Africa's Public Procurement & Entrepreneurship Research Initiative – APPERI


Western Cape

South Africa: Public Protector Must Investigate

July 15th, 2012


According to reports today, the ANC‘s former parliamentary Chief Whip signed a “blank cheque” contract with EduSolutions, the company at the centre of the Limpopo textbooks crisis, to do business with the ANC in Parliament.

This is the latest in a series of reports which raise serious questions about the links between EduSolutions and the ANC and whether it was the company’s political connections that led to it receiving a number of state contracts.

I will be writing to the Public Protector, Advocate Thuli Madonsela, to request that the relationship between the ANC and EduSolutions is subjected to a full investigation.

Numerous links have been reported to exist between EduSolutions and the ANC.

These include:

African Access Holdings, the holding company of EduSolutions, is a key donor to Zuma’s RDP Education Trust

EduSolutions founder and CEO Shaun Battlemann has links to President Zuma as a “champion” of his education trust, Mr Battleman also reportedly has links to Professor John Volmink, a former top advisor to Basic Education Minister Angie Motshekga, and former ANC Chief Whip Mbulelo Goniwe, who was reportedly responsible for signing off on EduSolutions’ “blank cheque” contract to do business with the ANC in Parliament.

Brand Talk, a fellow subsidiary of African Access Holdings, was one of the companies implicated in the reported irregular awarding of communications tenders during the tenure of former ANC Premier of the Western Cape, Ebrahim Rasool.

Numerous concerns have been raised about the awarding of the Limpopo textbook contract to EduSolutions, and whether the proper processes were circumvented because of the company’s reported political links.

Problems with the awarding of the tender include:

Allegations that 22 of the 23 tender bids that were received for the Limpopo textbooks deal were disqualified- without any explanation. This left EduSolutions as the sole remaining bidder

A legal opinion, commissioned by the Department of Basic Education and provided to the State on 17 January 2012, stated that complaints of irregularities regarding the awarding of the Limpopo textbooks tender were swept under the carpet, and that it would be “irresponsible for the National Government to continue to give effect to the contract without a proper investigation of the complaints”. However, the opinion was ignored.

The same legal opinion declared that the contract with EduSolutions is “probably invalid” for not complying with Section 217 of the Constitution, the Public Finance Management Act and the Treasury. However, the former Limpopo education administrator, Anis Karodia, was actively obstructed from implementing the legal opinion’s recommendations.

There are still too many unanswered questions regarding the awarding of the EduSolutions tender, and the company’s reported political links.

The Public Protector must investigate whether it is political patronage, rather than the needs of our learners, that dictated the awarding of this tender.

Annette Lovemore, Shadow Minister of Basic Education

South Africa: Zille hails tender finding

IOL News


June 1st, 2012

Western Cape premier Helen Zille on Friday welcomed the Public Protector‘s finding that there was no evidence of unlawfulness in her government awarding a branding contract to agency TBWA.

“The report shows, above all, that the entire exercise was a storm in a teacup stirred up by our political opponents,” she told reporters in Cape Town.

“The entire affair was a waste of the Public Protector’s time and cost the South African taxpayer hundreds of thousands of rand at least, that could have been better spent on service delivery.”

Public Protector Thuli Madonsela announced on Friday that she made four findings of maladministration but none of unlawfulness, which meant she would not recommend that the contract was invalid or should be cancelled.

Zille said the report found no corruption and political involvement, interference or manipulation in the procurement process. She was also not personally involved in the process.

She said it was found that the presence of two special advisers on the tender bid evaluation committee had made no difference to the outcome of the evaluation.

Madonsela found that some administrative processes in managing transversal tenders, those which involved various government departments and strict Treasury regulations, were faulty.

Zille said the provincial treasury had picked up these faults long beforehand and steps were taken to rectify them.

Madonsela was asked by, among others, the ANC in the Western Cape to investigate whether the department of the provincial premier had employed proper demand side management regarding procurement of the contract.

She had to find out whether failure to do so had resulted in fruitless and wasteful expenditure, whether the department had kept proper records of proceedings of the bid evaluation committee, and whether the appointment of two special advisers to the committee which awarded the contract was legal. – Sapa

Absa wants to reverse social security deal


By Nicola Mawson, ITWeb deputy news editor

March 16, 2012

AllPay, a subsidiary of big four bank Absa, is set to square off with the South African Social Security Agency (SASSA) and a competitor next month, over a R10 billion contract it alleges was awarded unlawfully.

AllPay argues SASSA’s five-year deal with Net1 UEPS Technologies unit Cash Paymaster Services (CPS), awarded in January to cover SA‘s nine provinces, does not comply with the necessary regulations and laws.

AllPay claims, in an affidavit filed with the court this month, that the “process followed by SASSA in awarding the tender to CPS is very deeply flawed”. AllPay’s application to have the award set aside is set to be heard on 11 April.

Net1 previously had a contract to distribute grants in five of SA’s nine provinces. AllPay had been handling payments in the Free State, Western Cape, Gauteng and Eastern Cape, for a decade.

Payment disruptions

AllPay argues the award to CPS does not comply with the Constitution, National Treasury regulations or the Public Finance Management Act and is “unlawful”. It says the 10 million beneficiaries will be prejudiced if SASSA goes ahead with the CPS deal, while the matter is pending before the court.

Earlier this month, Democratic Alliance shadow deputy minister of social development Emmah More claimed the change in service providers disrupted grant payments, despite government assurances to the contrary. She said hundreds of recipients did not receive payouts.

AllPay alleges that CPS’s bid did not comply with SASSA’s requirements and that AllPay’s score was inexplicably lowered. “SASSA has acted in a manner which is designed to secure a particular outcome which favours CPS.”

Millions lost

The document, penned by Charmaine Webb, AllPay Consolidated’s GM of sales and service delivery, supplements a February affidavit.

Webb alleges in the February filing that AllPay will “suffer severe prejudice and irreparable harm if interim relief is not granted on an urgent basis”. She says AllPay “will need to dismantle a massive infrastructure if interim relief is not granted”.

However, if the company is successful in its bid, AllPay will need to go through the process of setting up infrastructure again, says Webb. She adds that the company’s technology, logistics and security partners stand to lose about R7 million in income a month.

If AllPay does not get the relief it seeks, 553 temporary and permanent staff will need to be retrenched, which will cost Absa R26 million, writes Webb. In addition, Absa stands to lose anywhere between 1 million and 1.75 million accounts.

No disruption

Net1 VP of investor relations Dhruv Chopra says “there have been several further affidavits that have been filed since to respond to AllPay’s allegations in a comprehensive manner”.

Chopra says, while the matter is pending, CPS continues to implement the tender based on the contract terms it has with SASSA. “We strongly believe we won the contract purely on merit and that a proper procurement process was followed.”

At the time of the award, chairman and CEO Serge Belamant said: “We are overjoyed by the SASSA tender award and very proud of the confidence that SASSA has placed in our company and technology.”

Department of Social Development spokesperson Lumka Oliphant says it is “not in a position to comment on allegations that have not been tested in court”.

Oliphant says “in the meantime, we want to assure our grant recipients that the service will not be disrupted. They will get what is due to them every month.”

Stop sitting on the sidelines (South Africa)

Image by heathbrandon via Flickr


August 2011

Kim Cloete

CAPE TOWN – Gareth Ackerman comes across as something of a lone ranger in the business world.

Well, at least as far as putting his views on the line about controversial legislation and problems within government.

He raised concerns about the Protection of Information Bill a few months ago when he said it had the potential to scare off foreign investors and blunt the rights of consumers.

Now he’s come out strongly again about the legislation – as well as a range of other issues which he has warned could potentially scupper investment in South Africa, amongst them labour inflexibility, corruption and fading democratic principles.

In a speech to the Cape Town Press Club, he called on other business leaders to take more of a stand on key policy debates and issues they feel strongly about.

I’m very concerned that business people who are very dependent on government contracts, are scared of retribution from government. Government is a very large spender with very large tenders. You don’t want to fall foul of government. That’s why business falls quiet.” Read more.

South Africa: Western Cape government to slash red tape


By Adam Leach

August 5th, 2011

Procurement bureaucracy is to be stripped away to allow companies in the Western Cape of South Africa to generate more business.

Speaking at the launch of the Western Cape Government’s red tape programme yesterday, Alan Winde, who is the economic development member of region’s executive council, announced the formation of a dedicated unit to identify the most damaging areas of bureaucracy and regulation and remove them.

If red tape is not addressed, it will remain an insidious threat to Western Cape businesses,” he said. “By placing unnecessary blockages in the way, it inhibits large enterprises, as well as those smaller enterprises that are so important to our economy.”

He went on to emphasise that rules and regulations that are found to be “beneficial” to industry would remain.

The two-fold process to make things run more smoothly will see the new unit “reduce or eradicate” needless legislation governing procurement while also adapting existing regulations and processes to make them more efficient both in terms of cost and the amount of time they take up.

Describing one of the key actions he said: “As part of this initiative, we will complete Regulatory Impact Assessments on procurement and supply chain management functions that constrain business. As they are completed, we will receive options for policy changes that ease red tape.”

The plans will also see the provincial government run a series of networking events and forums to work closely with industry. These events included twice yearly supplier days where government officials will meet with current and potential suppliers. Special events will also be held with small and medium enterprises to help them overcome the specific challenges they face with red tape.

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