The Special Investigating Unit has welcomed a Special Tribunal ruling declaring the R646 million contract awarded to AECOM SA (Pty) Ltd for the emergency upgrading of the Thukela-Goedertrouw transfer scheme in KwaZulu-Natal constitutionally invalid
The Special Investigating Unit (SIU) has welcomed a Special Tribunal ruling declaring the R646 million contract awarded to AECOM SA (Pty) Ltd for the emergency upgrading of the Thukela-Goedertrouw transfer scheme in KwaZulu-Natal constitutionally invalid, setting it aside.
The project, overseen by the department of water and sanitation, was intended to prevent the Richards Bay area from running out of water. The contract value was inflated from an initial R407m to R646.5m,resulting in irregular expenditure and significant losses for the state.
AECOM SA is the South African arm of the global engineering, consulting and infrastructure firm. It provides services such as engineering design, project management, environmental consulting and infrastructure advisory.
The Special Tribunal found that the procurement process violated Section 217 of the Constitution, which requires government contracts to be conducted in a manner that is fair, equitable, transparent, competitive and cost-effective.
AECOM SA had not been formally invited to participate in the closed tender but was irregularly included and appointed.
Despite the bid adjudication committee’s recommendation against the award, acting director general Sfiso Mkhize proceeded with the contract, leading to irregular expenditure of more than R357m and total losses of R429m.
Investigations revealed a series of failures by senior officials. Zandile Makhathini, then chief director of supply chain management, bypassed the competitive bid system and submitted the request directly to Mkhize, while chief financial officer Mpho Mofokeng signed off on submissions despite being aware of procedural irregularities.
Additional senior officials failed to implement controls that could have prevented irregular expenditure, contravening Section 45 of the Public Finance Management Act.
“These failures directly contributed to unlawful procurement, irregular expenditure and the undermining of constitutional procurement principles,” the tribunal said.
It ordered AECOM to provide audited financial statements, invoices and supporting documents related to the contract within 30 days.
The SIU must then determine the profits earned by the company and inform AECOM of the repayment required within 60 days. Failure to comply will result in the matter being re-enrolled before the tribunal. AECOM is also required to pay the SIU’s legal costs, including the fees for two counsel.
The SIU, which is empowered by Proclamation R.28 of 2019 to investigate maladministration and irregularities in the department of water and sanitation, said it remained committed to protecting public resources, promoting clean governance and upholding constitutional values in the management of state contracts.
It also pledged its commitment to protecting public resources, advancing clean governance and reinforcing constitutional values in the management of state contracts.
“The tribunal’s ruling strengthens the principle of legality in public procurement and ensures that wrongdoing by officials and service providers does not go unchecked, it added.
The SIU also confirmed its authority to institute civil action in the high court or a special tribunal to correct corruption, fraud or maladministration uncovered during its investigations.
