At least two former top City of Cape Town officials involved in authorising a R12-million contract for an IT company to manage the N2 Gateway project could be prosecuted for their "negligence" and "wasteful expenditure" - three years after leaving the city council.
The contracts were approved by former city manager Wallace Mgoqi and his chief financial officer Ike Nxedlana.
City manager Achmat Ebrahim on Thursday told Parliament's Standing Committee on Public Accounts (Scopa) that he had legal advice from Ashley Binns-Ward SC that the "entire N2 Gateway project was done in a statutory vacuum" and that there was evidence of financial negligence by Nxedlana.
Mgoqi, who signed off Cyberia's payments, also authorised the irregular expenditure of R9m for a consultant for the Jewellery City project that never got off the ground.
Ebrahim said the legal opinion, received this week, indicated the city could take action against the former senior employees.
The nature of this action still had to be decided and Ebrahim said the legal opinion would be referred to the council in the next two months.
The Scopa said those involved had to be brought to book.
"Someone has to go to jail," said Inkatha Freedom Party MP Narend Singh.
Democratic Alliance MP Mark Steele said the Cyberia contract, because of the irregularities, could be null and void.
"We are looking for the recovery (of money) or prosecution."
Scopa chair Themba Godi said: "Action does need to be taken against anyone who played a role in this fruitless expenditure."
But Nxedlana, now with the Richard's Bay Industrial Development Zone, said on Thursday the allegations made in Scopa were "a joke". "I have a track record of keeping my hands clean. I have never misspent a penny." He said he would consider taking legal action to clear his name if necessary.
Mgoqi could not be reached for comment and former mayor Nomaindia Mfeketo's cellphone was off.
In response to questions by the Scopa following the release of a special audit on the N2 Gateway project, Ebrahim explained that a technical evaluation team had ranked Cyberia sixth of 11 bidders.
This recommendation should have been sent to the external Goods, Services and Property Advisory Board (GSPAB), but instead it was sent to Mgoqi and Mfeketo for an "emergency decision".
Instead of signing off the recommendation, they referred it to the GSPAB. The board convened an unscheduled meeting on December 17, 2004 with only four of seven members present. The recommendation for Cyberia was then sent to the city's Supply Chain Management Committee.
An independent forensic audit commissioned by the city found the board acted outside of its mandate by performing its own evaluation.
Nxedlana approved the appointment of Cyberia that same day, without first establishing whether there was a business plan or funding. Ebrahim said Cyberia had expertise in information technology, not construction. He said officials asked Mgoqi to do an audit of the adjudication, but the city manager said he did not want to interfere with Nxedlana's decision.
The city conducted a forensic audit of Cyberia's contract in 2006 when the DA administration took over.
Those findings were given to the Auditor- General for investigation.
Richardson said a paper trail proved some officials had voiced concerns about payments to Cyberia, but were over-ruled by former chief operations officer Rushj Lehutso and Mgoqi.
Ebrahim said the senior officials implicated in the Cyberia tender irregularity had left the city council. Mthuthuzeli Swartz, who was head of the executive management when he was suspended because of involvement in the Jewellery City tender, was part of the GSPAB that recommended Cyberia.
He later resigned, as did Lehutso who, with Mgoqi, extended Cyberia's contract without a competitive procurement process.
The other member of the GSPAB was Bulumko Msengana, who is currently executive director of utility services.
Housing director-general Itumelang Kotsoane admitted the national Housing Department allocated funding for N2 Gateway without a proper plan.
City service delivery integration executive director Mike Marsden said officials on the N2 Gateway steering committee had told political leaders the target of building 22,000 houses in six months was unrealistic.
"We were told the construction of the 22 000 units was non-negotiable," Marsden said.
- Cape Times
The contracts were approved by former city manager Wallace Mgoqi and his chief financial officer Ike Nxedlana.
City manager Achmat Ebrahim on Thursday told Parliament's Standing Committee on Public Accounts (Scopa) that he had legal advice from Ashley Binns-Ward SC that the "entire N2 Gateway project was done in a statutory vacuum" and that there was evidence of financial negligence by Nxedlana.
Mgoqi, who signed off Cyberia's payments, also authorised the irregular expenditure of R9m for a consultant for the Jewellery City project that never got off the ground.
Ebrahim said the legal opinion, received this week, indicated the city could take action against the former senior employees.
The nature of this action still had to be decided and Ebrahim said the legal opinion would be referred to the council in the next two months.
The Scopa said those involved had to be brought to book.
"Someone has to go to jail," said Inkatha Freedom Party MP Narend Singh.
Democratic Alliance MP Mark Steele said the Cyberia contract, because of the irregularities, could be null and void.
"We are looking for the recovery (of money) or prosecution."
Scopa chair Themba Godi said: "Action does need to be taken against anyone who played a role in this fruitless expenditure."
But Nxedlana, now with the Richard's Bay Industrial Development Zone, said on Thursday the allegations made in Scopa were "a joke". "I have a track record of keeping my hands clean. I have never misspent a penny." He said he would consider taking legal action to clear his name if necessary.
Mgoqi could not be reached for comment and former mayor Nomaindia Mfeketo's cellphone was off.
In response to questions by the Scopa following the release of a special audit on the N2 Gateway project, Ebrahim explained that a technical evaluation team had ranked Cyberia sixth of 11 bidders.
This recommendation should have been sent to the external Goods, Services and Property Advisory Board (GSPAB), but instead it was sent to Mgoqi and Mfeketo for an "emergency decision".
Instead of signing off the recommendation, they referred it to the GSPAB. The board convened an unscheduled meeting on December 17, 2004 with only four of seven members present. The recommendation for Cyberia was then sent to the city's Supply Chain Management Committee.
An independent forensic audit commissioned by the city found the board acted outside of its mandate by performing its own evaluation.
Nxedlana approved the appointment of Cyberia that same day, without first establishing whether there was a business plan or funding. Ebrahim said Cyberia had expertise in information technology, not construction. He said officials asked Mgoqi to do an audit of the adjudication, but the city manager said he did not want to interfere with Nxedlana's decision.
The city conducted a forensic audit of Cyberia's contract in 2006 when the DA administration took over.
Those findings were given to the Auditor- General for investigation.
Richardson said a paper trail proved some officials had voiced concerns about payments to Cyberia, but were over-ruled by former chief operations officer Rushj Lehutso and Mgoqi.
Ebrahim said the senior officials implicated in the Cyberia tender irregularity had left the city council. Mthuthuzeli Swartz, who was head of the executive management when he was suspended because of involvement in the Jewellery City tender, was part of the GSPAB that recommended Cyberia.
He later resigned, as did Lehutso who, with Mgoqi, extended Cyberia's contract without a competitive procurement process.
The other member of the GSPAB was Bulumko Msengana, who is currently executive director of utility services.
Housing director-general Itumelang Kotsoane admitted the national Housing Department allocated funding for N2 Gateway without a proper plan.
City service delivery integration executive director Mike Marsden said officials on the N2 Gateway steering committee had told political leaders the target of building 22,000 houses in six months was unrealistic.
"We were told the construction of the 22 000 units was non-negotiable," Marsden said.
- Cape Times
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