ANC chiefs caught up in R200m tender trap

Arrests in scandal in which premier, finance MEC allegedly play key roles
Sep 5, 2010 12:00 AM | By MZILIKAZI wa AFRIKA and STEPHAN HOFSTATTER
Two senior ANC bosses have been drawn into a R200-million tender scandal in which the Hawks arrested eight people and raided their houses last week.

KwaZulu-Natal premier Zweli Mkhize
Photograph by: TEBOGO LETSIE
'These commissions (are) just another way of giving kickbacks, paying bribes to the officials'
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KwaZulu-Natal premier Dr Zweli Mkhize and ANC Northern Cape chairman John Block played key roles in multimillion-rand deals awarded to Cape Town firm Intaka.

Block is Northern Cape finance, economic development and tourism MEC. Mkhize is provincial ANC leader in KwaZulu-Natal.

The Hawks raided Block's house and offices in Kimberley in August last year, allegedly seizing incriminating documents. Block's spokesman, Derek Martin, this week confirmed the raid.

Court papers seen by the Sunday Times implicate Block, who served as acting Northern Cape premier twice this year, and Ithala bank CEO Sipho Shabalala in the massive corruption case that spans at least five South African provinces, Angola, Namibia, Democratic Republic of Congo, Nigeria and Pakistan.

Last Wednesday, the Asset Forfeiture Unit and police priority-crimes directorate the Hawks seized R200-million in assets in simultaneous dawn raids in Durban, Pietermaritzburg and Cape Town. They arrested five businessmen in Cape Town, including Uruguayan tycoon Gaston Savoi, and three senior government officials in KwaZulu-Natal.

Savoi's Ferrari, Maserati, Lear Jet and properties were attached.

Shabalala was suspended pending the outcome of the investigation.

The suspects are accused of colluding to award massive tenders without proper tender processes, inflating prices of goods and services rendered by up to seven times and creating shell firms for kickbacks for officials, court papers show.

The alleged fraud centres on water-purification and oxygen plants supplied by Gastoi firm Intaka for KwaZulu-Natal and Northern Cape health and local government departments. Block is Gastoi's partner in Intaka's Northern Cape branch.

Mkhize, as KwaZulu-Natal economic affairs MEC, wrote in July 2005 to then local government and traditional affairs MEC Mike Mabuyakhulu, asking him for R43.2-million from the poverty alleviation fund to buy water-purification plants from Intaka.

Intaka allegedly sold a plant valued at R420000 for R4.9-million to the provincial health department.

Mkhize wrote: "It is my view that it would be more than justified to fund the purchase of this equipment from the poverty alleviation fund, which is intended inter alia to fund exactly this type of social and economic related infrastructure."

Yesterday, Mkhize spokesman Ndabezinhle Sibiya said: "It is incorrect to suggest that Mkhize 'put pressure' to push the deal. Mkhize expected that the processes would be expedited. No instruction for illegal or criminal acts was given.

"Dr Mkhize therefore denies in the strongest terms suggestions that he was involved in the facilitation of a fraudulent deal, and categorically denies any wrongdoing on his part."

KwaZulu-Natal's health department spent R44-million on water-purification plants and the Northern Cape government R112-million on water-purification and oxygen plants Intaka supplied. Investigators believe up to R16-million was paid in bribes in KwaZulu-Natal and R13-million in the Northern Cape. Shabalala and Block were not arrested or charged , but properties and luxury vehicles owned by Shabalala were attached. Investigators said more arrests, including Shabalala's, were imminent.

It is not clear if Block faces arrest or if Mkhize will be questioned.

Justice minister Jeff Radebe said last week "more arrests would follow" in the Northern Cape.

Hawks investigator Petrus du Plooy said in an affidavit "Intaka was involved in similar and related criminal activities in the Northern Cape", involving its health department. Intaka sold the department 11 plants for R47-million "at similarly excessive unit prices. Intaka was entitled only to charge R7.975-million."

Letters and agreements between Intaka, Savoi and Northern Cape and KwaZulu-Natal health officials were seized, and also invoices for "several payments made by Intaka to and on behalf of several officials and/or their related business entities".

In an affidavit, lead Hawks investigator Clarence Jones said: "These commissions (are) just another way of giving kickbacks, paying bribes to the officials."

mzilikazi@sundaytimes.co.za hofstatters@sundaytimes.co.za

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Comments by Sonny

Take away corruption and the ANC will cease to exist!