The City of Cape Town is probing allegations that a firm, linked to President Jacob Zuma’s brother Michael, used BEE fronting in winning tenders worth R100 million.
|||The City of Cape Town is probing allegations that the Midway Two Group, linked to President Jacob Zuma’s brother Michael, used black economic empowerment fronting in winning tenders worth more than R100 million.
The company is alleged to have also used an unwitting domestic worker in the BEE fronting.
On Monday Cape Town deputy mayor and mayoral committee member for finance Ian Neilson confirmed the city would investigate the company in the light of the most recent allegations.
“We can confirm that the city is currently undertaking an investigation into allegations involving Midway Two Contractors, but we cannot comment any further in this regard. We cannot comment about any other investigations currently being undertaken by the city as doing so could be prejudicial to the outcome of same,” said Neilson.
The Sunday Independent reported that besides Zuma, other partners in Midway Two Group were ANC MP Richard Mdakane and businessman Prince Brayce Mthimkulu. There are also claims that the company listed a domestic worker as a director without her knowledge.
The city has confirmed that it used Midway contract workers as and when needed, paying the company more than R110.7m since 2005.
The most recent contract from the City of Cape Town was won in October last year.
On October 17, 2011 Midway and five other companies were awarded an R80m contract over three years for the “provision of a service provider for temporary employment”, according to the city’s supply chain records.
Neilson told the Sunday Independent that Midway received 51 percent HDI (historically disadvantaged individual) points in the tender process. Midway also won a R43m contract in June based on having achieved 51 percent HDI points.
Called for comment, Midway Two Group owner Daan Scholtz washed his hands of the company claiming that he had sold the firm to Zuma, Mthimkulu and Mdakane.
“The company belongs 100 percent to those three gentlemen, Zuma, Brayce (Mthimkulu) and Mdakane. I sold it all,” said Scholtz from his George office.
Mdakane confirmed that the company had in fact been sold to them last year.
“I’ve worked with him (Scholtz) for many years and he said to me he wants to retire and can he sell the company to me,” said Mdakane who has worked with Zuma since 1983. Mdakane said they were still paying Scholtz for the company which he said was valued at about R140m.
“We have to pay him. Everything is going well. (The fronting) allegation came from a woman. In 2011 we came in as directors. We’re not sure what happened before that,” said Mdakana.
On a separate fronting matter involving tender appeals, Neilson told the Cape Times earlier this month that fronting had not been the common reason for tender appeals.
He said only two appeals were under investigation by Forensic Services, both on allegations of fronting or misrepresentation of empowerment status. - Cape Times