A former eThekwini Municipality employee and a former consultant allegedly set up a technology company specifically to land contracts worth more than R20m from the municipality.
|||Durban - A technology company was specifically created by a former city employee and former consultant to land contracts worth more than R20-million from the eThekwini Municipality.
This is one of the allegations made in the Manase report about the award of two Section 36 awards - awards that deviate from normal tender processes - to the company H2O Networks.
The report, which concurred with a report that had been done by the city’s internal audit department, states that in January 2009, Jacquie Subban, the head of the Geographic Information and Policy Unit, had asked for approval for H2O Networks South Africa to get a Section 36 award to supply fibre optic cables as it was the only company in the country that could provide the service.
A pilot project, which cost R282 000, was awarded to H2O for the installation of fibre optic cables through the city’s sewer system.
In October 2009, Subban motivated for the pilot project to be extended and for the second award, which cost R27.4m, to be made to H2O Networks under Section 36. Manase investigators recommended that a third award to H2O in the amount of R53m should be comprehensively investigated.
Last month, the provincial Department of Co-operative Governance said that disciplinary proceedings against Subban were in progress.
It also said that the process to terminate the contract of H2O had begun.
“Legal opinion was sought on the continued relationship with H2O, which recommended that this contract be cancelled” after it became clear that fibre optic cables were installed “in places other than through the sewer system, thus causing damage to municipal infrastructure”, the department said.
“The extent of damage is still being assessed with a view to suing for damages.”
The department said the matter had been referred to the anti-corruption task team.
Manase investigators said that at the time of the awarding of the contracts, H2O Networks was managed by a former consultant to the municipality, and a former city employee who was previously employed by the Geographic Information and Policy Unit.
The Mercury has chosen not to reveal their identifies because it could not reach the consultant for comment, while the city employee said he had not seen the report and was not able to comment on the allegations.
The report also said H2O was awarded the pilot project within eight months of the employee’s resignation from the municipality, in contravention of municipal laws which required a 12-month cooling-off period before the employee’s company could bid for contracts with the city.
The Manase investigators also alleged that the previous relationship the consultant and the city employee had with the city and Subban “may have unduly influenced the awarding of the contract”.
“The company appears to have been formed specifically for this project as it had not previously traded,” the report said.
Another irregularity was that H2O had not been registered on the suppliers’ database of the city, in contravention of the Supply Chain Management Act.
The investigators said the company was also allowed to draw up the contract for the second tender which was tantamount to “gross negligence” by the city.
In her response to Manase investigators, Subban said H2O’s method of laying fibre was “cost-effective” with a saving of 70 percent against the traditional method.
She was satisfied that the company had been the sole supplier of the service and confirmed the consultant had done work for the geographic information and policy unit for nine months and that the city employee had previously worked for her.
She said she was unaware of the “cooling-off period” and believed the city had received value for money.
Contacted for comment on Thursday, the former city employee said he left H2O Networks a year ago.
He had not seen the Manase report and could not comment on the allegations.
He added that neither the anti-corruption task team nor the city had contacted him about the report.
The Mercury