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South Africa: Transnet finds R6bn in irregular pipeline spending


Mail&Guardian Online

By Lynne Donnely

March 16, 2012

Irregular expenditure on contracts relating to Transnet’s new multi-product pipeline amounted to an estimated R6.2-billion, it was revealed in Parliament this week. 

At a hearing by Parliament’s standing committee on public accounts (Scopa) the parastatal revealed that two contracts for engineering, procurement and contract management services on the controversial pipeline contributed a major share of the total of R8.3-billion of irregular expenditure disclosed in the company’s 2011 annual report.
The pipeline has been fraught with controversy because of delays and cost escalations, which increased from the originally budgeted R9.5-billion in 2006 to R23.4-billion now.
Full completion was intended for the first quarter of 2011 but was delayed until 2013, although certain sections have since become operational.
Rising costs and time delays prompted Public Enterprises Minister Malusi Gigaba to launch an independent review of the project.
The review, which is expected to be released next week, included three independent reports on the governance, engineering and project management aspects of the pipeline, as well as an independent legal opinion.

Pipeline tariffs affect petrol prices
The increases have also had an impact on pipeline tariffs as costs for the infrastructure are recouped. This in turn has an impact on petrol prices for South African commuters.
On Thursday the National Energy Regulator of South Africa announced a 22% increase in the pipeline tariff, which is expected to cause a 4c per litre hike in the petrol price.
The company’s acting chief financial officer, Anoj Singh, told Scopa that three contracts for procurement and management services totalling R6.57-billion were deemed irregular.Of these, one contract for services valued at about R300-million was unrelated to the pipeline. The contracts had been concluded in 2004-2005 and 2006-2007.

He said, however, that in all three cases Transnet had received value for money on the contracts, even though procurement procedures had not been complied with.

For this reason, the contracts were not classified as fruitless or wasteful expenditure.

Contracts awarded without following procedure
The first contract for the pipeline was awarded after an individual without the delegated authority signed the agreement. The second was deemed irregular after it was found that internal policies and procedures had not been followed because internal controls in awarding the contract were not applied. But this was in the first stages of the pipeline project, said Singh, and contributed the smallest amount to the combined pipeline irregular-expenditure total of R6.57-billion. He could not tell the committee the individual worth of pipeline-related contracts…Read more.

South Africa may be sanctions-busting hub for Iran, warns DA


The Witness

by Rajaa Azzakan

May 15th, 2012

CAPE TOWN — The Democratic Alliance warned yesterday that South Africa may be used as a route to get parts for military helicopters in Iran.

Lindiwe Mazibuko, DA parliamentary leader, yesterday told the Cape Town Press Club this was totally against a resolution of the United Nations.

At the same time she praised Deputy President Kgalema Motlanthe for his request that the Public Prosecutor investigate bribery allegations against his life partner, Gugu Mtshali.

She said Motlanthe showed much needed political will to get corruption investigated independently.

The Sunday Times reported that Mtshali was allegedly involved in an attempt to get a bribe of R104 million in exchange for government support for a South African company to get a contract to supply Bell helicopters and parts to Iran.

Mtshali, Raisaka Masebelanga and other associates of Motlanthe reportedly met in February last year in Johannesburg with representatives of 360 Aviation to discuss the buying of government support for a contract with Iran, which would be worth some R2 billion.

The report stated that Barry Oberholzer, chief director of 360 Aviation, said Mtshali and company wanted R10 million up front as a consultancy fee as well as shares worth some R94 million.

A front company, which would have been registered by 360 Aviation, would have supplied American Bell helicopters and parts to the the National Iran Oil company.

Mazibuko warned that the larger picture — that South Africa could be used as a route to supply parts for Iran military helicopters — should not be lost sight of.

She said Motlanthe’s fast reaction was in stark contrast with the delays involving investigations into South Africa’s arms deal, which have been dragging on for years.

Mazibuko will ask President Jacob Zuma in the Assembly today if the full report by the commission of inquiry that he ordered into the weapons transactions will be made public and whether any action will follow against those involved.

Regarding Cosatu’s refusal to meet the DA, Mazibuko said the labour federation was not serious about helping to solve the issue of joblessness among South Africa’s youth.

She said it seemed the trade union was placing petty party politics ahead of SA’s interests.

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