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IPTS scandal: Port Elizabeth law firm offers to pay back R2 million

Aug 3, 2015
IPTS scandal: Port Elizabeth law firm offers to pay back R2 million

Nelson Mandela Bay legal firm, Le Roux Incorporated Attorneys, has reportedly offered to reimburse the city of R2 million, which it reportedly received for services rendered on the Nelson Mandela Bay's now-infamous Integrated Public Transport System (IPTS).

This comes amid reports that a large-scale investigation into how millions were milked out of the IPTS project was nearing completion.

According to The Herald newspaper, the firm has reportedly also distanced itself from Jarami Projects. Le Roux Inc helped process Jarami's invoices for 'work done' on the failed IPTS project.

Then Nelson Mandela Bay IPTS boss, Mhleli Tshamase, quit last month before he could be suspended by the municipality ahead of an internal disciplinary hearing for misconduct in the handling of the IPTS project.

Last week, a confidential report compiled by the Nelson Mandela Bay Ratepayers Association (NMBRA) and seen by the City Press claimed that the Nelson Mandela Bay Municipality wasted more than R500 million over 12 months on the stagnant IPTS.

According to the report, the city paid more than R500 million between July 2013 and July 2014 to numerous contractors; including engineers, security companies and attorneys for the IPTS project, which is still to take off.

Several of the IPTS buses have been standing idle at a depot next to a fruit and vegetable market in Motherwell and were only seen on the roads during the 2010 FIFA World Cup as part of a pilot project.

The report contains information leaked to the NMBRA by whistle-blowers within City Hall. It reportedly includes proof-of-payment receipts, names of companies involved in the IPTS project and how much they were paid, email exchanges between city officials, and reports and requests for deviation from procurement guidelines by those involved in executing the project.

Irregularities included in report

The report reportedly lists a R92 million payment to a security company for a closed-circuit surveillance system – but it not clear how this security system was linked to the IPTS project.

The MD of the Port Elizabeth-based company involved told the paper that they had done security work for the city for the past 10 years and wasn’t aware of how much they had been paid for work on the bus rapid transit system, but disputed it was R92 million.

“I would require more time to speak to our accountants to determine the exact amount that has been paid to us by the metro, but it’s not R92 million – that I can assure you,” he said.

An amount of R28 million, was paid to a Port Elizabeth-based law firm, presumably for legal fees relating to the project, although it was not clear what exactly the law firm had done.

R188 million was paid to a number of consulting companies and R250 million was paid to various entities for civil engineering and for the construction of bus lanes.

According to the report, a company that provided the IPTS buses received an additional R17 million. It is not clear what this aspect of the project was about.

Contacted for comment, the company asked City Press to send them questions, but was still to respond by the time of going to press.

Still a confidential report

NMBRA Chairperson, Kobus Gerber, said that the investigation was confidential and not in the public domain yet. He said the report was to be used for prosecuting and for recovering tax-payers monies from those, who may have milked the project.

Last week, he said that they would make sure that Tshamase – and anyone involved in what has become the Nelson Mandela Bay’s biggest scandal, face the charges of fraud and corruption.

Apparently, only the Minister of Cooperative Governance and Traditional Affairs, Pravin Gordhan; Derek Hanekom, previously head of ANC deployees in the Eastern Cape; the Treasury; the Hawks; and Public Protector, Thuli Madonsela, had seen the report.

Gordhan’s office confirmed to City Press that he indeed knew about the report.

A forensic report into the bus project is also expected to be completed soon.

Nelson Mandela Metro spokesperson, Roland Williams, told the paper that Tshamase and two other people had been served with a notice of suspension relating to the IPTS project, saying the city was still conducting further investigations.

Williams, however, said he was not aware of the report.