Aurecon’s contract exposes Acsa to conflict of interest claims
Lulu Gwagwa,CEO of Lereko Investments and a board member of FirstRand, Massmart and Sun International, is also the chair of Aurecon SA
The award of a contract to Aurecon SA by Airports Company SA (Acsa) to help develop a cargo facility at OR Tambo International Airport has exposed the state-owned airports operator to allegations of a conflict of interest, following the brief tenure of Lulu Gwagwa as its non-executive chair.
Gwagwa, CEO of investment company Lereko Investments and a board member of FirstRand, Massmart and Sun International, is also the chair of Aurecon SA, an infrastructure management consultancy. It is part of the Aurecon global engineering consulting group and is responsible for all operations in Africa.
In a Sens announcement on Monday September 10, Acsa told noteholders that "Gwagwa will no longer be taking up the position of non-executive director and chair" of Acsa and that Deon Botha would continue acting as the board’s chair. Although the cabinet approved Gwagwa’s appointment in August, the nature and the reasons for its reversal last week were not provided. The transport department would say only that Gwagwa had declined the appointment, although this came weeks after her appointment had already been announced.
Gwagwa has not responded to Business Day’s e-mailed request for comment made last week. Aurecon referred all queries to Acsa.
Details of a R400m project, called Midfield Cargo Development, allegedly show that it was allocated to Aurecon SA in July 2018, as confirmed in a letter to an Aurecon official signed on July 26 by Mthuthuzeli Mboniswa, group manager of Acsa’s supply-chain management unit. The buyers for Acsa were identified in the letter, which was seen by Business Day, as Thami Mncube and Louis Kombora, and the project manager as Kenosi Mokolobate.
The letter could not be independently authenticated and Acsa has questioned its veracity, saying that the tender was cancelled in April and that it has not been re-published. The tender will be published only once the scope is finalised and investment approval obtained from the relevant capex committees and the board, Acsa said. Instead, Aurecon was appointed to provide scoping and professional services for development for the Midfield cargo terminal, and that the amount involved was R4.9m.
However, a source at Acsa insisted that the letter was authentic and that the amount of R400m was indeed accurate. He said also that the tender for the Midfield Cargo Development was not advertised as required under Treasury regulations. He expected this amount to grow far greater with the inclusion of procurement and construction.
An earlier scoping document described the work as "professional services for the design, procurement and supervision of the construction of Midfield cargo facilities at OR Tambo". This means that under standard engineering practice, Aurecon should also be appointed for the supervision phase to avoid detached liability, though Acsa denied following this practice.
Acsa has been mired in corporate governance issues for more than a year as a result of recommendations to institute disciplinary action against its CEO Bongani Maseko
No tender found
A search for tenders published by Acsa in the Treasury’s bulletin and in Acsa’s own bulletin showed a call for a "multi-disciplinary professional service for Midfield cargo" at OR Tambo made in April 2016 for which the validity had long expired. No other tender advertisements for the project could be found.
In response, Acsa said Aurecon was part of a panel of suppliers for professional services. "This panel of suppliers was selected through an open tender and approved by the national Bid Adjudicating Committee in February 2018," a spokesperson said. "This is in line with Acsa’s supply-chain management procedures."
Acsa has been mired in corporate governance issues for more than a year as a result of recommendations to institute disciplinary action against its CEO Bongani Maseko, whose tenure was extended for six months by transport minister Blade Nzimande in May.
The recommendations made in a number of separate forensic reports after investigations by professional services firms into charges of gross misconduct related to, among other accusations, the unlawful eviction of an Acsa tenant; the improper dismissal of a staff member; obstruction of an investigation instituted by a service provider; and failure to prevent irregular and wasteful expenditure.
In June, Nzimande confirmed to parliament that four Acsa board members had resigned over the past three years, which had left the company with only three board members and without an audit and risk committee. A full board was only appointed in August. This means the allocation made to Aurecon by Acsa in July was done without the benefit of a board-appointed audit and risk committee.
In July, Acsa suspended the evaluation of 78 retail store tender bids after the High Court in Johannesburg found that the airports operator had acted inconsistently with the constitution, which might have harmed car-hire company Imperial — which has operated airport car-hire outlets in SA for 32 years.
Earlier in 2018, a group of "concerned employees" wrote to President Cyril Ramaphosa in which it appealed for action against personnel named in the forensic reports by professional services firm Deloitte in 2015, among others.