Issuing of Pilgrim's Rest shop leases unlawful and improper - Thuli Madonsela

Public Protector finds that the tender process was characterised by gross irregularities and maladministration

Public Protector finds issuing of Pilgrim's Rest shop leases tenders unlawful and improper

Friday, 20 December 2013

Public Protector Adv. Thuli Madonsela on Thursday directed the head of the provincial Department of Public Works in Mpumalanga to cancel the awarding of the contracts for the new shop leases at the Pilgrims Rest Heritage Site (see here - PDF).

In an investigation report titled Poisoned Processes, the Public Protector directed the Head of the Department (HOD) to embark on a new procurement process for the conclusion of lease contracts for buildings at Pilgrim Rest that are currently without valid lease agreements.

"The HOD must," said the Public Protector, "ensure that the procurement process complies with the relevant laws and related prescripts as well as the standards of fairness, equitability, transparency, competitiveness and cost-effectiveness as required [by the Constitution]."

This follows an investigation into allegations of maladministration by the department in the awarding of tenders for shop leases in Pilgrim's Rest, a national heritage site and tourist attraction, for which government -through the department- is a custodian. 

Allegations included illegal awarding of tenders, improper issuing of eviction notices, and lack of responsiveness by the department to representations that were made prior to the issuing of eviction notices and threats to forced evictions.

Businesses rent the buildings on Pilgrim's Rest from the government from as little as R1700 a month and the government is responsible for the upkeep of the town, buildings and provision of basic services.

The businesses that rent premises are selected through a tender process, which considers the functionality of each biddings business and price, the ideal being to select the most functional in terms of competency and the highest bidder in terms of rental price offered.

The Public Protector found that the allegation of unlawfulness and impropriety with regard to the award of the tender for the leasing of business premises was substantiated.

"The process was characterised by gross irregularities and maladministration," the Public Protector said, adding that these included a Bid Specification Committee that did not have the requisite 60% quorum.

Other irregularities included a high score for price to a bidder whose bid was one of the lowest (The bid was adjudicated and scored on the understanding of its rent offer being R19 100 when it was in fact R10 416); due diligence not being carried out to assess functionality and sustainability of businesses considered for leases, among others.

The Public Protector further found that the business that got the leasing contract on account of the price of R19 100, did not qualify for the contract and that the conduct involved in awarding such a contract was accordingly unlawful, improper and constituted maladministration.

Upholding the allegation regarding the insufficiency of notices to businesses occupying the premises, the Public Protector found that the 30 day notice did not provide reasonable time for businesses that had been running for years to wind up their operations or make fair arrangements for employees.

In addition, she also upheld the allegation that the handling of the request to review the decision to grant a 30 day notice was improper, finding that the department did not apply its mind to the request and the fairness of its previous decision to serve eviction notices.

The Public Protector also made two findings of prejudice against the department. In the first one, she found that the businesses that legitimately qualified to be awarded the tenders and many of which were running sustainable businesses beneficial to the community were prejudiced by or suffered an injustice due to the department's maladministration with regard to the award of the new leasing tenders.

Also, the failure by the department to give proper notice and to review the notice period when requested to do so prejudiced business owners, the community and sustainability of Pilgrim's Rest as a national heritage site and tourist attraction.

The Public Protector called on the HOD to ensure that the new process is "heritage complaint" to minimise adverse effect on the maintenance and conservation of Pilgrim's Rest and with due regard to the interests of all stakeholders as envisaged in the law.

The HOD also had to ensure that the owners of current business that are not successful in the new bidding process are given adequate vacation notices which should not be less than three months.

Together with the MEC, the HOD must deal with the incidences of non-compliance with the PFMA, the department's supply chain management policy and the applicable prescripts as well as any unauthorised, irregular or wasteful and fruitless expenditure arising from such failures and non-compliance, the Public Protector said.

Effective and appropriate disciplinary steps also had to be taken against any official of the department who made or permitted fruitless and wasteful expenditure.

Statement issued by the Office of the Public Protector, December 20 2013

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