Limpopo municipality’s R69-million tender scandal

Construction company Easyway, Tarmac, Pave, and Projects has been ordered to pay the Special Investigating Unit (SIU) R68.9 million for a dodgy municipal contract with the Mogalakwena Local Municipality in Limpopo.

This comes after the SIU applied to have the tender reviewed and set aside following an investigation into the matter, finding the tender was unlawful and unconstitutional.

The municipality awarded the tender for supplying, installing, and constructing borehole development, storage reservoirs, and bulk gravity supply pipelines in 2018.

“The company fraudulently misrepresented its grades and projects undertaken, thereby inducing the Municipality to award the tender to it,” the SIU said in a statement on Wednesday.

“The specified amount encompasses all financial payments made by the municipality to Easyway.”

The SIU’s investigation found that Easyway lied in its application documents, which claimed that it had completed three projects to the value of over R50 million each.

However, this was proved to be false, with the company inflating the value of one of the projects from R6.1 million to over R50.8 million. The investigation found that another was entirely fabricated.

The SIU said that Easyway would not have qualified for the tender process without making these false claims.

Easyway’s contractor grading was also found to be significantly lower than the contract’s total value, R167.9 million, which would have disqualified it from undertaking the project.

However, the tender award was not just deceit on Easyway’s part; the investigation also uncovered wrongdoing on the municipality’s part.

“The evaluation process by the Municipality’s Bid Evaluation Committee was found to be unfair and non-transparent,” the SIU said.

“This is because it failed to score bids according to its own specifications properly and could not justify why a higher-scoring bidder was overlooked.”

Billions in irregular expenditure

Mogalakwena Local Municipality is located in the Waterberg District of Limpopo, home to 378,198 people.

The municipality has received qualified audit opinions from the Auditor General of South Africa (AGSA) for the past three years, with adverse opinions in the two years before.

During the 2022/23 financial year, it accumulated R228.2 million in unauthorised expenditures, R19.1 million in fruitless and wasteful expenditures, and R336.4 million in irregular expenditures.

However, this was a significant decrease compared to 2021/22, when unauthorised expenditures were reported as R3.9 billion, fruitless and wasteful expenditures as R55.5 million, and irregular expenditures as R2.8 billion.

The AGSA notes that the municipality’s ability to continue operating is doubtful. It was found that it took an average of 180 days to collect its debt, with 85% of its debt unable to be recovered.

The municipality was also found to be spending only 0.6% of the value of its infrastructure and assets on maintenance, compared to the National Treasury’s minimum requirement of 8%.