Transnet has awarded an R2 billion security contract to Fidelity Services Group, a company currently being investigated for possible tender fraud/irregularity at another state-owned entity, Eskom.
Transnet, a rail, port, and pipeline company has confirmed to ‘The Star’ that Fidelity Service Group was a successful bidder for the North East Corridor.
The security firm will provide security services valued at a staggering R2bn.
“All due procurement processes were followed for the award of the contract. Transnet can confirm that Fidelity responded to the open tender and was the successful bidder for the North East Corridor,” said Transnet.
This comes as Fidelity Group is undergoing an investigation for alleged tender fraud and irregularity at Eskom.
In 2022, Eskom awarded the company a R500 million security tender to look after the power utility’s infrastructure for three months.
The multimillion-rand tender was awarded without a competitive bidding process. That decision was backed by a bogus security report compiled by former police chief George Fivaz at the request of former CEO Andre de Ruyter.
When asked about the murky deal, Eskom responded that it was reviewing the tender.
“We are working with the relevant authorities to investigate the contract to ensure that the matter comes to finality without further delay.
“The emergency process was closed; hence, no payments are being affected,” said Eskom spokesperson Daphne Mokoena in a written response to ‘The Star’.
One of those authorities is The Special Investigating Unit (SIU), which has also confirmed that the matter is being investigated.
Despite the ongoing investigation, Transnet decided to grant the service provider in question a tender. In its response to the question of why it awarded a company clouded with controversy such a massive contract, Transnet said the company has not been found guilty of any wrongdoing.
“Transnet conducted due diligence through probity checks before the award of the contract, and no judgments were found relating to fraud and corruption against Fidelity, adding that it was not listed in the National Treasury’s database of restricted suppliers,” said Transnet.
The state-owned entity said by law, it can only exclude a supplier from its tender processes when they have been restricted from doing business with the state on the National Treasury Database of Restricted Suppliers and/or when they have been found guilty of a specific crime by a competent court of law.
However, it said that if the service provider is found wanting in the ongoing probe, it will take action based on the recommendations of the relevant state organ.
“Transnet will consider any action when advised and engaged by the relevant state institution (SIU, Eskom, National Treasury, or any other relevant organ of state) upon completion of the aforementioned institution’s requisite investigations and/or processes,” said the entity.
The state-owned company has been embroiled in legal tussles over security-related contracts. In April this year, Amahlo Joint Venture took Transnet to court over the termination of a R1.1bn contract.
The five-year contract was terminated over poor performance, with the Gauteng High Court, Johannesburg, siding with Transnet in that application.
Meanwhile, the SIU is also investigating the security upgrades at Durban, Richards Bay and Saldanha Bay ports. The cost of those upgrades is estimated at close to R300m.
The African Security Congress (ASC) has expressed concern over what has been described as negligent and questionable procurement practices from SOEs.
“In July 2022, Eskom granted Fidelity a security contract worth half a billion under dodgy circumstances. Now we are learning that Transnet has procured services from the same service provider implicated in possible irregularities,” said ASC president Tebogo Motloung.
Motloung said they find “the unjustifiable preference of Fidelity Service Group over tens of thousands of other service providers suspicious”.
The Star