Tensions are running high at an Eastern Cape municipality after explosive allegations of serious irregularities surfaced relating to the awarding of a multimillion-rand tender.
The tender is for the leasing out of three Walter Sisulu Local Municipality capital assets, which the municipality said would generate more than R300m over the lease term.
The collective market value of the assets being leased out is R20.7m.
The DA has lodged a formal objection with the provincial treasury, flagging potential legal and financial risks to the municipality.
DA caucus leader Magda Botha wrote to provincial treasury head Daluhlanga Majeke, requesting urgent intervention regarding the process followed in awarding the tender for the long-term lease of the Aliwal Spa Holiday Resort, Buffelspruit Nature Reserve and Oppie Bron Flats.
She voiced concerns about alleged irregularities, including inconsistencies in the consortium agreement, potential misrepresentation and unenforceable clauses.
“The process appears to contravene the Municipal Finance Management Act (MFMA) No 56 of 2003, the Municipal Supply Chain Management Regulations, 2005, and the Municipal Asset Transfer Regulations, 2008, which, if confirmed, could result in irregular, fruitless or wasteful expenditure under Section 32 of the MFMA,” Botha said.
“The processes followed by the Walter Sisulu Local Municipality appear to have created a potentially untenable legal situation that could undermine transparency, accountability and good governance.
“Proceeding with a lease amid allegations of an unauthorised business name and an invalid agreement may constitute a breach of procurement and fiduciary standards.
“Immediate provincial treasury oversight is therefore necessary to mitigate potential legal and financial risks.”
Municipal manager Khaya Gashi denied wrongdoing.
“We confirm that on January 28, the municipal council resolved to grant the rights for the use, control or management of the three capital assets to the Limakatso Tsa Maletswai Consortium, which is the entity that was awarded the bid,” Gashi said.
“There are no contracts that are as yet signed.
“The time lag between the decision of the council and now is the fact that there have been a number of interlocutory questions raised by individual councillors around a number of issues post the decision of January 28.
“Management has had to respond to all of these matters.”
According to Gashi, the National Treasury Public-Private Partnership (PPP) unit advised and the municipality agreed that the best alternative would be a long-term lease of the assets.
He said the legal opinion obtained by the municipality confirmed that it had no option but to continue with the transaction.
“The main thrust of the objection was that some members of the Limakatso Tsa Maletswai Consortium had declared that they are not part of the consortium and requested that their names be removed from the consortium agreement,” Gashi said.
“The remaining members of the consortium have confirmed that they have become aware of the declarations by the dissenting consortium members through social media, and are in the process of reconstituting the consortium agreement, with other parties.”
According to Gashi, the idea of disposing of non-core assets through a long-term lease was conceptualised in the 2022/2023 financial year, with the National Treasury advising a long-term lease due to financial constraints.
Botha said they had lodged repeated objections, highlighting procedural irregularities and political interference, but ANC councillors voted through items despite concerns.
The DA called for an independent review to safeguard public resources.
The party’s concerns include failure to verify the consortium agreement’s validity, procedural shortcomings in the bid evaluation process and insufficient protection of municipal assets in draft lease agreements.
Gashi rejected the DA’s claims of political interference in the transactions.
He said all the necessary procedures and regulations were followed in awarding the leases.
“The main thrust of the transactions is the appointment of the Limakatso Tsa Maletswai Consortium to use, control or manage the assets, including developing the assets as would be spelt out in the respective lease agreements,” Gashi said.
“We confirm that the entire process has been underpinned by a high level of transparency and accountability.
“This is the reason that the council process has been largely driven by consensus and only voted upon when there is evident filibustering from some sections of the municipal council.”
Botha said over several months and through multiple executive and council meetings, the DA lodged repeated objections, highlighting serious procedural irregularities and political interference in the awarding of the lease.
“Despite this, every council item was voted through by ANC councillors, while legitimate concerns were systematically dismissed,” she said.
“I have, therefore, written to the provincial treasury, calling for an independent legal and forensic review of all contracts before any implementation to safeguard public resources,” Botha said.
The DA tabled sworn declarations from individuals who publicly distanced themselves and their entities from the purported consortium bidding for the lease.
Botha said despite the evidence of misrepresentation, the ANC majority continued to advance the process.
“At the ordinary council meeting on September 30, council, at the DA’s request, resolved to defer the item pending an investigation and independent legal opinion on the tender process,” she said.
“However, at the special council meeting on October 31, the municipal manager provided only a limited legal opinion, without the required investigation, dismissing the DA’s concerns and supporting declarations.
“In a subsequent division vote called by the DA, opposition parties voted in unison, but a narrow ANC majority pushed the item forward, disregarding the prior council resolution to investigate.
“The DA supports the principle of public-private partnerships as a legitimate means to stimulate local economic growth and create jobs.
“However, such partnerships must be grounded in transparency, fairness and strict compliance with the law.
“Public assets must serve the public good and not private interests.”
Provincial treasury spokesperson Pumelele Godongwana confirmed receipt of Botha’s letter.
“The department is to begin the consultation process within the intergovernmental confines to inform our way forward on the matter,” Godongwana said.
“We will thereafter respond to the DA on issues raised.”
The consortium could not be reached for comment by the time of publication.
Daily Dispatch
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