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Leaked AG report points to irregular nuclear tenders

Aug 22 2017 16:45
Matthew le Cordeur

Cape Town – The Auditor-General (AG) has allegedly found gross irregularities in a nuclear tender awarded to the son of President Jacob Zuma’s benefactor, Vivian Reddy.

An unauthenticated draft version of the AG report for the Department of Energy’s (DoE) 2016/17 financial year reveals irregularities with regards to more than one nuclear tender in the last financial year.  

Democratic Alliance energy lawmaker Gordon Mackay on Tuesday released extracts of the leaked AG’s internal report that Energy Minister Mmamoloko Kubayi says she has yet to see. AG spokesperson Khutsafalo Mnisi told Fin24 the office could not comment on the details of the report - or if it is authentic - as it is not meant to be in the public domain.

Referring to the report, which Fin24 has seen, Mackay said in a statement that the AG found that the procurement of the Nuclear Procurement Management System, awarded to Central Lake Trading t/a Empire Technology and owned by Shantan Reddy, was irregular.

“The original amount of the contract was also inflated from R60m to R171m by the Department of Energy (DoE),” he said.

The extract from the document sent to media states: “After inspecting the additional documents that were provided with management response, it was noted that the product specification for the department matched the ones from the first organ of state, but it was noted that award value at DoE was R171m, while at Free State Treasury was R60.91m. No additional documents were provided by management to justify the price difference.”

The Mail & Guardian reported in September last year that the contract to Shantan Reddy appeared to have been the first transaction in the multi-billion rand nuclear deal, despite assertions by then energy minister Tina Joemat-Pettersson that South Africa has not entered into any such a deal.

The tender was published on the DoE’s website under the category “Awarded Bids”. The bid number BAC-10/16 appeared under the heading as well as the company name Central Lake Trading 149, which trades as Empire Technology.

In addition, Mackay said on Tuesday the procurement of Nuclear Transaction Advisory Services awarded to Mahlako A Phahla was unauthorised as there was vast deviation from the original specifications from 11 work requirements in the original contract to four work requirements. They were “all unrelated to the original, in the subsequent contract issued by the DoE”, he said.

“This deviation meant that the DoE was, in fact, embarking on a new contract which would, in turn, need to be subjected to a new and separate competitive tender process.

“The AG’s report further seems to confirm last week’s media reports which indicate that Mahlako A Phahla obtained a contract extension without the necessary approval from the DoE’s own bid tender committee or National Treasury, as required by law.”

Minister has not seen report, says if report is real then release is unethical

Mnisi told Fin24 on Tuesday that the office has not finished its internal process yet and that the final AG reports for all public entities will only be released from November onwards. “They should not be communicated at this stage,” she said. “Only after the report is tabled are they public knowledge.”

She said it would be unlikely that the AG’s office could authenticate the report, as it should not be in the public domain.

Kubayi told Fin24 that the AG has not confirmed the existence of such a report, nor has she seen one. She also told the energy portfolio committee meeting at Parliament on Tuesday that she has not been given any report yet. In addition she said that if there is a draft report released to the public without the accounting authority and executive authority having been given an opportunity to look at it, it will be unethical.

However, in a statement on Tuesday, Mackay said the DA has been reliably informed that the AG’s report was served before to the DoE's audit committee, but that director-general Thabane Zulu refused to sign it off. Zulu was recently seconded to the Strategic Fuel Fund as its acting chief executive.

Kubayi told Parliament’s portfolio committee on energy that while the AG finished its report at the end of July, they requested more information from the department. “That process is now done,” she said.

However, she said she has not met with the AG or seen any report. “I have not had a meeting with the AG, as I can only do that after the audit of DoE is complete," she said. "I am not aware of any irregular activity. Only when the AG sits in front of me and shows me the report, then I can confidently say what is irregular.”

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