South Africa: RDP housing tender fraud in eThekwini

In order to cease complaints and reports of corruption, the eThekwini municipality will stop using section 36 of the Municipal Finance Management Act to award emergency tenders.

The municipality has tabled a budget of R35.8 billion for the new financial year, of which R3.7 billion will be used to address infrastructure backlogs and issues and R2.3 billion will be used to build to low-cost housing.

The Public Protector, Thuli Mandosela, was recently requested by the Democratic Alliance’s caucus leader, Zwakele Mncwango, to probe a R255m tender to build low-cost houses in Umlazi, Kwa-Zulu Natal. It was awarded to the politically-connected businesswoman Shauwn Mpisane’s company, Zikhulise Cleaning, Maintenance and Transport, without following proper tender procedures, given that it had allegedly become the norm within the municipality to bypass official tender procedures and approved in terms of an emergency
tender process whenever Ms Mpisane’s company was involved.

The mayor, Mr Nxumalo, has indicated that they have warned their officials not to use section 36 of the Municipal Finance Management Act to award tenders, which provides that “the accounting officer of a national or provincial department and the accounting authority of a national or provincial public entity responsible for the transfer of any proposed allocations to a municipality, must by no later than 20 January of each year notify the National Treasury or the relevant provincial treasury, as may be appropriate, of all proposed allocations, and the projected amounts of those allocations, to be transferred to each municipality during each of the next three financial years.”

This follows on the various protests, demonstrations and legal action against the eThekwini metropolitan municipality due to slow delivery of houses and services which led the municipality to bypass the standard tender procedures and award a R224 million tender to Durban businesswoman Shauwn Mpisane’s Zikhulise Cleaning, Maintenance and Transport company. The R255 million housing contract in Durban’s Umlazi area in March.

Mpisane and her husband S’bu have attracted media attention over the past years due to their lavish lifestyle and numerous court appearances. Mpisane was facing charges ranging from fraud and corruption to interfering with a witness. However, none of the cases materialised and by the end of January 2014 charges were withdrawn.

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