Johannesburg - A company partly owned by ANC Youth League president Julius Malema’s family trust benefits directly from multimillion-rand tenders it helps to award.
Limpopo outsourced essential government functions to the company, which means it is engaged in the privatisation of state functions. Malema promotes nationalisation.
City Press can reveal that On-Point Engineers (Pty) Ltd – a private company headed by Malema’s former business partner, Lesiba Gwangwa, in which Malema’s Ratanang Family Trust owns a stake – cashes in on Limpopo road tenders it is supposed to manage.
On-Point was awarded a R51m tender by the Limpopo roads and transport department in 2009 to design, manage and implement road projects in the province through an outfit called the “project management unit”. This is outsourcing, a form of privatisation.
As part of the tender, On-Point’s duties include supporting the department with the adjudication and awarding of road tenders.
A document in the possession of City Press reveals that On-Point’s involvement in state tenders doesn’t stop there. The company also signs confidential “back-to-back” agreements with successful contractors, giving it a share of between 50% and 90% of the profits of tenders it helped to award.
The details of these back-to-back agreements are contained in confidential memorandums of understanding, signed between On-Point and contractors to the department. City Press has a pro forma memorandum that is used.
The parties are barred from sharing any information about the agreements with third parties.
“Any information shared by the service provider with the National Treasury will be shared on a statistical basis and no names will be made known unless the express written consent has been obtained from the person whose name is to be made known,” reads one of the clauses.
A National Treasury employee said that government could not outsource functions like this and it appeared that this clause violated constitutional provisions of transparency. Both this person and a businessman who understands the tender system said the back-to-back contracts were illegal and On-Point was conflicted as it could not be both tender referee and beneficiary.
Two company insiders, three youth league leaders, four business people, two senior civil servants and a provincial ANC leader told City Press that the confidential contract with On-Point was a requirement for any firm that wanted to benefit from projects overseen by the project management unit that the company manages.
On Friday, the Mail & Guardian reported that Malema admitted to owning shares in On-Point through the Ratanang Family Trust, of which he is a co-trustee. The other trustee is his grandmother, Sarah.
“Yes, we are close to On-Point. We are shareholders as a family,” Malema told the paper, declining to elaborate on the extent of the trust’s shareholding. He said he had not influenced any of On-Point’s tenders, adding: “I just queue when the dividends are due.”
According to the firm’s website, On-Point and, by extension, Malema’s family trust have benefited from at least eight other government tenders, excluding the project management unit contract.
This includes the construction of a high school, the upgrading of roads from gravel to tar and sewer reticulation in the Mopani District Municipality.
City Press can reveal that On-Point is a growing enterprise. It was recently appointed by the provincial local government and housing department (run by Clifford Motsepe, a close Malema ally) as consulting engineers on a low-cost housing project near Seshego.
In September 2009, City Press reported that Limpopo roads and transport MEC Pinky Kekana had suspended R300m worth of roads tenders and frozen Roads Agency Limpopo’s R1.2bn budget before firing the agency’s board.
Kekana later transferred the R500m maintenance budget of Roads Agency Limpopo (the provincial parastatal overseeing Limpopo’s road network) to a project management unit that is run by On-Point.
A National Treasury source said this might be illegal.
Malema’s admission of shareholding in On-Point again raises questions about the true purpose and administration of the Ratanang Family Trust, whose sole purpose is to look after the interests of Malema’s five-year-old son.
- City Press