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Eskom tops in bending tender rules

Publish date: 12 October 2017
Issue Number: 583
Diary: Legalbrief Forensic
Category: Governance

Questions have been raised about governance at Eskom as MPs were told yesterday (Wednesday) that the power utility tops the list of government departments and agencies seeking permission to deviate from normal procurement procedure. A BusinessLIVE report says Eskom’s requests amounted to R31.3bn of the total R37bn worth of deviations requested in 2016/17. Acting chief procurement officer Willie Mathebula told members of Parliament’s Standing Committee on Finance the office of the chief procurement officer received 800 requests for deviations from state entities in 2016/17. However, he pleaded ignorance on whether his office had a framework to guide it in declining variation requests. Mathebula said his office had reviewed 263 contracts valued at more than R10m, with 260 pertaining to the Passenger Rail Agency SA and the rest from Transnet and the SABC. The Eskom contract review related to verification of the utility’s compliance with the supply chain management framework when appointing coal suppliers. Framework compliance was the subject of investigation in the other reviews as well. Mathebula said Eskom accounted for the lion’s share of the value of contracts, worth a total of R31.3bn, for which deviations were sought. This was leagues ahead of the SARS, which had the second-highest quantum with R1.2bn. The Treasury, under which the office of the chief procurement officer falls, approved 450 of the 793 applications received in the financial year for permission to deviate from procurement guidelines. The procurement office also approved 398 of the 756 applications to either expand or vary the scope of a transaction from previous cost specifications.

Full BusinessLIVE report

Mathebula ‘categorically denied’ reports alleging that he had met with the Finance Ministry to discuss the restructuring of his office and the revision of his powers, notes a Fin24 report. It says DA spokesperson David Maynier asked him to elaborate on an alleged meeting between him, Finance Minister Malusi Gigaba and Deputy Finance Minister Sfiso Buthelezi. City Press reported on Sunday that Mathebula had met with Gigaba and Buthelezi to discuss the restructuring of his office and its functions. If the Finance Ministry’s proposed intervention goes ahead, it could see the chief procurement officer's powers significantly diminished. This could mean that state departments will no longer need permission from National Treasury to deviate from contracts, as long as the head of a specific entity believes the deviation is warranted. ‘I dispute the content (of the news report) with the contempt it deserves,’ Mathebula reportedly said.

Full Fin24 report