Company linked to Ace Magashule scores big on Free State road projects

Did companies associated with the erstwhile Free State strongman have a stranglehold on provincial contracts? New data suggests some did.

Sedtrade, a company linked to former Free State premier Ace Magashule, scored nearly R1.47-billion worth of contracts out of R3.3-billion allocated to infrastructure projects by the provincial department of police, roads and transport.

The figure comes from an official spreadsheet amaBhungane obtained under the Promotion of Access to Information Act (PAIA), showing the value of completed and ongoing projects for the 2016/17 financial year, when Magashule was still premier.

Magashule was elected secretary general of the African National Congress in December 2017 and resigned as premier, though his scandal-plagued Free State legacy has dogged his role in the party.

Sedtrade obtained nine out of 36 provincial road contracts detailed (25%) – more than any other construction company – but, more importantly, they were mainly large contracts amounting to some 44.5% of the total project costs.

Sedtrade is a Vereeniging-based company owned by the wealthy Dockrat family, whose other businesses have also benefitted to the tune of millions rands from projects in the Free State.

The provincial police, roads and transport department has been under the media spotlight since 2017, after allegations emerged that tenders were used as cash cows for companies associated with Magashule or his close ally, the late head of department, Sandile Msibi.

Magashule claimed at Msibi’s funeral in January 2018 that Msibi had been “poisoned” and “ruthlessly murdered by heartless people”.

Sedtrade is linked to the Magashule family via a close corporation called Tsefay Hardware in which scions of the two families, Fayaaz Dockrat and Tshepiso Magashule, share directorships.

The Dockrats say Tsefay is dormant and has never traded.

They say their political affiliations are innocent – they are open that Sedtrade is a member of the ANC Progressive Business Forum and has on occasion paid for a table at an ANC gala. “What is wrong with that?” they ask.

They insist these affiliations have played no role at all in their tender successes.

Magashule did not respond, despite repeated efforts to seek his comment.

The Free State department of police, roads and transport told amaBhungane it was “not aware of any favouritism that might have stemmed from personal or political relations as alleged”.

“Due supply chain processes were followed to procure the services of the appointed service providers after they had initially been appointed as part of the panels of service providers. We also cannot express ourselves on the alleged political links and donations as we are unaware of such.”

There are two opposing versions on why Sedtrade dominated Free State infrastructure projects.

Sedtrade chief executive Zaid Dockrat said the company was awarded the contracts because the firm had the highest broad-based black economic empowerment credentials and highest level of construction grading competence.

“Tenders that were awarded were in compliance with the relevant legislation and regulations and were successful because of Sedtrade’s excellent history of performance with government departments,” he said in a written response to questions from amaBhungane.

However, senior departmental sources who cannot be named for fear of reprisal claim that Sedtrade and its subsidiary Sedgars, as well as other unrelated companies, were favoured to get contracts because of political connections with Magashule or Msibi.

Sedtrade has scoffed at these claims, dismissing any suggestion that Magashule could influence tender processes: “I suggest that you investigate and understand the internal workings of the tender committee… after which you will grasp the appreciation that former Premier Magashule would not have had any influence over them,” Dockrat told amaBhungane.

He said the allegations were part of a pattern of “baseless” efforts to defame Sedtrade.

But both the detailed disclosure by the Free State department and previous reporting on Sedtrade and Sedgars suggest that the allegations from departmental sources should not be dismissed out of hand.

Firstly, the probity of the department’s tender procedures is in doubt.

The auditor general’s report for the 2017/18 financial year found that the Free State department of police, roads and transport incurred R1.6-billion of irregular expenditure.

According to the AG, the main reason was “the incorrect application of the preferential procurement requirements in establishing a panel of contractors for road projects during 2014”.

This was the same panel from which the winning bidders of the contracts identified in the PAIA document were drawn.

The AG highlighted: “The department continued to use contractors from this panel in subsequent financial years, even for projects that did not fall within the scope of the original tender. The department could not provide a valid reason for the manner in which these awards were dealt with. When comparing the awards made to the original tender, it was evident that some suppliers on the panel were preferred.”

Then there are previous allegations about Magashule’s willingness to get personally involved – and Sedtrade’s willingness to grant favours to powerful politicians.

In November 2017 amaBhungane reported that businessman Abiel Mokotso claimed that Magashule pulled the strings behind a R9.5-million tender to provide soccer-related regalia for the 2010 World Cup.

Mokotso claimed that his company was used as a front for Sedgars at the instigation of Magashule – Mokotso’s company got the contract, but was expected to subcontract to Sedgars, which kept the lion’s share of the profits.

Dockrat denied this and said Mokotso simply approached his company for help: “It is our view that this was a normal transaction initiated by Mokotso, and there was nothing to suggest anything to the contrary,” Dockrat told amaBhungane at the time.

Also in 2017, Eyewitness News exposed how another Dockrat company, Sedgars Sports, had sponsored then-sports minister Fikile Mbalula’s Dubai holiday – see Mbaks’s Dubai jaunt below.

According to the Daily Maverick, there were indications of a similar relationship with Magashule. The article was written by Pieter-Louis Myburgh, author of Gangster State, an exposé of Magashule.

The article alleged the Dockrat family had a hand in facilitating the construction of a R6-million mansion for Magashule’s so-called “Bloemfontein wife”, Mosidi Lydia Motsemme.

AmaBhungane has no independent evidence for this claim.

The architect involved, Imran Mulla, now works for a Dockrat family company, but told Daily Maverick this had nothing to do with the Magashule house project, which had been commissioned via his previous employer.

“The Dockrat family and/or any of its associates have played no role whatsoever in the above project. In addition, I categorically state that there hasn’t been any financial and/or material contribution made by Sedtrade or any associated company, to the said project,” said Dockrat.

Meanwhile amaBhungane can also reveal that in 2017 two other Dockrat entities were awarded contracts in the police, road and transport department.

One company is called Atlehang Basadi, awarded a three-year grass cutting tender along Free State roads. Another entity, Fredock Trading, was awarded a three-year contract to provide personal and protective uniforms.

It is not clear how much these contracts are worth but sources claim they could run into millions.

Zaid Dockrat said that these companies tendered separately and independently. “You are drawing inferences where there are none to be drawn… The tenders were awarded validly,” he said.

But suspicions of a pattern of political preference are also raised when examining the other most successful bidders revealed by amaBhungane’s PAIA request.

The documents show that Down Touch Investments, owned by Johannes Cronje, scored four road contracts worth R295-million, the second highest number after Sedtrade.

Cronje was thrust into the media spotlight in 2016 when amaBhungane reported that the Free State businessman was implicated in the buying of a high tech bugging device called a Verint Engage PI2 Tactical location System.

The spying machine, also called known as a “grabber”, is an Israeli device that has the capability to simultaneously intercept and record hundreds of phone calls and SMSs.

As amaBhungane reported, Cronje was apparently sufficiently politically trusted (or indebted) to advance about R15-million to finance the acquisition of the grabber for the benefit of “national security” – though the true purpose appears to have been to obtain an advantage in the ANC’s factional battles.

The grabber was allegedly imported illegally and Cronje was arrested with three others in July 2015 – but, perhaps unsurprisingly, the case has gone nowhere.

According to the National Prosecuting Authority spokesperson Phindi Louw, the “accused intend to make representations to the National Director of Public Prosecutions and we await the outcome of these representations before proceeding with the case.”

When amaBhungane approached Cronje about his Free State road contracts he laughed off allegations of political connections.

He said, “I am not politically connected at all; I have never met with Magashule. In fact I think maybe Magashule doesn’t like me or maybe it’s a race thing; you can check my track record history order in the Free State.”

The third most successful bidder was Robs Investments, with three contracts totalling R115-million.

Robs belongs to Isaac “Blacky” Seoe, a former business partner of both Magashule and one of his sons.

Last year Seoe was found guilty on a charge of fraud in the high court in Bloemfontein, but he was acquitted on a corruption charge and sentenced to correctional supervision.

The case dated from 2001 and related to a corrupt tender secured from the Free State education department by a company linked to Seoe.

Several other successful bidders show signs of being subject to the kind of political influence that Myburgh has argued in Gangster State was almost a requirement for doing business with the Free State government under Magashule’s tenure.

For instance, consulting engineers Mol Pro won consulting contracts in 13 of the 36 road contracts.

The company says it won these contracts fair and square.

However there is at least some evidence that when the late Msibi was in charge, companies doing business with the police, roads and transport department were regarded as fair game for political shakedowns.

According to a 2016 complaint to the public protector, the DA submitted evidence that Msibi solicited R40 000 in donations from contracted service providers for a table at an ANC gala dinner held with President Jacob Zuma on 21 July 2016, two weeks before the August 2016 municipal elections.

DA leader in the Free State legislature Roy Jankielsohn attached to his complaint three sample letters from Msibi on departmental letterheads, including one to Mol Pro.

In a letter to Jankielsohn in February this year, the protector said: “Due to the untimely death of the HOD during 2017 the office of the Premier indicated that they cannot respond to allegations in the letter…

“However in line with the Public Protector reports referred to above, the late HOD’s conduct would suggest that prima facie he acted unlawfully, improperly and contrary to legislative prescripts. Please note that no remedial action can, however, be taken against him as he is deceased.”

Mol Pro group chair Tumi Moletsane told amaBhungane: “I cannot comment on what the HOD of the Department did or did not do regarding the use of departmental letterheads. I believe this matter is for the department, not service providers, to comment on. Lastly July 2016 is about three years back, I cannot recall if we did actually receive these letters as you mention nor our response at the time.”

Moletsane said they had always followed proper tender procedures and been appointed based on technical expertise, experience and short-list interviews.

Departmental spokesperson Hillary Mophethe told amaBhungane: “It should be noted that these contracts had been audited by the Auditor General of South Africa since the 2014/15 financial year, without any issues being raised.

“However, in the 2017/18 financial year, it emerged that the initial procurement processes were flawed due to the incorrect application of the preferential procurement requirements in establishing a panel of contractors for road projects. For that reason, even though opposing views still exist, the Department agreed to terminate all the affected projects and to commence the new process of procuring service providers…

“It should also be noted that expenditure to the tune of R1.6 billion had been incurred while the Department was unaware of the irregularities. However, value for money was still received as the irregular expenditure did not affect the quality, workmanship or pricing of the works, but rather brought the initial process of procurement and appointment of the panels into question.”


Mbaks’s Dubai jaunt

The Dockrats, it seems, may have a habit of lending politicians a helping hand. In October 2017, Eyewitness News revealed that Sedgars had paid at least R300 000 towards a late 2016 holiday in Dubai for Mbalula and his family.
Mbalula was sports minister at the time of this trip, while Sedgars was doing business with the South African Sports Confederation and Olympic Committee (Sascoc).

Dockrat told amaBhungane: “The Public Protector did not make a finding that Sedgars ‘bankrolled’ Minister Mbalula’s holiday to Dubai. It is true that Mr Mbalula borrowed money from Sedgars. Proof of the lending was submitted to the Public Protector. It is also true that Minister Mbalula repaid the loan. Proof of the repayment of the loan was also submitted to the PP.”

But this is misleading.

The Public Protector pointed out Mbalula only made repayments to Dockrat after the Eyewitness News story had broken and made this finding: “I do not accept that the arrangement between them constituted a loan agreement. Had the transaction not have been reported in the media, Mr Mbalula would not have repaid the funds… During the investigation, neither Mr Mbalula nor Mr Dockrat submitted proof showing that what they term a ‘loan agreement’ was entered into before he departed for Dubai.”

She asked the authorities to probe the funds used to pay for Mbalula’s trip. (Not all of the money came from Dockrat’s payments. Mbalula also had R150,000 in cash delivered to the travel agent.)

NPA head of communications Bulelwa Makeke said the case was still with the Hawks for further investigation.

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