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‘Lift the cap’ – Tshwane transport tender ballooned from R88m to nearly R800m

‘Lift the cap’ – Tshwane transport tender ballooned from R88m to nearly R800m
Illustrative Image: An A Re Yeng bus at its depot in Tshwane on 15 May 2020. (Photo: Gallo Images / Lefty Shivambu) | Auswell Mashaba. (Photo source: AM Consulting Engineers, accessed via Internet Archive)

A City of Tshwane transport tender somehow ballooned from R88m to nearly R800m. 'Tall trains' Auswell Mashaba is at the centre of it all.

Businessman Auswell Mashaba gained tender infamy due to Swifambo’s R3.5-billion Prasa contract.

Much less is known about the projects Mashaba’s other companies had been involved in.

We’ve done some digging into a major tender Mashaba’s A-M Consulting Engineers, or AMCE, had clinched from the City of Tshwane (CoT). The CoT tender largely provided the funds for a R10-million donation to the ANC, as detailed in this investigation.

Based on what we’ve found, it seems fair to say that Mashaba’s other activities deserve as much scrutiny as the corrupt trains deal.

Documents in our possession detail how the CoT hiked the value of one of AMCE’s tenders. The increase in AMCE’s fees was nothing short of gobsmacking — after CoT officials had motived for the tender’s “cap” to be “lifted”, the contract’s value swelled from R88.5-million to nearly R800-million.

One source, a CoT official who spoke to us on condition of anonymity, didn’t hold back in his assessment of the development: “This was an obvious, elaborate scheme to loot and fleece the coffers of the city.”

We made several efforts to contact Mashaba, but he could not be reached for comment. He did not answer his cellphone, nor did he respond to multiple text messages and emails.

AMCE did not respond to emailed queries.

The City of Tshwane stated: “If there was any wrongdoing on the matter, the city will not hesitate to institute an investigation and take appropriate action against those involved, including those that have left the institution.

“The city was candid with your media enquiry and cooperated fully because we have nothing to hide. We pride ourselves in openness and transparency.”

AMCE was first appointed in 2011 to oversee a project management unit (PMU) for the city’s Integrated Rapid Public Transport Network (IRPTN), which included Tshwane’s A Re Yeng bus service.

This was a three-year contract. In February 2014, the CoT advertised a new tender to appoint someone to run the PMU for another three years.  Initially, the city entertained nine acceptable bids. After further evaluation, only two companies remained in the race. Mashaba’s AMCE, with a bid price of R29.5-million per annum (R88.5-million over three years) was pitted against multinational engineering group Aurecon, which had a bid offering of R30-million per year.

AMCE won the tender. The CoT’s letter of appointment confirmed that the new contract period was to start on 1 June 2014.

AMCE’s website lists the Tshwane IRPTN as one of its flagship projects. (Photo: amce.co.za)

No sooner had the second contract period started when things turned strange. AMCE’s billings for a single month grew larger than the fees it should have earned in an entire year.

In July 2014 alone, AMCE submitted invoices to the city for payments totalling R57.5-million — nearly double the capped annual fee of R29.5-million. And the invoices kept rolling in. By the end of August, AMCE’s billings had climbed to over a R100-million. By all indications, the metro didn’t flinch. Instead, it simply settled each invoice.

Evidently, someone within the metro realised that there might be some sort of a reckoning for this overspending. A request was therefore directed to the city’s Executive Acquisition Committee (EAC) to summarily “lift the cap on the tender amount”.

But the EAC didn’t like the idea. Minutes from a EAC meeting on 4 September 2014 confirm as much. “During the discussion on this matter . . . the Committee did not agree with the recommendation … with regards to the lift of the capped amount. The Committee noted the [bid] evaluation done and was of the view that approval be granted per the rates (as evaluated) to a maximum amount of R29,502,190.08 per annum,” reads the document.

AMCE should have earned no more than R29.5m per annum. In the end, it earned nearly R800-million.

The EAC’s decision clearly didn’t hold much weight. In the end, those city officials who had pushed for lifting the cap clearly had the final say.

On 19 September 2014, the CoT sent a new appointment letter to AMCE, one that in effect scrapped the earlier appointment letter.

According to the document, AMCE was now free to bill the metro in accordance with hourly rates, without the limitations of a pesky annual cap.

By the end of 2014, AMCE’s billings stood at R188-million. The CoT paid every single invoice.

In 2015, AMCE submitted invoices totalling R248-million. The city settled each invoice.

In the last two years of the contract period — 2016 and 2017 — AMCE’s billings were a combined R360-million. Again, the CoT paid every last invoice.

By the time the contract period came to an end, AMCE had earned R796-million from a contract that should have cost the city no more than R88.5-million.

Together with the roughly R665-million that AMCE had pocketed in the first three-year contract, the company ultimately banked R1.46-billion in fees from the city. DM

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Comments - Please in order to comment.

  • D'Esprit Dan says:

    Arrest, charge and imprison everyone involved for life. No bail, no parole, no medical relief, justvlife behind bars and take everything they own. Absolute scum, every one of them.

  • Karl Nepgen says:

    How is such a scam at all possible, by a respected professional engineering business (which AMCE must be, in order to fairly win a tender against a highly reputable competitor like Aurecon).
    I can only imagine that apartheid and WMC is to be blamed.

    • Pieter Badenhorst says:

      I suspect there’s more to the tender process than meets the eye. Note that the winning bid came in at just under that of the competitor. I suspect some sharing of inside information during the bidding process.

      • D'Esprit Dan says:

        Think you’re spot on – come in just under with no intention of delivering anywhere close to that price. Easy when you’re not actually going to deliver to the terms and price submitted!

    • J vN says:

      The interesting thing is that Aurecon (now called Zutari) has seemingly decided to call it quits in SA and to seek greener pastures. Seems South Africa’s corruption and rigged tenders were, it appears, just too much for them. Rumour has it that Zutari is about to move its company registration and head office to the Middle East.

      Soon only the dregs like Sodi, whose very aptly named Blackhead Consulting won a corrupt tender for water treatment in Pretoria too, and Mashaba, will be left. Be careful when you drive over a bridge built by one of these companies.

  • Jane Crankshaw says:

    All in the name of “ radical economic transformation!!!” Known by taxpayers as theft!

  • Jane Crankshaw says:

    How much longer is this going to be allowed to go on???
    Current taxpayers just cant keep contributing unwittingly towards this theft and abuse of power….
    We need to see some real convictions now before the next wave of taxpayers leave the country taking their contributions and expertise elsewhere.

  • The mayor needs to investigate, since he is so hell bent on rescuing the city.

  • Ompaletse Mokwadi says:

    Just unbelievable that such grand corruption can happen under people’s eyes, with the so called “corruption watch dogs” looking on.

  • Murray Burt says:

    I’m sick of being sick and tired. Hawks, over to you.

  • Fanie Rajesh Ngabiso says:

    Is it still considered arrogamt to say that if you dont vote DA in this election you are just plain stupid?

  • Jucy Malema says:

    Bring the death penalty back for this pos. Shoot all corrupt government officials under the death penalty!

  • Thomas Cleghorn says:

    Wow! Did no one ask what the extra monies over and above the annual 29mil were for? Did anyone check the work or what was allegedly bought with the money? Again, wow! Unbelievable.

  • Scott Gordon says:

    Hmm , see so many comments by WMC , please remember this is a democracy !
    The poor voters must be happy that the top guys are ‘ redistributing ‘ the $$$ amongst themselves .
    So , R700m , will not be spent on schools / houses / health clinics .
    Clearly what the masses want . Stay poor while their ‘ leaders ‘ wallow in luxury !
    Anyone done a tally of all the wasted taxpayer money has gone ?
    Leaving out the SOEs 🙂
    The many billions gone , would have made the NHI a breeze .
    Sort of ironic all the talk about the NHI , how many pit toilets do we still have ?

  • Richard Owen says:

    Inflation of tender fees way way above the actual costs seems to be a core methodology of state corruption. There is vast criminality throughout the world and sadly South Africa appears to be a leading practitioner. Powerful oversight regulations and specifically focused arrest and prosecution empowered institutions (eg Scorpions +++) are required to curb such corruption.
    It doesn’t help that the world seems so focused on money money money and the number of billionaires is increasing daily.

  • Brian Cotter says:

    No Babita around at that time.
    This is big. Needs to be all out in the open before elections.

  • Martin Kunhardt says:

    Reading the articles showing vast sums on money flowing to individuals begs a question. If I, as a lowly taxpayer was to suddenly receive an amount in the millions, the bank would ask questions. There must be someone who oversees the banks clients financial affairs, especially when tender monies are concerned, and who raises a flag regarding these deposits and withdrawals. SARS knows but stays quiet, maybe big brother is watching!?

    • MT Wessels says:

      Nothing-burger; the bank or SARS will only ask a question about the source of funds flowing in, and declare same to the authorities (and SARB is some flows overseas). So the company produces the authentic and legitimate invoices and payments for hours billed – all real and above board from a tax and accounting point of view. Therein lies the rub: Mr Mashaba (well, his company) can show proof of income, and no lifestyle audit will prove anything different. All above board – unless an audit with consequences is directed by the source of the contract: CoT.

      • Stephan Pieterse says:

        Also, the money doesn’t flow to an individual. It will flow from AMCE to a subsidiary, then a trust, then another company…and so on. I suspect Mr Mashaba “earns” a market related salary from his company while the rest of his disposable income flows to him via numerous entities, even though it originated at AMCE.

  • Just imagine. Under the leadership of a party that speaks clean governance. I suspect collaboration.

    • Alex Nagel says:

      Just take a quick look at when these transfers took place 2014 firmly under ANC control. And if you look back at who the Mayor was, you may be shocked

    • Greeff Kotzé says:

      Which party are you thinking of? Please note that the years of this contract was 1 June 2014 until 31 May 2017, as detailed in the article. Sputla “Smart Meters” Ramokgopa was the ANC mayor of Tshwane until the Local Government Elections held on 3 August 2016.

      That means that this contract continued under the DA’s Solly Msimanga for only about nine months out of the total period of 36 months. At that point, of course, the updated letter of appointment for AMCE had long since been rammed through, so by the time the new MMC for Roads & Transport came in, this would have simply been an accepted reality in the department. It would have taken a bit of digging to find the original intended value of the contract, unless one received a tip-off or knew exactly where the skeletons are hidden.

      I’m assuming that, since the article does not mention it, AMCE ran out of runway after 31 May 2017 and did not get re-appointed.

  • Jo Van says:

    Follow the money. See where it went and prosecute them all. That seems like the rational thing to do. In our reality Mashaba is being rewarded with more contracts and there are no consequences for his crimes. Corruption has become a culture and the new normal, so just imagine how rapidly all monies will be drained from the NHI scam, leaving all South Africans equally without medical services. Whatever Verwoerd, Vorster and Botha had predicted has proven to be exponentially worse in reality. We have to vote correctly! We can’t afford these scoundrels any more! Yes, I am dreaming on!

    • District Six says:

      If you know anything about our history, then you know Verwoerd, et al, did not merely “predict” but they purposed this. They were the very reason a Zulu child like Zuma only got to a Standard Three education. That was the whole point!
      Unbelievable that someone could actually say what you just said without any self-reflection on their ignorance.

  • Geoff Coles says:

    The ANC Mayor at the time in Cape Town joined Government at a Minister and became in due course Ambassador

  • Dhasagan Pillay says:

    @DM – have you sent a copy of everything to the AG’s office with a request for comment? One must hope that will give the office a reason to take a bite out of everyone involved.

  • Lisbeth Scalabrini says:

    All these findings by Scorpio should be sent to all households in South Africa by mail…..a pity that the post office is no more 😡

  • Malose Nyatlo says:

    Feeding frenzy!
    CoT should go after the culprits and recover every cent stolen.
    It’s so easy to find culprits, they own expensive properties in the exclusive estates.

  • Donald bemax says:

    Great work by Scorpio…However as Sir Winston would have said … what is or can be done about it ? ZILCH, NADA……The ANC.. Stealing your future should be the party slogan.

  • Ashley Stone says:

    Can’t believe there is anymore money to loot….

  • Oom Dugk says:

    10 years ago…
    And still no consequences!

  • Rae Earl says:

    Glynnis Breytenbch will sort these maggot infested thieves out if the DA and Multi Party Charter has any say in government next week. The ANC is now so well recognised as a gangster operation controlled by its septic NEC with Ramaphosa at the head, that there is a new suspicion emerging. Ramaphosa keeps spouting with absolute certainty that the ANC will win an easy majority vote next week despite polls to the contrary. Does he have inside info on a possible manipulation of the IEC and the vote count? If the Tshwane deal can be so easily boosted from R88 million to R800 million, why not? SA owes a big vote of thanks to press investigations and revelations by Daily Maverick, Scorpio, AmaBhungane and News 24.

  • Allrite Jack says:

    How do these ANC BEE affirrmatives get away with this massive extortion? Is the Zuma corruption approach to life now standard practice amongst the ANC apparatchiks?

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