Why did R70bn Chinese contracts bypass tender laws

Johannesburg – Finance minister Malusi Gigaba had to explain why Chinese parastatals were awarded R70bn worth of contracts without a public tender, the DA’s deputy spokesman on finance‚ Alf Lees said on Sunday.

City Press reported on Sunday that two mega-contracts between government and a Chinese parastatal are set to go ahead, despite neither qualifying for deviation from procurement laws. The department of water and sanitation and rail agency Passanger Rail Agency of South Africa seem set to hand two contracts, worth more than R70bn, to a Chinese parastatal with neither a public tender nor permission from Treasury to bypass tender laws, the paper said.

READ: China to score in R70bn SA projects

City Press obtained confidential documents that the two state entities were in funding negotiations with the Export-Import Bank of China (Exim Bank). But the documents also appear to show that Exim will only provide the finance on condition that the construction on both projects is done by another Chinese parastatal, the China Communications Construction Company.

The talks centre on the construction of the Moloto Rail Development Corridor, estimated to cost R57bn, and the Mzimvubu Water Project, estimated to cost taxpayers more than R16bn.

Competitive tender processes flouted?

Lees said the massive deal seems to be flouting all competitive tender processes.

He said Gigaba, had to give assurances to both Parliament and the South African public that these two mega-contracts would not go ahead without procurement laws being adhered to.

“Gigaba must urgently account for Treasury’s alleged planned deviation in the competitive tendering process,” Lees said.

He said the last thing that South Africa could afford right now was another corrupt multi-billion rand intergovernmental tender deal. He referenced the Western Cape High Court’s ruling in April that stated that the process leading to government signing agreements with Russia for a nuclear contract was “flawed, unconstitutional and not in line with sound decision making”.

“The DA will not allow an attempt at grand corruption of this sort to transpire again and we will use all available avenues to challenge the lack of due process in these deals,” he said, adding that Treasury must account to parliament on its involvement in these negotiations.

“It should provide a full disclosure on whether the legal tender process is being followed.”

Lees said the DA would pose these questions to Treasury when it appears before the Standing Committee on Finance on Wednesday next week on the matter.

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