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The Special Investigating Unit (SIU) has been granted a preservation order by the Special Tribunal (Tribunal) to freeze pension benefits of former Head of Department (HOD) of the North West Department of Public Works, Roads and Transport.

The 24 August 2021 judgment by Judge Siwendu restrain and interdict the Government Employees Pension Fund and the Government Pensions Administration Agency from paying out pension benefits of over R 3.4 million to Mr. Pakiso Mothupi, pending the institution of an action against Mr. Mothupi before the Tribunal.

The application to freeze pension benefits of Mr. Mothupi follows the signing of Proclamation R210 0f 2021 by President Cyril Ramaphosa, authorising the SIU to investigate allegations of corruption, malpractice, maladministration and unlawful appropriation or expenditure of public funds and other irregular conduct into the affairs of the Department.

Ongoing SIU investigations revealed that, while working as the HOD, Mr Mothupi committed the Department into unlawful contracts with private entities. He authorised payments to Ayamah Consulting Engineers (Pty) Ltd (Ayamah) in circumstances where there were no services rendered to justify the payment, resulting in financial losses of R 166 290 625, 77.

The SIU intends to launch an action in the Tribunal within 30 days to recover the amount.

Mr. Mothupi was suspended from the Department on 26 September 2018 following the allegations of irregularity pertaining to the contract. He was dismissed on 4 June 2021.

Ayamah, an engineering consulting company, provided water and sanitation services to Mbombela Local Municipality (Mbombela) in terms of contract which commenced on 14 July 2014 to 14 July 2017. Utilising the contracting mechanism provided in Treasury Regulation 16A6.6, which permits a state organ to participate in a pre-existing contract with other state organs and or institutions, on 7 November 2016, Mr Mothupi wrote to Mbombela requesting to participate in the contract between the municipality and Ayamah.

After Mr Mothupi sent the letter to Mbombela, the Department’s Bid Adjudication Committee (BAC) met on 9 November 2016 to consider and recommend the participation. However, the BAC’s recommendation was not for participation in a contract for water and sanitation services but for roads. The recommendation was followed by the appointment of Ayamah embodied in a letter signed by Mr Mothupi dated 11 November 2016.

Curiously, on 18 November 2016, the Chief Directorate Transport Infrastructure prepared a submission seeking approval for the appointment of an external programme managers to assist the Department to achieve its goals. The Department signed a Service Level Agreement (SLA) with Ayamah on the same day as the submission of the approval of the appointment of the external programme manager.

Unlike the contract with Mbombela, the appointment in the North West was for roads and management services. The Mbombela contract commenced in July 2014 and terminated in July 2017, while the SLA with the Department commenced in November 2016 and terminated in May 2018. This had the effect of extending a contract that was coming to an end through an effluxion of time.

The Department agreed to pay a once off set–up fee (equal to 10% of the annual fee) for the establishment of Ayamah’s offices in North West Province, together with relocation and infrastructure costs. Part of the responsibilities assigned to Ayamah included the provision of support to the Department in procurement of professional services and contractors.

The SIU alleges that the SLA was riddled with a host of irregularities, and was also in breach of the PFMA and National Treasury Instruction 1 of 2013/14. There was no competitive bidding process followed. The Department failed to consider locally based companies, resulting in set-up costs which are believed to be in excess of the actual costs. The set-up costs were not included in the participation request or letter of appointment.

Even though the investigation is ongoing, the SIU claims that the Department incurred fruitless and wasteful expenditure because Mr Mothupi deliberately went out of his way to violate the law and unlawfully appointed Ayamah. In March 2017, the Department made pre-payments of R 103m to Ayamah in two tranches of R 8 540 587 and R 94 495 413 in the extension to the rehabilitating of the flood damaged road infrastructure.

The requirements of National Treasury Instruction Note 32 with regards to the thresholds for the extension of contracts were not followed when Ayamah’s contract was extended on numerous occasion to include amongst others, the rehabilitation of flood damaged road infrastructure and the perimeter fencing at Eagle Waters Wildlife Resort. These extensions were outside the scope of Ayamah’s contract with Mbombela.
 

Issued by South African Police Service