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Avis under scrutiny over illicit R1.2bn contract


Cape Town - Avis Fleet, a subsidiary of JSE-listed Barloworld Group is accused of using dirty tricks in an effort to usurp a R1.2billion Fleet Management contract from a smaller black-owned competitor appointed by the City of Joburg.

Avis had two contracts between 2011 to 2016, one valued at more than R700million and the other at R1.2bn yet the latter was extended into 2017 even though it had lapsed.

File picture: Reuters/Siphiwe Sibeko

A leaked Auditor-General’s (AG) report alleges that Avis obtained the contracts unlawfully.

Independent Media has established that some former employees at Avis, who secured jobs in the city council’s Fleet Management Department, allegedly ensured Avis secured the tender although they did not meet the minimum requirements on several occasions as stipulated by the AG report.

AfriRent, which won the R1.2bn contract under the city council’s Regulation 32 was appointed when the AG report made its findings.

Avis is then alleged to have tried to muscle their way back into the lucrative contract by proposing a joint venture with AfriRent.

When AfriRent refused, all hell broke lose, according to Senzo Tsabedze, the chief executive of AfriRent.

Avis tried to sell their obsolete fleet to AfriRent for a fee of R500m and when they refused, AfriRent became their target, claimed Tabedze.

Absa Bank gave AfriRent a guarantee of R1bn to assist with financing the fleet management service but pulled out after media linked AfriRent to Julius Malema and the EFF.

The AG report suggests one of the contracts between Avis and the City of Joburg did not comply with the Municipal Finance Management Act.

The report found the decision to award the R1.2bn contract on a non-firm price agreement with Avis amounted to irregular expenditure and an unfair bidding process where other bidders were disqualified.

“The decision by the city to award to a supplier quoting a non-firm price is thus not economical and it may lead to overspending of the allocated budget resulting in possible unauthorised expenditure,” said the AG’s report.

The AG’s report found other companies were disqualified for not submitting a 30% transformation plan but Avis, who did not submit a plan were not disqualified.

The report eventually found that the contract 533/17 between the City of Joburg and Avis was unlawful.

Albert Geldenhuys, the chief executive of Avis Fleet confirmed that the company was involved in the contracts awarded by the City of Joburg.

However, he said all Avis submissions were above board. The City of Joburg’s Nthatisi Modingoane confirmed a probity report advised that the bidding process had some material defects arising from officials who had allegedly manipulated the process in favour of specific bidders.

He said the expiry of the contract at the end of October, meant that services would be negatively impacted.

“This would have seen its entire public safety, law enforcement, emergency services and front-line services grind to an effective halt on November 1.

“In terms of the Municipal Finance Management Act, the city explored both Regulation 36 as well as Regulation 32. In line with the principles of clean and transparent governance, the only option available is Regulation 32 which allows the accounting officer to procure goods or services for the municipality under a contract secured by another organ of the state,” he said.



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