Wells reveals inconsistencies in bid
March 11, 2009
By Wiseman Khuzwayo
Electro-Motive Sibanye (EMS) - a joint venture between Electro-Motive Diesel (EMD), based in Chicago, and Sibanye Trade & Services (STS), an empowerment company - tendered for a contract to supply 212 locomotives to Transnet for R6.5 billion before the conception of the joint venture.
The joint venture was subsequently selected by Transnet as the preferred bidder but after several meetings between executives of Transnet and those of EMD, the parastatal said it could not go ahead with the contract after all.
It alleged that there were material irregularities in the tender process that had culminated in EMS being nominated as the preferred bidder.
EMS has applied for an interdict to stop Transnet from issuing another tender to buy 100 locomotives because it believes this tender is replacing the one awarded to it by the parastatal 19 months ago.
Transnet, however, maintains that the tender for the 100 locomotives is separate and distinct from the first tender.
Chris Wells, Transnet's chief financial officer and acting chief executive, says in an affidavit that the reasons for ending the joint venture's status as the preferred bidder in the first tender were communicated formally to EMS in July 2008.
He says it came to Transnet's attention that a personal and business relationship existed between a Transnet manager, Percival Mosweu, who chaired the adjudication steering committee during the tender evaluation process, and Gustav Adams, a director of STS. Their wives were shareholders or directors in several inter-related commercial entities, Wells alleges.
Wells says there was a fundamental error relating to the empowerment scores allocated to the joint venture. If these errors were to have been rectified, he alleges, the joint venture's score would have been lower than that achieved by one of the opposing bidders.
He says in the affidavit that the investigation revealed that the joint venture or STS somehow came to be in possession of the first tender invitation two weeks before the relevant documents were issued by Transnet.
The company came into possession of the invitation contrary to a board resolution that it be excluded from the original equipment manufacturers invited to tender.
Wells says it is clear the tender was submitted by STS, which described itself as the "bidding company", and that it is equally clear the tender was not submitted by or on behalf of EMD or the joint venture.
"At the top of this document its issue date is reflected as September 5, 2006,'" says Wells. "This is at odds with the actual tender document issued by Transnet, which specifies the issue date as September 18, 2006, which was the date on which the first tender was actually issued by Transnet and also the date reflected on the version of the tender to which GE (General Electric) and Siemens replied.
"Accordingly, it appears that STS came to be in possession of the tender document 13 days before it was officially issued."
Wells' affidavit says the adjudication steering committee, which was chaired by Mosweu, met on February 9, 2007.
Item four of the agenda indicated that everybody present at the meeting "declared that they had no interest in or any relationship with any of the tenderers/suppliers/agents involved with the tenders being tabled today".
Wells says: "Mosweu and Adams had both been directors and shareholders of a company known as Finishing Touch 239 (FT). Upon resigning as director of FT in December 2006, Adams had transferred his shareholding in FT to the remaining directors, including Mosweu. Mosweu resigned as a director of FT on June 19, 2007.
"What this shows is that the transfer of the shareholding occurred during the adjudication process and prior to EMSJV (the joint venture) nomination as the preferred bidder."
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