Public Service No Longer Empowerment Opportunity

To members,

The letter below was sent to Mayor Swart and MM Memani on 3 November. The mayor responded on 11 November that he was passing it onto the relevant individuals.  We are hopeful that a comprehensive response is received shortly.

Peter Gaylard


3 November 2022
Mayor Swart
Municipal Manager Memani
Bitou Municipality

Dear Gentlemen,

Council’s policy on “economic empowerment” has reference. 

As we understand it, the purpose of Supply Chain Management (SCM) is to do the best possible purchasing deal for the municipality.

It was very disappointing to hear during the last council meeting that in Bitou Municipality, SCM would be used for “economic empowerment” as stated by acting CFO Lotter.  While the broad concept may have merit, in practice it has proved disastrous for our SOEs, government departments and municipalities.  The major political parties have all spoken out loudly and forcefully against the manner by which this ideology has been corrupted in practice and used by politicians and officials to the benefit of family and friends.  (The latest pronouncement by a senior politician is that of the President in the article below.)

We are concerned that council could have a policy and/or practice that is out of step with the stated policies of both the governing and opposition parties on council, and that all the signs are there that Bitou’s SCM has been captured to the prejudice of its residents for the benefit of a shadowy grouping of officials and their cohorts. The fact that council, on the recommendation of MPAC, wrote off in excess of R120 million in flagged irregular expenditure, much of which bore obvious hallmarks of state capture, and saw fit to actually applaud the committee’s failure to invoke any consequences against those responsible seems to confirm council’s incongruous position.

Could you please clarify council’s position in this regard.

MPAC reported that the Irregular Expenditure from SCM was due to officials not following due process and minor inaccuracies in paperwork, but despite that, it fails to recommend any consequences for those responsible. Against the background of the municipality’s dire financial position, the obvious need for tight financial control and the AG’s repeated findings that consequence management is inadequate, it is a gross failure of duty.

Furthermore, it fails to identify and address the far more serious but unstated problems that emerge from the reports.

There are clear and obvious indicators that SCM is not focused on efficient and cost effective procurement. The fact that readily available supplies, of sugar for example, are being bought at hugely inflated prices from “trading companies” whose principals are associated with municipal employees attracts no consequences (R24/kg from Kukokonke Trading instead of R11/kg from Checkers) is shocking and should be stamped out and never be allowed to recur, not loudly applauded.

Apart from the monetary value, there is no difference between Transnet paying double the going price for locomotives and Bitou paying double the going rate for sugar. Likewise the consequences must be the same for those involved in the practice.

As you are aware this is not an isolated incident nor just a single provider but clearly a more widespread practice which costs the municipality millions.

As negligible as the overpayment to Kukokonke Trading may be, the payment to Isolomzi Security is truly massive and raises many questions, not the least being why there are never local competitive bidders and why the amount has increased from R16m to R23m in just 3 years and yet the municipality continues to suffer losses and vandalism.

Another very suspect expenditure is the R100k paid out of the waste management budget to another associated supplier, Masiqhame Trading, for unspecified services and/or goods for a “deputy president event.” Masiqhame Trading’s business, as you know, is recycling… Somebody needs to “go figure.”

For the above reasons and many other unexplained activities it is our impression that Bitou’s SCM has been captured, but due to the dearth of information available to us it is not possible for us to come to an informed opinion.

Therefore please provide us with the following information:

1. The information and explanations gathered by MPAC which lead them to recommend writing off the irregular expenditures, with no recommendations for recovery, discipline, or blacklisting of suppliers.

2. Additionally, the details of exactly what the R100k paid to Masiqhame Trading for the “deputy president event” was spent on, with copies of invoices, if same does not form part of the above.

3. The record of all purchases made from Kukokonke Trading, Masiqhame Trading, Samwix Trading, Ade Equipment Trading, Sidomela Trading, Misuyolo Pty Ltd., Sakh’iKhaya (also spelled Shekynah), and any other trading companies…for the last two financial years. And please remind us which councillors and municipal staff have ties to these trading companies.

4. Other examples of curious tenders and payments include:

R2 million for padlocks by the Electrical Department.  How many is that and what are they for?  What happens when the master key gets “lost?”  And only one bidder?

R199,999.87 for Upgrading of Bossieqif Sports Ground to Sidomela Trading.  Is it a coincidence that the limit for non-competitive bids is R200,000?

Mr. Casa, an SCM practitioner, awarded 22 payments to Kikokonke Trading, of which HE is listed on the A-G report as an associate of the owner.  If MPAC had done their research, they would have found the same inflated prices as we found.  Yet they recommended no recovery or consequence.

What was the reason for Bitou to pay rent for Councillor Gcabayi in the amount of R7,250?

What was the reason for Bitou to pay accommodation for Speaker Claude Terblanche in the amount of R4,350?

R420,000 was paid to Jirah Construction who provided a “false declaration,” and there is no consequence?

R484,800 spent on disaster relief items, consisting of 3 mattresses and 4 blankets, to Ade Equipment Trading.

The list goes on and on.

Please provide council’s policy on “economic empowerment” and the other information we requested, which we hope you will also find of interest.

Kind regards,
Peter Gaylard