OUTA’s section 27 referral to NPA exposes R4.5m laptop tender corruption under Ace Magashule
No procurement processes were followed for 277 laptops procured at R4.578 million by former Free State premier Ace Magashule’s office in 2014. And if this is not enough, there is no certainty that laptops were indeed received after payment.
This is just some of the shocking findings in a section 27 referral made by the Organisation Undoing Tax Abuse (OUTA) to the National Prosecuting Authority (NPA). The laptops were procured from Sunbay Trading (Pty) Ltd, a company with Kamal Vasram, a former director of Estina, as sole director. According to Free State premier’s office annual report for 2014/2015, the laptops were to be procured for the Community Development Workers (CDW) in the Free State.
OUTA’s referral is based on information and documents retrieved from the Gupta Leaks.
Adv. Stefanie Fick, executive director of OUTA’s Accountability Division, says from the information retrieved, it is evident that the computers were procured as a result of a pre-arrangement between Gupta owned Sahara Computers and the office of the Free State premier. “Provisions of Supply Chain Management (SCM) as well as the Public Finance Management Act (PFMA) were completely ignored.”
Section 27 of the NPA Act is a vehicle for anybody to refer a suspicion of criminal activities directly to the NPA by way of a sworn affidavit via the investigating arm of the NPA, the Investigating Directorate (ID). This unit, headed up by Adv Hermione Cronje, was established by way of a proclamation by President Cyril Ramaphosa and tasked specifically to help expose and prosecute state capture.
“A section 27 referral gives ordinary South Africans the opportunity to report suspected crimes related to State Capture, directly to the NPA,” explains Asavela Kakaza, legal project manager at OUTA. “The ID have the discretion to pursue and investigate the matter.”
OUTA’s referral is based on emails exchanged between Magashule’s office, Sahara computers and Sunbay Trading. In one instance, an email sent by Ashok Narayan (former advisor at the office of the premier and also a former employee of Sahara computers) to Kamal Vasram, advised that “the order” would be finalized by the following day. It also stated that Vasram should forward the order to “Mr Ashu” Chawla, the CEO of Sahara Computers. The email also contained the name of the Chief Financial Officer (CFO) at office of the premier (one Mr Sello) and his cell number. Vasram later forwarded the mail to Chawla, adding that he “understands” the request from Narayan.
According to OUTA’s investigation, Sunbay issued a quotation to the office of the premier for 277 laptops one day later, on Sunday 17 April 2014. The quotation to the value of R4.578 million was addressed to the CFO.
Barely two weeks later, on 30 April 2014, the Acting Head of SCM (Ms M.A Mokoena), at the office of the premier wrote a commitment letter to Sunbay. In this she requested Sunbay to continue with the procurement of the computer equipment and she commits to making payment of the items upon receipt.
Three weeks later, on 22 May 2014, payment in the amount of R4 578 810.00 was made to Sunbay’s Standard Bank account. The payment advice was signed by Ms Mokoena. On 28 May 2014, payment of R4 263 030.00 was received from Sunbay into Sahara computers’ Absa bank account.
According to the National Treasury practice note of 2007/08, accounting officers/authorities should invite competitive bids for all procurement above the value of R500 000, and competitive bids should be advertised in at least the government Tender Bulletin and other appropriate media. In this case, it did not happen. Furthermore, the SCM policy of the office of the premier also reinforces this point by making it clear that a procurement of certain goods and services as required by the threshold values prescribed by the National Treasury must be done through a bid process.
Kakaza says OUTA wrote a letter to the office of the Premier of the Free State, Sisi Ntombela, in July 2019 to enquire whether a competitive bid process was followed in the procurement of the laptops. “The only form of response we received was an acknowledgement of receipt. We were told that our letter would be brought to the attention of the premier and the director general, Mr Kopung Ralinkontsane."
OUTA’s investigations found no indication that an open bidding process was held during the procurement process of the laptops. “We also did not find any advertisements nor any indication that the laptops were indeed received.”
Adv Fick says there is a possibility that the Magashule’s office contravened the provisions of section 38 of the PFMA. “They failed to apply an appropriate procurement system which is fair, equitable, transparent, competitive and cost effective. Therefore, the procurement of the laptops was probably irregular, fruitless and wasteful expenditure and as such the provisions of Section 86 of the PFMA are applicable.”
According to Section 86 of the PFMA, an accounting officer is guilty of an offence and liable on conviction to a fine or imprisonment for up to five years if he or she wilfully or in a grossly negligent way fails to comply with sections 38, 39 or 40 of the PFMA.
Fick says corruption is a scourge and has devastating consequences, especially on the poor. “Our economy suffers and the life of each South African is impacted. How many schools, roads and hospitals were not built because the funds were looted? The corrupt should be held to account, and soon!”
A soundclip with comment from Adv Stefanie Fick is here.