Cape Town – The City of Cape Town has launched an investigation into allegations of possible fraud within its housing directorate while the police have confirmed they are also probing.
Anti-crime activist Hanif Loonat sounded the alarm on alleged fraud relating to projects on the Cape Flats.
Loonat said: “I was approached by a sub-contractor about possible fraud, which led me to initiate my investigation. After my preliminary investigation, I found evidence of possible fraud. I then presented the matter to a mayoral committee member in May 2020. This member was to arrange for a senior City official to call me for information on the alleged fraud. After not hearing from anyone, I approached the office of mayor Dan Plato.”
According to Loonat, the City awarded a term contract in January 2018, which was to expire in January next year. It is understood that the construction company was managed through the City with Aurecon SA as consultants. Aurecon provided an oversight role, with final approval resting with the City.
“The difference between a term tender and a normal tender is that normal tenders are priced upfront, while a term tender is a compilation of smaller tenders which are lumped into a pool where the tenderer prices a generic bill of quantities at tender stage,” Loonat said.
“The actual work to be completed is decided upon where the need is greater, and this need is converted into various small projects which are priced as the project progresses if those prices are not found in the generic tender bill.”
Police spokesperson FC Van Wyk said: “A case of fraud has been registered at Maitland police station for investigation and the investigation is currently ongoing.”
The City said in a statement: “The City has received the complaint and it is being investigated. The tender was awarded in line with City supply chain management policy; however, the investigation will assess the specifics of the complaints raised.”
Attempts to get hold of both Aurecon SA and the construction company were unsuccessful.
Loonat said it was estimated that almost 400 projects ranging from R500 000 to R2m had been issued in this term’s tender, which he said were allegedly abnormally high amounts.
“Many of which were at alleged inflated prices and not assessed but accepted and validated by the professional team and finally approved by the City officials. In fact, the City staff approved costs outside what is allowed by the contract of agreement, that the tender prescriptively clarifies should not be charged, which in this case amounted to one irregular item that was approved at R22 000 000. This cost should never have been approved, let alone paid. Payments on these alleged inflated/fraudulent quotes have been made and are currently being processed monthly while this contract remains in existence.”
Loonat said that over and above alleged irregular/alleged fraudulent items approved, the maximum value of a tender range for a term tender, R2 000 000, had also been surpassed.
He has lodged a formal complaint at the Maitland police station, he said.