This week the Zondo Commission of Inquiry into state capture will focus on the Free State asbestos project.
Evidence leader Advocate Paul Pretorius informed the commission that since former Free State economic development MEC Mxolisi Dukwana gave evidence in August last year, the commission has conducted an extensive investigation, and the “fruits of that investigation are now contained in the bundles” to be presented to the commission.
The evidence bundles contain affidavits from various witnesses, the current Public Protector’s report which makes several findings, court papers, transcripts of evidence, documents, plus a comprehensive signed investigators’ report.
The overall picture
Pretorius explained that asbestos was used extensively in housing and industry, but particularly in low-cost housing.
Some 36 000 low-cost homes in the Free State contain asbestos.
The National Department of Human Settlements appointed a panel of eight service providers in Gauteng to assess the prevalence, existence and extent of asbestos in low-cost housing, and to eradicate the asbestos. One of the companies appointed was Blackhead Consulting.
“There is no evidence of any competitive bidding that took place in the appointment of either panel… there was no tender process… there was no contract. The processes were entirely flawed,” said Pretorius.
Blackhead charged R650 per unit to assess the prevalence of asbestos. The Auditor-General declared that this procurement process was irregular.
The evidence of Blackhead CEO Edwin Sodi shows that “the profits were massive”. Blackhead was paid “in the region of R230 million” and the profit was in the “region of R100 million….the profits of all the others who participated in similar projects ranged between 50% and 60%.”
Sodi met the late Ignatius Mpambani (owner of Diamond Hill), who was well-connected and influential, at a function in Welkom. Sodi recognised a business opportunity. An unsolicited bid was made to the Free State department, resulting in a contract with a joint venture: Blackhead-Diamond Hill JV.
According to Sodi, Mpambani “had no knowledge, experience or capacity to deal with asbestos eradication. He contributed nothing to the contract at all.” All Mpambani did was “unlock opportunities through officials in the Free State.” For this, Mpambani was to receive 50% of the project price. The unlocking of opportunities required government officials to be paid off. Pretorius referred to a schedule in the commission’s possession that reflects the initials of provincial officials next to the payment allocated.
Mpambani was gunned down in Sandton in 2017.
The JV contract had a price of R850 per unit, contained different terms and conditions, and no transparent competitive bidding process had taken place. In the eyes of Pretorius, the participation contract was a “clumsy sham to cloak the contract between the Free State department and the JV with a veneer of legality.”
The service level agreement (SLA) entered into with the Free State department – according to Pretorius, “was deficient, it contained no information regarding to overall price per unit…it had a number of provisions regarding payment (which were ignored in the execution of the contract)…there was no budget for the project.” The SLA was also in contravention of the department’s own supply chain management policy.
The initial cost of the project was R127 million. The SLA provided that the JV would pay for the project. This was clearly not the intention. What it meant was that the JV would continue to ‘unlock’ the process by making sure that there was budget to pay. This would be achieved by a ‘rearrangement of priorities’ and a rearrangement of ‘budgetary considerations’.
The regulations laid down by National Treasury in regard to an unsolicited bid require that an unsolicited bid is transparent, and must therefore be published. However, this process was secretive. No due diligence was carried out on the JV. Further payment to the JV was suspended when the current Public Protector produced a report stating that the SLA was flawed and unlawful.
The asbestos audits
Jacobus Roets, a registered asbestos expert, gave his opinion to the commission on five examples of assessments and one report from the Free State asbestos project. In his opinion these documents do not contain the necessary information to enable a project for the effective removal and eradication of the asbestos (type of asbestos, other asbestos containing building materials, quantity, risk, GPS location). The assessments would have to be redone.
Legislation requires an asbestos report that is drafted after an assessment and identification of asbestos to be properly recorded and kept for 40 years.
The Free State asbestos project squandered hundreds of millions of rands, but the asbestos is still in the roofs, and the occupants of the homes are exposed to the health risks.
Blue asbestos is the most hazardous asbestos, and was extensively used in the Northern Cape.
The state has a constitutional duty to care for the safety and well-being of its citizens, and to provide adequate housing. It has failed to do so.
Stricter stance for commission
As an aside, the Zondo Commission is entering into a new phase. Implicated persons will now have to answer to all allegations, and they will no longer be able to hide behind their false sense of self-importance, political connections, and entitlement.
Up against them is a mountain of evidence gathered by the commission’s investigators after painstaking inquiry.
Judge Raymond Zondo, seemingly considerate and affable, is adopting a tougher stance and will no longer be putting up with witnesses’ excuses of not having had time to prepare their defence, or of how important and busy they are in their day jobs.
He recently expressed the view “that it is about time that everyone must be issued with summons, compelling them to appear before the commission, rather than just issuing notices.”