SIPHELELE NKETO
NINE suspects were arrested this week by the Hawks’ Serious Corruption Investigation (SCI) and Serious Commercial Crime Investigation (SCCI) units in collaboration with the Tactical Response Team (TRT) and National Intervention Unit (NIU) for alleged municipal tender fraud, corruption and money laundering.
They also include two corporate entities from various localities including areas outside the Eastern Cape province. Hawks spokesperson Warrant Officer Ndiphiwe Mhlakuvana said that the arrest was in relation to charges of fraud, corruption and money laundering, emanating from the alleged unlawful awarding and execution of a municipal contract by the Alfred Nzo District Municipality during the period of 2015 to 2018.
Mhlakuvana said the investigation was initiated after information was received from a whistle-blower who alerted authorities about irregularities in the procurement processes relating to the appointment of a particular service provider.
“It was alleged that the appointed company did not possess the requisite yellow plant machinery and equipment at the time when the contract was awarded, but instead relied on hired or leased assets from third-party service providers,” he explained. He said that further probing revealed that similar procurement irregularities were replicated across several municipalities, including Alfred Nzo District Municipality, prompting a comprehensive investigation by the Hawks.
He added that investigations established that in December 2014, one of the suspects acting on behalf of his company allegedly approached the municipality with a proposal to procure yellow plant machinery through a hire-purchase arrangement.
Mhlakuvana said the proposal was purportedly advanced without adherence to prescribed supply chain management processes and was allegedly facilitated through the improper application of regulations under the Municipal Finance Management Act (MFMA), by exploiting an existing contract between the said company and another local municipality.
“During the period between January 2015 and April 2018, the Alfred Nzo District Municipality paid an estimated amount of approximately R75 million to the said business entity in respect of purported hire-purchase installments. These payments were reportedly approved by municipal officials and electronically transferred into the business accounts of the service provider,” he stated.
It was reported that the funds were systematically channelled through various bank accounts belonging to individuals and entities, involving bulk cash withdrawals and layered transactions indicative of money laundering activities that were inconsistent with legitimate business operations.
The arrested suspects include former Alfred Nzo District Municipality senior officials, employees of an entity and a businessman. They briefly appeared in Maxesibeni Magistrate’s Court on February 12 and were granted bail of R10 000 each. The matter was postponed to April 30 to be enrolled in the Mthatha Specialised Commercial Crimes Court. In a statement, the Alfred Nzo District Municipality welcomed the decisive action by law enforcement agencies in dealing with corruption. The municipality further stated that it strengthened its supply chain management processes, enhanced internal audit oversight and reinforced consequence management mechanisms to prevent any recurrence of similar irregularities.
