By Thapelo Molefe
Nine suspects, including former senior officials and two corporate entities, are expected to appear in the Maxesibeni Magistrate’s Court on Thursday following their arrest by the Hawks in connection with alleged fraud, corruption and money laundering linked to a R75 million yellow fleet contract at the Alfred Nzo District Municipality.
In a statement, the Directorate for Priority Crime Investigation said its Serious Corruption Investigation and Serious Commercial Crime Investigation units, supported by the Tactical Response Team and National Intervention Unit, executed the arrests on Wednesday.
The suspects, aged between 43 and 73, were apprehended in various localities, including areas outside the Eastern Cape.
Provincial Hawks spokesperson Warrant Officer Ndiphiwe Mhlakuvana said the case is related to “the alleged unlawful awarding and execution of a municipal contract by the Alfred Nzo District Municipality [from 2015 to 2018].”
He said the investigation was initiated after a whistleblower alerted authorities to irregularities in procurement processes relating to the appointment of a service provider.
“It is alleged that the appointed company did not possess the requisite yellow plant machinery and equipment at the time when the contract was awarded, and instead relied on hired or leased assets from third-party service providers,” Mhlakuvana said.
According to the Hawks, in December 2014 one of the suspects, acting on behalf of his company, approached the municipality with a proposal to procure yellow plant machinery through a hire purchase arrangement.
“This proposal was purportedly advanced without adherence to prescribed supply chain management processes and was allegedly facilitated through the improper application of regulations under the Municipal Finance Management Act,” Mhlakuvana said.
The Hawks further revealed that the company had entered into a full maintenance lease agreement with Zeda Car Leasing, trading as Avis Fleet Services, on 13 June 2014.
“In terms of the agreement, fleet and machinery remained the property of Avis with explicit provisions stipulating that ownership would never vest in the company,” the Hawks said.
Despite this, the municipality allegedly entered into a hire purchase agreement in January 2015 with the intention of acquiring ownership of the same fleet upon final payment.
“Probing revealed that the service provider allegedly misrepresented its ownership of the equipment, thereby creating a false impression that lawful transfer of ownership to the Municipality would occur,” Mhlakuvana said.
Between January 2015 and April 2018, the municipality reportedly paid an estimated R75 million to the business entity in respect of hire purchase instalments.
“Subsequent financial analysis revealed that the funds were systematically channelled through various bank accounts belonging to individuals and entities, involving a bulk of cash withdrawals and layered transactions indicative of money laundering activities and inconsistent with legitimate business operations,” Mhlakuvana said.
Eastern Cape Hawks Provincial Head Major General Mboiki Obed Ngwenya commended the investigating team for their “diligent and meticulous work in ensuring that all perpetrators of corruption and economic crimes are brought to book”.
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