3 March 2025
An audit has found that a private security company submitted a fraudulent document in its tender bid. Illustration: Lisa Nelson.
A private security company managed to land a tender worth over R140-million, but a subsequent audit found several issues, including that it had submitted a fraudulent document in its bid.
Dephethogo, a private security company operating out of Klerksdorp in the North West province, signed a memorandum of agreement (MOA) on 25 August 2021, after winning a tender bid using a fake Unemployment Insurance Fund (UIF) certificate, an audit by Morar Incorporated found. The audit was done as a part of an independent investigation commissioned by the Department of Forestry, Fisheries, and the Environment (DFFE).
The investigation, completed in September 2023, discovered the fraudulent UIF certificate when the investigators contacted the Department of Labour suspecting that the document was fake. The department confirmed that the certificate was fraudulent.
Even after Dephethogo’s MOA was cancelled, it still submitted seven invoices totalling almost R4.3-million. All the invoices were paid. The invoices show that the security company was paid a total amount of R106-million by the department.
The tender was to supply the DFFE with security services for 65 sites over three years.
The full tender, worth R163-million, was awarded to three different bidders, with Dephethogo being awarded contracts worth R144-million, the lion’s share of the contract.
GroundUp sent several questions to Peter Mbelengwa, DFFE spokesperson, including why payments were still made to Dephethogo after their MOA was cancelled. Mbelengwa responded, “As there are pending labour and litigation proceedings, the department will not provide any response at this stage.”
Dephethogo were also sent questions via email regarding the investigation. GroundUp has yet to receive a response.
Following the investigation, the security company’s multimillion-rand contract ended up being cancelled by the department for several reasons, including the submission of the fake document.
The investigation by audit firm Morar was launched after the DFFE received a complaint of non-compliance related to Dephethogo’s service delivery, as well as possible irregular appointment processes involved in awarding the tender.
Even before the investigation had begun, Dephethogo had already received two warnings in 2022 from DFFE officials regarding allegations of non-compliance.
The allegation was explained in a 2023 letter notifying Dephethogo that their MOA had been terminated. The letter was addressed to Segolo Gaarekoe, the sole director of Dephethogo, and signed by Nomfundo Tshabalala, the director-general of the DFFE.
The main reasons for Dephethogo’s MOA cancellation were the discovery of the fake UIF certificate and the company’s failure to meet its service delivery obligations.
The cancellation letter was dated 29 December, at least two months after Morar recommended that the department should terminate Dephethogo’s MOA “with immediate effect”.
Morar’s investigation report found the members of the Bid Evaluation Committee (BEC), the internal committee in charge of evaluating all of the submitted bids, were the main culprits for the fake UIF certificate not being picked up. Morar’s report found that the committee should have picked up that the fraudulent UIF certificate submitted by Dephethogo since it was clear the document did not have a stamp from the Department of Labour.
However, Ubuntu Business Advisory and Consulting (UBAC), a company that was outsourced by the department to do quality assurance, also failed to pick up that Dephethogo’s UIF was fraudulent, according to a source with knowledge of the process who asked to remain anonymous. UBAC’s role was to check the legitimacy of all of the documents submitted by the bidders in the tender process and communicate the results to the BEC, the source said.
In the report, UBAC is only mentioned twice by name. In one of these mentions it’s noted that one of the consultants, Mandla Sibeko, was interviewed. However, Sibeko’s interview is never again directly mentioned in the report.
After this, the only other mention of quality assurance (QA) activities is in interviews with some BEC members, who reiterated that QA consultants checked all the documents, including the UIF certificate, and deemed them to be adequate.
UBAC’s compliance checklist for the tenders marked Dephethogo’s bid as “responsive” with no issues found. In the column where it states whether a bidder submitted a “valid certificate with UIF”, Dephethogos is marked as “yes”.
Responding to questions from GroundUp on its QA role for the bid, UBAC said: “After having considered the same, and after having had discussions with the DFFE, we were reminded of the non-disclosure agreement signed with the Department.” UBAC referred further questions to the department.
Morar also found that the BEC had scored Dephethogo too high in several areas of evaluation and that some members had changed their original scores. According to the report, if the scores were not changed, Dephethogo would not have reached a minimum score of 75% needed to pass evaluation.
When Morar questioned members of the BEC, several stated that they changed their scores when they were advised to do so by the supply chain management (SCM) technical advisors.
These SCM advisors are non-voting members who serve on the committee as experts and help guide the BEC members to make decisions on the bid evaluation process.
After an evaluation is completed by the bid evaluation committee, it must then recommend a preferred bidder to the Bid Adjudication Committee (BAC). The BAC’s role is to check the recommended bid and, if everything is in order, make a final award, according to the National Treasury’s Code Of Conduct for Bid Adjudication Committees.
Even though the BAC also would have seen the UIF certificate and the inflated scores when reviewing Dephethogo’s bid, the Morar report does not suggest any fault on this committee’s part for not picking up that it was a fake document.
Questions were emailed to Morar regarding the findings of the investigation and Dephethogo’s subsequent MOA cancellation. Morar declined to answer the questions relating to the investigation, saying it was not authorised to do so.
However, Morar did confirm that they conducted the investigation and that they were appointed to the department’s panel of forensic investigators through an open tender process in 2021.
Other issues with Dephethogo’s service delivery were also found in Morar’s investigation.
This included that Dephethogo only had one control room, in Klerksdorp North West, for all of its operations when it was stipulated in the bid requirements that there should be one within 100km of all guarded areas. Some of the bases of operation were over 1000km from the control room.
The department also needed 116 guards armed with firearms across its various sites and Dephethogo only had 27 firearm licences.
To make up for the firearm non-compliance, Dephethogo credited the department R130 per unarmed security guard for 17 of the 19 regions they were meant to protect, according to the report. “In other words, Dephethogo deployed security guards without firearms and thereafter discounted their fee in their invoices,” the report said.
The Morar report also compiled a list of the main complaints that were raised by department officials during Dephethogo’s tenure. These included instances such as guards being under the influence of alcohol, not attending work and, in some cases, letting crime go unchecked.
Morar recommended in its report that members of the BEC face disciplinary action for “negligent conduct during the evaluation of the bid”. The members of the BEC are currently facing internal disciplinary action.
But not all of the members of the BEC were recommended for disciplinary action as Emily Babedi and Georgina Serumula, the two SCM technical advisors assigned to the committee, had already left the department by the time the investigation began.
Morar also interviewed Vinesh Naidoo, director of security, vetting and travel for the DFFE, to ask why payments were still being made to Dephethogo for unsatisfactory work. Naidoo stated it was because he was being threatened by the service provider when he refused to pay.
When Depehethogo did have its payments withheld the guards went on strike. After engagements were held, Maria Lekota, Chief Director of SCM for the DFFE, instructed that payments should continue to be made minus the firearm rate.
Lekota also sat as one of the secretaries for the BAC for the bid, an administrative non-voting role. She was also the person who signed off on the appointment of Morar to provide forensic investigation services for the DFFE.
According to the report, Morar investigators tried to get a meeting with Lekota to ask her about the payment approvals but they were unsuccessful in their attempts.
The conclusions of the report state that Morar Incorporated found Lekota and Naidoo in breach of the Public Finance Management Act (PFMA) by continuing to pay Dephethogo as a service provider when it was incapable of executing its agreement with the department.
In the report, Naidoo was recommended for disciplinary action due to his role as chairperson of the BEC. Lekota was not mentioned as a candidate for disciplinary action.
