Sunday Times: Tax dodger’s R176m deal

http://www.timeslive.co.za/politics/2012/01/15/tax-dodger-s-r176m-deal

Tax dodger’s R176m deal
BRETT HORNER

A BUSINESSWOMAN is demanding the eThekwini municipality honour a secret R176-million housing contract on which it is backtracking.

The contract, which never went out to tender, was suspended after the city’s legal advisers pointed out that Mabongi Shauwn Mpisane had a criminal record.

Mpisane and her husband, former city policeman Sibusiso Mpisane, are known for their flashy lifestyle and for hosting lavish parties attended by celebrities and high-ranking politicians.

Mpisane’s company, Zikhulise Cleaning, Maintenance and Transport, of which she is sole director, is also listed in a forensic report on alleged financial irregularities and tender fraud within the municipality.

The company has received more than R300-million in housing contracts from the city over the past five years – excluding the one for R176-million – while Mpisane is facing 172 new tax-related charges.

And, despite probes into Mpisane and her company by the municipality, the provincial housing department and the SA Revenue Service, in September last year the municipality gave her the contract to build and complete 2114 low-cost homes in Umlazi, south of Durban.

Normal tender procedures were not followed and the city suspended the contract after being advised to do so by its legal department.

The Sunday Times has established that Mpisane instructed her lawyers to force the municipality to reverse its decision.

In a letter dated December 6 2011 from lawyer Themba Mjoli, the municipality was given a 24-hour deadline to reverse its decision. “Unless you do so immediately … our instructions are to seek appropriate relief from the high court on an urgent basis,” he wrote.

This week Mjoli declined to comment, saying he had just returned from holiday and was unaware if the city had responded. Municipal spokesman Thabo Mofokeng failed to answer questions forwarded to him.

According to municipal documents, Mpisane’s company was hand-picked for the tender by the city’s bid adjudication committee in September last year – despite it being tarnished by claims of poor workmanship in several of its projects.

Documents seen by the Sunday Times show that the committee used Section 36 of the procurement policy to bypass the normal public tender route.

However, a month later the municipality’s legal department objected and, on two separate occasions, warned the committee to reverse its decision.

In two scathing letters, legal advisers questioned the selection of Mpisane’s company, saying she had been convicted of VAT fraud in 2005.

At the time, the company was fined R15000 and Mpisane received a three-year jail term suspended for five years.

The advisers also said the Close Corporations Act prohibited Mpisane from owning a business because of her conviction and sentence.

“The amount of public money involved is such that the [committee] is obliged to follow the public tender process, so that council can get value for money,” it said.

Housing head Cogi Pather wrote to Mpisane on December 2 explaining their decision to suspend the contract. Mjoli responded: “You are undoubtedly aware that the impugned decision was taken and made arbitrarily and capriciously.”

The lawyer attacked the municipality for ignoring the cost to Zikhulise of paying “1000 employees” and “18 subcontractors”.

“On a more serious note, the community, which is currently awaiting being accommodated before the builder’s shutdown, is likely to be seriously angered by your impugned decision.”

Mjoli also questioned the applicability of the Close Corporations Act in view of the fact that Mpisane’s sentence had been suspended.

Council minutes show that the tender in question was simply reconfigured from an old deal in 2006 for the construction of 3100 homes in Umlazi.

The Mpisanes were then appointed as the main contractors but, after the auditor-general denounced the deal as highly irregular two years ago, work came to a halt.

But early last year the provincial human settlements department approved the new, re-jigged contract to finish the work.

In 2010 forensic auditors Ngubane & Co recommended an investigation into Zikhulise and 34 other contractors.

Two years ago, the Special Investigating Unit also began a probe of payments linked to a R37-million housing project in Durban’s Lamontville township involving Mpisane.

The DA’s Tex Collins, who has cried foul over the municipality’s procurement practices for years, said: “Clearly all is not well … any such work [Mpisane’s company is involved in] should be stopped immediately for investigation.”

Mpisane and her husband, meanwhile, spent an estimated R1-million on an Egyptian-themed seventh wedding anniversary in March last year.

Guests included socialite Khanyi Mbau, Khulubuse Zuma and May Mkhize, wife of KwaZulu-Natal premier Zweli Mkhize.