As published in Business Day: 2019-06-03
‘Vindicated’ Afrirent to proceed with R1.2bn City of Joburg tender.
Fleet management firm says it suffered damage from allegations that its contract with the municipality was awarded irregularly in 2018.
Fleet management company Afrirent on Monday said an investigation by the City of Johannesburg had exonerated it following allegations that its R1.2bn contract with the municipality had been irregularly awarded.
The City of Johannesburg earlier in 2019 instituted a forensic investigation following media reports in November 2018 that there had been political influence in the awarding of a fleet management contract to Afrinet, a black-owned company.
The municipality appointed Afrirent on a 30-month contract through a so-called Regulation 32 process, which allows arms of the government to appoint a supplier that is providing services to another state institution without following a competitive tender process.
The municipality opted for the alternative process after it canceled a fleet management tender that had been awarded to Avis Fleet Services. The city canned the tender process after a report from auditors SM Xulu Consulting pointed out irregularities during the procurement process and recommended its cancellation.
Afrirent CEO Senzo Tsabedze on Monday said the company had been vindicated of any wrongdoing after the City of Johannesburg investigation, which had been carried out by the city’s forensic and investigation unit.
He said the city’s investigation had found no wrongdoing on Afrirent’s part “and that none of the [municipality’s] employees involved in the procurement process were coerced or influenced to award the contract to Afrirent”.
He said as a result of the allegations the company lost financiers and suffered irreparable damage to its reputation. “We will be consulting our legal team to map out a way forward now that our name has been cleared,” Tsabedze said.
He said Afrirent had so far delivered about 40% of the fleet to the municipality “without any assistance from the banks”. He said banks shunned the company after the reports in November.
“It has been tough. We lost potential clients who suddenly did not want to deal with us,” he said.
He said the contract still had another 23 months to run.
In its recommendation following the investigation, the forensic and investigation unit said the municipality should improve its procurement processes.
“The city in future [should] allow ample time for the replacement of contracts, ensuring that there is sufficient time to restart a tender process should the need arise,” it said.
As published in The Citizen: 2019-06-04
City of Joburg clears company of ‘political influence’ over R1bn contract.
‘None of the city employees involved in the procurement process were coerced or influenced to award the contract to Afrirent.’
The City of Joburg has cleared a fleet management company of “alleged political influence” after it secured a R1 billion contract from the city to supply 2,732 non-specialised vehicles such as sedans, bakkies and minibusses to be used by departments, particularly metro police, City Power and Johannesburg Water.
According to a forensic investigation report by Group Forensic and Investigation Services (GFIS), Afrirent Fleet Management was investigated by the city for alleged political interference in the awarding of the tender through a Regulation 32 process of the Municipal Finance Management Act (MFMA).
This allows municipalities to procure goods or services under a contract secured by another organ of the state.
“According to interviews conducted with the majority of the role players, decisions taken regarding the utilisation of the Regulation 32 process were by officials of the city and they were not influenced politically,” said GFIS.
Another professional opinion obtained by the city from Mncedisi Ndlovu & Sedumedi Attorneys also found that the city had complied with the procedural requirements of the MFMA Regulation 32 and its own supply chain management policy when it appointed Afrirent.
Afrirent CEO Senzo Tsabedze said the company had been vindicated of any wrongdoing despite damaging media reports in November last year which prompted Johannesburg mayor Herman Mashaba to launch a forensic investigation.
“Based on these media reports, the city took a decision to investigate. Afrirent understands that the city’s investigation reports, legal and forensic, revealed that there was no wrongdoing on Afrirent’s part and that none of the city employees involved in the procurement process were coerced or influenced to award the contract to Afrirent,” said Tsabedze.
In November last year, the amaBunghane investigative unit reported that Afrirent, a company which bid for a tender to the value of R1.26 billion from the city, transferred R500,000 to Mahuna, a company owned by the cousin of Economic Freedom Fighters (EFF) leader Julius Malema.
The amaBunghane article reported that Mahuna was allegedly used as a “slush fund” by the EFF and Malema but the EFF has publicly denied influencing the fleet tender.
National spokesperson Mbuyiseni Ndlozi told Daily Maverick to ask those implicated and let him deal with queries directed at the party.
“We don’t know what you’re talking about. None of your questions have anything to do with the EFF and its leadership,” said Ndlozi.
“The individuals and companies you mention can speak for themselves.”
Mashaba was unavailable for comment.