Court orders SABC contracted security firm to pay back profits from dodgy R185m tender

AN unlawful R185-million SABC security tender has come back to bite the Tshwane-based company to which it was awarded as well as former members of the public broadcaster’s interim board who signed it off writes Solethu Mpondo
The troubled SABC’s decision to award the five-year deal worth about R185.5-m to guard its Auckland Park head office and TV outside broadcasts to Mafoko Security Patrols in June 2017, was this week reviewed and set aside by South Gauteng High Court Judge Dario Dosio.
Mafoko, which is based in the capital city, charged R2.3-m than Mjayeli Security, which was recommended by the bid evaluation committee (BEC), as the highest bidder.
In addition, Judge Dosio ordered Mafoko to file in court within 30 days of his ruling an audited statement of the expenses incurred in the performance of its obligations in terms of the contract, which ended in July last year, the income received and the net profit it earned.
According to the order, the SABC must within 60 days after Mafoko has filed its audited statement of expenses incurred obtain an independent audited verification with the court, which will thereafter determine the amount of profits to be paid back by the company (Mafoko) to the SABC or the Special Investigating Unit (SIU), which probed the deal after being authorised by President Cyril Ramaphosa in July 2018.
This was after the SIU had argued in court that notwithstanding the reviewing and setting aside of the awarding of the tender, Mafoko should not be entitled to keep the profits earned from an unlawful contract.
The costly drama started when Mjayeli, which has offices in Victory Park, Greenside in Johannesburg but operates in six of the country’s nine provinces, was overlooked despite also being recommended to be awarded the contract by another structure in the procurement process, the bid adjudication committee (BAC).
Additionally, the SABC’s executive committee (Exco) recommended Mjayeli at a contract price of R183.2-m but the final decision on which company to appoint lay with the public broadcaster’s interim board, which was then made up of Khanyisile Kweyama, Mathatha Tsedu, Febe Potgieter-Gqubule and John Matisson.
Instead, at a meeting of the interim board’s finance, investment, procurement and technology committee, board chairperson at the time, Kweyama, expressed several concerns about the BEC, BAC and Exco’s decisions to recommend Mjayeli. Kweyama’s concerns centred on the fact that Mafoko had a higher Broad-Based Black Economic Empowerment (B-BBEE) status and was already providing security to the SABC while Mjayeli’s B-BBEE status was lower.
Despite warning from the National Treasury not to overlook the highest bidder, the interim board proceeded to award the contract to Mafoko.
The SIU’s subsequent probe found that the interim board made irrelevant considerations when it awarded the tender to Mafoko and that it also cost more.
Another SIU finding was that the then interim board – Kweyama, Tsedu, Potgieter-Gqubule and Matisson – irregularly and wrongfully awarded the contract to the second highest bidder (Mafoko) and justified its decision using B-BBEE, which had already been evaluated.
”Even though they may have doubts about awarding the contract to the highest bidder, they were supposed to consider launching an investigation or cancel the tender or remitting it for reconsideration and they have failed to discharge their fiduciary duties in that respect and failed to act in the best interests of the SABC,” the SIU found in its probe.
Unhappy with the SIU’s findings, Kweyama, Tsedu, Potgieter-Gqubule and Matisson launched their own high court application to clear their names and argued that the unit acted ultra vires (beyond the powers) by investigating the fiduciary duties of the interim board members and that even if the SIU had the requisite authority it failed to take into account relevant considerations.
They maintained that the report was irrational, that the investigation’s procedural flaws rendered the report reviewable, there was no audi alteram partem (hear the other side) before adverse findings were made against them as well as that the probe was unconstitutional and contravened the principle of legality.
However, Judge Dosio dismissed their application this week but made no order on the costs as he found that former interim board members were not malicious in launching their review application.
SIU head Advocate Andy Mothibi described the two judgments as important in relation to consequence management and accountability of an accounting authority (board of directors).
“The court’s reference to the King Code on Good Governance underscores the requirements, as also provided for in the Public Finance Management Act, for boards of directors to always act in the interest of state institutions,” he said.
Mothibi added that the SIU has at all times emphasized that all those involved in causing losses to state institutions should be held to account irrespective of their level including members of the accounting authority. He said private sector parties and companies involved should also be held to account and face consequences. Earlier this year unions organising in the private security guard sector marched to the offices of Mafoko in Hatfield, Pretoria to protest against the company’s alleged failure to comply with a 2021  National Bargaining Council for the Private Security Sector (NBCPSS) approved a health insurance benefits scheme. – news@mukurukuru.co.za