela did enquire across the country about fleet contracts that could be

utilised for the purposes of Regulation 32.

8.19 GFIS established that on 06 July 2018, the City Manager, Dr Lukhwareni wrote a letter to

Raedane, City Manager at Mogale City. In the letter, Dr Lukhwareni requested permission to

utilise Mogale's contract number 1 (f) 01/2018:- Vehicle Fleet Financing in line with Regulation

32 of the MFMA. Tshwane was not approached by CoJ due to their response par. 8.17 above

(Refer to annexure S).

8.20 It should be noted that in terms of the pricing schedule submitted by Afrirent for the Mogale

City tender bid, the pricing was as follows:

• 123 general vehicles amounted to R50 262 014,30 (including VAT)

• 45 truck class vehicles amounted to R61 456 514.55 (including VAT);

8. 21 GFIS established in the response from Mogale City of 19 July 2018, the Acting City Manager,

Mr Ratha Ramathlape: Mogale City, granted the City of Joburg consent in writing to utilise

their vehicle fleet contract. Furthermore, Mogale City indicated that tender number l(F)

( 01/2018 for Fleet Financing was for a period of three years and had been awarded to Afrirent

(PTY) Ltd (Refer to annexure T)

8.22 GFIS established that on 20 July 2018, Dr Lukhwareni granted Dubru permission to engage

Afrirent (PTY) Ltd as per the requirement of Regulation 32 of the MFMA (Refer to annexure

U)

8.23 On 26 July 2018, a meeting was held between Afrirent and the City of Johannesburg to

negotiate a discounted offer from Afrirent. The City of Joburg team was represented by

Tshibalo, Vilakazi, Leso and Jamela. Afrient was represented by Tsabedze and Richards.

8.24 Subsequent to that meeting, Afrirent provided a proposal (Refer to annexure v,) for the

provision of leasing and support service for a period of 36 months.

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8.25 It should be noted that in the proposal, Afrirent confirm the existence of a contract at Mogale

City. The proposal provided for leasing of fleet and support services to the City and its entities

at the following cost:

R1 387 213 335.50

Total payment per mo111~

ovw ie ~~• IIDCI~ 9.Al)'MPg~~-R1 487 325 475.29 R100 112 139.79

8.26 According to Tshibalo, Afrirent (Pty) Ltd was requested to provide a guarantee from the bank

with respect to their financial position to enable support this of this contract and ABSA granted

them conditional reserved funds to the region of R1 billion ( Refer to annexure W).

8.27 GFIS established that a report dated 03 October 2018 was tabled before the EAC and the

objective of the report was to request the appointment of Afrirent in terms of Regulation 32

of the MFMA. The report sought to utilise the contract of Mogale City for vehicle fleet financing

for non-specialised vehicles and appoint Afrirent for a period of 30 months or a period

deemed fit by the accounting officer (Refer to annexure X).

8.28 GFIS established that the report recommended that the Accounting Officer approve the City's

participation on contract (IF} 01/2018) of Mogale City and Afrirent for vehicle fleet financing

on a full maintenance lease for a period of 36 months or a period deemed fit by the

Accounting Officer at a total cost of R1 387 213 335.50 However the EAC approved the

Regulation 32 request for 30 months (Refer to annexure Y).

(

8.29 During our interview with Tsabedze (Refer to annexure Z), he indicated that Afrirent was l established in 2003 in order to participate in the fleet management environment. Early in

2003, Afrirent subcontracted to Imperial Fleet Services and then to Avis. Tsabedze indicated

that Afrirent have 19 Municipal, three National and two Provincial Government contracts . In

addition, he indicated that 60% of those contracts were current.

8.30 Tsabedze provided the following information regarding contracts between Afrirent and

National/ Provincial Departments and Municipalities:

I Entity I Value al controct 1.,...-period., appointment


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Joburs FORENSIC INVEST/GA TION REPORT

National Laboratories R79 691 269.33 20 August 2016 for 5 years

Mogale City R111 718 528.85 27 June 2018 for 3 years

Harry Gwala District According to proposal 19 June 2018 for 48 months

Municipality

West Rand District R16 824 663.32 29 June 2016 for 36 months

Municipality

Victor Khanye R2 936 517.11 22 October 2016 for three years

Municipality

( Greater Kokstad

R1 725 055.71 02 January 2018 period not

Municipality specified

Amajuba District R1 348 760.14 30 March 2016 period not

Municipality specified

City of Tshwane R130 829 137.00 01 July 2014 for a period of 36

months

Mbombela Local Not indicated 20 October 2014 for a period of

Municipality 36 months

Department of Not indicated 17 April 2015 for a period of

Transport Eastern three years

Cape

( Rand West City Local R2 970 634.90 18 April 2018 for a period of 36

Municipality months

Alfred Duma Local R1 080 000.00 28 October 2016 for a period of

Municipality 36 months

Thembisile Hani Local Not indicated 16 April 2016 for a period of 36

Municipality months

Dr Nkosazana Dlamini R4 255 403.12 15 December 2017 period not

Zuma Municipality specified


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Department of Rural Not indicated 21 November 2017 for 36

Development and months

Land Reform (8

districts in Eastern

Cape)

Department of Rural Not indicated 16 July 2018 for 5 years

Development and

Land Reform Eastern

Cape

Department of Rural R114 657 300,12 13 March 2018 period not

Development and specified

Land Reform (Eastern

Cape)

Department of Rural R2 181 734 100.00 01 November 2017 for a period

Development and of three years

Land Reform

(Limpopo)

8.31 According to documents provided by Afrirent in their submission during the Regulation 32

process Afrirent has a contract with the Department of Rural Development and Land Reform

(

in Limpopo Province. The value of the contract is R2 181 734 100.00 for the provision of

tractors, implements and equipment for a period of thirty six months. In addition, the contract l is split amongst five (5) districts as follows:

• Capricon R436 346 820.73;

• Waterburg R436 346 820.73;

• Sekhukhune R436 346 820.73;

• Mopani R436 346 820.73; and

• Vhembe R436 346 820. 73

8.32 Tsabedze further explained that the contract with the Department of Rural Development and

Land Reform (DRDLR) consists of the supply and delivery of farming implements (ploughs)

and machinery to the Limpopo Province. The implements and machinery have to be delivered


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to various farms within the province. In addition, Afrirent had to train the farmers of the co

operatives on how to use the implements and machinery. Initially Afrirent used their suppliers

to deliver the implements and machinery to the farms in Limpopo and an additional cost and

Afrirent's Project Managers provided the training, however, this proved to be counter

productive and costly as there was a language barrier between the Project Managers and

the members of the cooperative at the farms.

8.33 The project managers employed by Afrirent were White Afrikaners and the farmers receiving

the implements spoke Venda, Tsonga or Pedi. Therefore a company in Limpopo was

contracted to provide logistic and interpretation services to Afrirent at a reduced cost. This

company was Mahuna. Tsabedze indicated that the companies being used at that stage were

Landbou and Vukani which were wholly white owned. Afrirent was spending R300 million a

year at Landbou and Vukani for the machinery and delivery but were experiencing problems

with language. Mahuna are 100% Black owned.

8.34 Tsabedze further indicated that for the work that was completed, Mahuna submitted invoices

and were paid accordingly. The first invoices were paid around April or May 2018 and the

second in June or July 2018.

8.35 According to Tsabedze, the appointment of Afrirent in CoJ happened in October /November

2018, therefore there is no relationship between Mahuna Investment payment and the

contract between CoJ and Afrirent Pty (Ltd).

8.36 Tsabedze indicated that at no stage did he or Afrirent have any knowledge of any relationship

between Mahuna Investments and any political party in South Africa. Specifically, he was not

aware of any link between Mahuna Investment and Mr Julius Malema or the EFF.

8.37 The following officials Tshibalo (AnnexureN), Dubru (AnnexureAA), Mashebela (Annexure

AB) and former official Ghanchi (Annexure 0) who played a role in the procurement process

for proposed contract A733 and the Regulation 32 process for the appointment of Afrirent

were approached in person or telephonically and they provided the following submission:

• That there was no interference in the open tender process or in the Regulation 32 process

by any political party or political figure.

• The decision to cancel the proposed contract A733 was entirely a decision taken by

officials of the City through a prescribed process as contained in the cancellation report

tabled before the EAC.


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• The decision to pursue the Regulation 32 process was a decision made by GCSS

management who recommended it to the Accounting Officer.

8.38 Ramroop (Refer to annexure AC) who was also approached for comment provided a

statement where he levels allegations of corruption against Dubru indicating that he was

appointed to manipulate the tender process, however he is not specific on how this happened

or which political party or politician was responsible for his agenda.

8.39 Thirteen (13) members of the BEC confirmed that they were not influenced in any way into

cancelling the open tender process, proposed contract A733 (Refer to annexure AD).

8.40 The City Manager (Refer to annexure AE) confirmed that there was no political influence

regarding the cancellation of the open tender process for proposed contract A733 and the

Regulation 32 appointment of Afrirent. He indicated that he was satisfied with the process

followed.

8.41 On the allegation that the negotiations with EFF on the tariff proposal for the 2018/2019 City

of Joburg budget were based on the awarding of fleet management tender, Executive Mayor,

Cllr Herman Mashaba (Refer to annexure AF) indicated that the allegations are without

base. In fact, on 12 June 2018, a meeting was held between the Executive Mayor, the

Member of Municipal Council (MMC) Cllr Funzela Ngobeni and representatives of the EFF.

During the meeting, EFF had indicated that the tariff increase on water and electricity was

too high. A compromise was reached whereby the "proposed decrease retail increases" were

decreased by 0,2 % for electricity and 1 % for water. Based on the compromise, the budget

and tariff proposal were ultimately adopted by Council on 21 June 2018. MMC Cllr Ngobeni

(Refer to annexure AG) confirmed the engagement and the compromised reached with EFF l representatives .

8.42 The Executive Mayor indicated that he became aware of the fleet management contract

challenges at a meeting on 05 October and the City Manager had assured him that the matter

was under control. Since the Executive Mayor had no rights and responsibilities in the supply

chain management process , he was satisfied with the response from the City Manager.

8.43 The Executive Mayor indicated that he had never heard of the company Afrirent prior to the

publication of the ama-Bhungane article on 29 November 2018 and this was the first time he

had been alerted to potential irregularities in the awarding of the fleet management contract


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Jobur~ FORENSIC INVEST/GA TION REPORT

to Afrirent. Given the nature of the allegations, the Executive Mayor instructed the Head of

Group Forensic Investigation Services to conduct an investigation into the allegations.

8.44 GFIS obtained an external legal opinion from MNS Attorney's on the Regulation 32 process

on the following issues:

8.45

• The validity of the cancellation of proposed contract A733.

• Was the Regulation 32 process the only available option for CoJ.

• Did the Regulation 32 process comply with the MFMA.

According to the external legal opinion (Refer to annexure AH) obtained from MNS

Attorneys in regards to the regulation 32 process the following was concluded:

A. "CoJ was justified in cancelling the tender A733 as advised by the Probity Report.

However, CoJ must in future consider appointing a probity advisor at the beginning of the

procurement process to ensure that each and every stage of the procurement process is

vetted to minimize risks of belated tender cancellations and legal challenges;

B. CoJ still had an option of further extending contract A400A, per Regulation 36 as the

reasons for the initial extension on Regulation 36 still prevailed as at 31 October 2018;

C. CoJ complied with the procedural requirements of the MFMA Regulation 32 when it

appointed Afrirent;

D. There are sufficient mitigating grounds to argue that substantively CoJ complied with

Regulation 32 and CoJ's SCM Policy;

E. There might, however, be a debate raised on whether the material price difference

between Mogale City/ Afrirent contract and the CoJ/Afrirent contract impact on the

substantive compliance with MFMA regulation 32 and CoJ policy; and

F. CoJ must consider engaging National Treasury to affirm the substantive compliance with

MFMA Regulation 32 in the conclusion of the Afrirent contract."

9. CONCLUSIONS

It is concluded that:

9.1 From the analysis of the information provided to GFIS and the documentation of the process

an open tender process was followed to replace contract A400 with proposed contract A 733

however the process followed had to be cancelled prior to finalisation due to a probity report

that indicated material negative findings .


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9.2 An attempt was made to re-start the process, however, the timelines for the completion of

the process was very limited (approximately 4 months). From experience in the previously

cancelled process (proposed contract A733) this timeline would be in-sufficient as the

cancelled process took 11 months.

9.3 According to interviews conducted with the majority of the role players as indicated above

decisions taken regarding the utilisation of the Regulation 32 process was by Officials of the

City and they were not pressured influenced politically.

9.4 The MFMA and its regulations do not specify under which circumstances an entity may apply

Regulation 32 for procurement of goods and services.

9.5 From the information gathered through various reports mentioned above and interviews

conducted the City could not afford to not have a non-specialised fleet contract in place as

this would severely hamper service delivery. The officials at GCSS attempted to secure a

contract through an open tender process, however the process has to be cancelled due to

negative findings in a probity report. The Regulation 32 process was used to secure the non

specialised fleet contract.

10. RECOMMENDATIONS

It is recommended that: -

10.1 The City in the future allow ample time for the replacement of contracts ensuring that there

is sufficient time to restart a tender process should the need arise.

10.2 The City's acquisition plan must be adhered to and monitored by GSCM as well as the User

Departments.

10.3 The City must consider providing probity reports at each stage of the tender process so that

anomalies can be remedied in good time rather than at the end of the BEC process .

10.4 User Departments must at all times consult Group Legal & Contracts and GSCM before any

decision to deviate from the open tender process is contemplated.


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