Mpisane’s sister scores R20m contract

The eThekwini Municipality has raised eyebrows by awarding a R20m housing project contract to Shawn Mpisane’s sister through a notorious regulation.

Durban - The eThekwini Municipality has raised eyebrows by awarding a R20 million housing project contract to a Durban-based construction company with links to Shauwn Mpisane’s Zikhulise Group, through the notorious Section 36 regulation.

The city initially awarded the contract in November last year to ANC benefactor Philani Mavundla’s company. But barely eight months later, Mavundla pleaded poverty, and has “ceded” the contract to little-known Lungza Management Consultants. Lungza is owned by Mpisane’s sister, Nosipho Fortunate Ngubo, who is understood to have been a bridesmaid at the Mpisanes’ wedding.

The developments come amid an investigation by Public Protector Thuli Madonsela into the abuse of the Section 36 regulation. The investigation, requested by the DA in eThekwini, came after the Zikhulise won numerous multimillion rand contracts through Section 36.

Section 36 of the supply chain management regulations allows for deviation from normal tender processes in the awarding of contracts in situations deemed to be emergencies or when there is only one suitable contractor available.

City manager S’bu Sithole said this week he was not aware that Lungza had links to Zikhulise.

The municipality contracted PG Mavundla Construction to build 126 double-storey units in the Cornubia housing project. The contract was worth R19 941 567, excluding VAT.

A report tabled before exco last week said Mavundla had written to the city early this month expressing “financial difficulty” and had withdrawn. The company ceded the work to Lungza.

At the time, only 20% of the work had been done. This has sparked the ire of opposition parties which are questioning how the municipality determined what work had been done by Mavundla if the company had already subcontracted “so early” in the project.

A company search of Lungza reveals that the company’s former auditors used a Zikhulise e-mail address.

The report reads: “The contractor ceded work and payments to another service provider. The city acknowledged and endorsed the cession.”

Sithole said the city was not aware of Mavundla’s financial constraints when the tender was awarded.

The municipality had aimed to have all the work completed by the end of the 2015/16 financial year. However, a status report of the development indicates that only 109 foundations (out of 126), 87 ground-floor masonry works (of 126), six first-floor slabs and stairs (out of 126) and six first-floor masonry works (out of 126) had been completed by last Tuesday.

Sithole said the city had three options to consider when it became aware of Mavundla’s predicament.

One was to award the contract to a second-placed company that had bid R24.6 million. This was not considered as the tender had elapsed 26 months ago and the chances of the bidder doing the work at a reduced price were “highly unlikely”.

The second option of increasing the contractor’s scope of work was also not considered as it would require “extensive monitoring”.

The report said the third option of a “cessionary”, which was eventually considered, would not be considered “under normal circumstances”.

“It is not advisable to transfer an incomplete scope from one contractor to another as it causes dual liability and compromises the responsibility lines. However, in this case, the cessionary has carried out the work to date and has performed to the accepted standard,” the report states. This option will, according to the city, “save council from incurring additional costs and additional delays”.

Lungza was awarded a R12.9 million contract by the city in November last year to build 132 units in the Sobonakhona rural housing development. The company also has a R1.2 million refuse collection contract with the city. The Mercury understands that Lungza was subcontracted to other city housing projects, though this could not be verified.

DA provincial and eThekwini caucus leader Zwakele Mncwango said the issue was the “continuous abuse of Section 36, which was favouring one family”.

“There is no explanation as to why they are always getting tenders without following the proper channels. The main concern is that we’ve seen a major decline after the public protector’s investigation. It seems this council is obsessed with this Mpisane family.

“In this case, there is no reason to use Section 36. If Mavundla has failed to honour the contract and do the work, he must account. The municipality was supposed to go out on tender and get a new company to complete the work. If it is a matter of urgency, the question is: How do you go about choosing this particular company?”

Approached on Wednesday, Ngubo refused to comment, referring all queries to the municipality. “I have nothing to do with eThekwini Municipality’s processes. I am not an official, I am not a celebrity. I will refrain from communicating with the media,” she said.

sihle.manda@inl.co.za

@Sihle_MG

The Mercury