Sunday, August 8, 2010

Cele's dodgy R500m deal likely to face two probes

Cele's dodgy R500m deal likely to face two probes
A R500-million deal to move police top brass to a building owned by a politically connected billionaire - without a public tender process - is likely to face two probes.

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The Public Protector's office this week confirmed it was investigating the lease, while the corruption-busting Special Investigating Unit has launched one of its "biggest ever" probes into irregular government leases worth billions of rands.
The deal - exposed by the Sunday Times last week - will involve moving police headquarters to a building owned by Roux Shabangu at a cost to taxpayers of over R500-million, without following normal tender procedures; it is expected to form part of the SIU probe.
The SIU would neither confirm nor deny this, saying it was probing possible irregularities in "numerous leases negotiated by DPW (the Department of Public Works) ... some of which involve significant amounts".
The SIU is an elite unit that fights corruption through forensic investigations and follows up with litigation to retrieve public funds.
Both Shabangu and police chief General Bheki Cele, who signed off on the proposed financial terms of the deal, sent threatening letters to the Sunday Times this week in an apparent bid to gag the newspaper from publishing further details of the dodgy deal - which has raised eyebrows not only due to the lack of a tender, but also because the SAPS signed a 10-year lease with Shabangu while it still has a 10-year lease on its existing head office, Wachthuis.
The SIU said the investigation into government leases was sparked by a request from the minister of public works, Geoff Doidge, to look into "serious concerns he had regarding procurement processes in the department", a spokesman said on Friday.
"The Department of Public Works investigation will be one of the biggest ever launched by the SIU," the spokesman said.
This week Public Protector Thuli Madonsela launched an investigation into the SAPS lease, responding to a complaint lodged by the Institute for Accountability in Southern Africa.
"I hope to be in a position to issue my report at the beginning of September," she said in a letter sent to the institute on Tuesday.
Shabangu was not involved in any "underhanded dealings" in clinching the deal, his lawyer, Natalie Visagie, said on Friday. "My client had no interaction or contact with Cele at all. The allegation that Cele signed the lease is completely false.
"The building was sold to my client and it was a condition of the sale that my client would obtain SAPS as a lessee."
Although Shabangu initially denied his political connections, his lawyer said that "President (Jacob) Zuma is a friend of long standing of my client", but insisted "to the best of my client's knowledge, Zuma did not bring to bear any political influence (on awarding the lease)".
Cele, meanwhile, has insisted that the Department of Public Works had exonerated him of any wrongdoing by pointing out that the lease did not need to go out to tender because it was a negotiated contract.
He also said it was "misleading" and "incorrect" to say he had clinched the deal with Shabangu. Cele said he simply signed a "needs assessment" because the SAPS headquarters "was not big enough for it to carry out its administrative functions".
"With that his role as the accounting officer of the SAPS ended," his office said. "The Department of Public Works then took over the process."
But documents in the Sunday Times's possession show that on June 1 Cele signed off on the proposed financial terms of the lease.
The documents, while not the final lease issued, consist of an offer document headed "Agreement of Lease" containing Shabangu's detailed proposed rentals, and a document signed off by Cele entitled "Actual cost calculations: leasing of properties to accommodate government departments", largely reflecting the same numbers.
(View the documents online at
This week neither public works nor the SAPS could adequately explain why the R500-million deal did not go out to public tender - as required by Treasury rules.
The rules require all government contracts over R500000 to go through a competitive bid process.
If a service is needed really urgently, departments are allowed to negotiate directly with a contractor. But only if they've given good reasons, which must be as a result of unforeseen circumstances, including "a catastrophic event".
A government official familiar with tender compliance rules, who spoke on condition of anonymity, said contracts were typically negotiated directly only after an open bidding process had failed to produce a suitable candidate.
Accommodation crunches caused by bad planning would result in short-term emergency solutions - not 10-year leases, he said.
"On what basis is the relocation of an entire building urgent? You don't have to move 500 people quickly. Where is the case for urgency?"
Attempts to get answers from public works proved fruitless. "I don't want to talk to the Sunday Times ever again," shouted spokesman Lucky Nchalibane, referring all queries to special projects deputy director-general Mandla Mabuza.
But Mabuza failed to explain why the department decided not to follow normal tender procedures.
This week Cele's office also refused to supply reasons why the move was deemed so urgent it warranted dispensing with normal tender processes, or documents to support his claims, including the needs assessment he claimed was the last document he signed.
"After an appropriate apology, retraction and correction are published, we will consider whether to make available to you the information that has been requested," said a Major-General Julius Molefe. "In the circumstances you leave General Cele with no option but to seek proper redress through other means provided by the law."
Visagie also threatened to hold the Sunday Times liable for any damages suffered by Shabangu, if another deal he was planning to clinch with the SAPS - for renting a building in Durban - fell through because of negative publicity.

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