By Sonica Naudé-Steyn
The Hawks descended on EmaXesibeni (Mount Ayliff) last Wednesday and arrested nine people on charges relating to a R75 million yellow and white fleet lease agreement between Kwane Capital and the Alfred Nzo District Municipality, an alleged unlawful awarding and execution of a Municipal contract during the period of 2015 to 2018.
According to the National Prosecuting Authority, the nine accused include Kwane Capital director Mcebisi Rudolf Mlonzi; company employee Bambangazibini Tabata; former ANDM senior officials Xolani Masiza, Paul Mahlasela and Zuko Mani; former Avis and Barloworld employees Clive Else and Shawn Govender; and Monalitho Muba and Xola Bomela, as well as their business entity, Chumani Water Solutions.
The accused, aged between 43 and 73, were arrested by the Hawks’ Serious Corruption Investigation (SCI) and Serious Commercial Crime Investigation (SCCI) units, in collaboration with the Tactical Response Team (TRT) and the National Intervention Unit (NIU). The arrests follow investigations emanating from a referral by the Special Investigating Unit (SIU) into the contract entered into between the municipality and Kwane Capital from 2015 to 2018.
“Investigations revealed an alleged elaborate scheme in which Mlonzi misrepresented Kwane Capital as the legitimate owner of vehicles, plant machinery, and equipment when the lease contract was awarded. It is alleged that the company instead relied on hired or leased assets sourced from third-party service providers, namely Avis and Barloworld. It is further alleged that senior ANDM officials received gratifications to contravene provisions of the MFMA in furtherance of the unlawful contract. Former officials from Avis and Barloworld allegedly participated in the scheme to favour Kwane Capital and received payments for their roles,” said NPA spokesperson, Luxolo Tyali.
Associates of the former municipal manager and procurement manager, together with their companies, allegedly received payments which were laundered for the benefit of the executives.
Hawks spokesperson, Warrant Officer Ndiphiwe Mhlakuvana, confirmed the alleged charges and said that the investigation was initiated following information received from a whistle-blower.
“Further probing revealed that similar procurement irregularities were replicated across several Municipalities, including ANDM, prompting a comprehensive investigation by the Hawks. Investigations established that in December 2014, one of the suspects acting on behalf of his company, allegedly approached ANDM with a proposal to procure yellow plant machinery through a hire-purchase arrangement. This proposal was purportedly advanced without adherence to prescribed supply chain management processes and was allegedly facilitated through the improper application of Regulations under the Municipal Finance Management Act (MFMA), by exploiting an existing contract between the said company and another local Municipality,” said Mhlakuvana.
He added that according to the reports, the company had entered into a Full Maintenance Lease Agreement with Zeda Car Leasing (Pty) Ltd, trading as Avis Fleet Services, which were concluded on 13 June 2014.
“In terms of the agreement, fleet and machinery remained the property of Avis with explicit provisions stipulating that ownership would never vest in the company. Therefore, the equipment would be returned upon termination of lease agreement. In January 2015, ANDM ostensibly entered into a Hire-Purchase Agreement with the intention of acquiring ownership of the same fleet upon final payment. Probing revealed that the service provider allegedly misrepresented its ownership of the equipment, thereby creating a false impression that lawful transfer of ownership to the Municipality would occur,” Mhlakuvana continued.
It is alleged that in the period between January 2015 and April 2018, ANDM paid an estimated amount of approximately R75 million to the said business entity in respect of purported hire-purchase instalments.
“These payments were reportedly approved by Municipal officials and electronically transferred into the business accounts of the service provider. Subsequent financial analysis revealed that the funds were systematically channelled through various bank accounts belonging to individuals and entities, involving a bulk of cash withdrawals and layered transactions indicative of money-laundering activities and inconsistent with legitimate business operations,” said Mhlakuvana.
The investigation further allegedly uncovered significant irregularities within the procurement process, including the abuse of MFMA regulations to unlawfully favour the service provider, despite the entity failing to meet the prescribed qualifying criteria.
“Evidence points to collusion between certain Municipal officials, service providers, and third-party beneficiaries, resulting in the fraudulent approval of invoices and misappropriation of public funds. It is further alleged that identified officials within ANDM directly and indirectly benefited from the scheme, which is believed to have operated as a criminal syndicate entrenched within Municipal structures,” said Mhlakuvana.
The Special Investigating Unit has also welcomed the arrests and said that the Yellow fleet refers to six trucks, six sprinkler water tankers, and three jet vacuum tankers that were meant for water supply, sanitation and infrastructure support in the municipality.
According to the SIU, fraudulent licensing and vehicle examination were also uncovered, with roadworthy certificates issued despite GPS data showing the vehicles never attended testing stations.
“The municipality suffered an actual or potential financial loss of R60.7 million due to overcharging and excessive profit margins. The SIU has instituted a civil action in the Special Tribunal to review and set aside the contract and to recover losses suffered by the municipality.”
The nine accused briefly appeared before the EmaXesibeni (Mount Ayliff) Magistrates’ Court on charges of fraud, corruption, money laundering, and contravention of the Municipal Finance Management Act (MFMA) and were all granted bail of R10 000 each. The matter has been postponed to 30 April 2026 for enrolment in the Mthatha Specialised Commercial Crimes Court.
“The NPA and the Hawks remain committed to working collaboratively to ensure accountability and to secure convictions in matters involving corruption and financial misconduct that undermine service delivery and prejudice communities,” concluded Tyali.
- Members from the Hawks arresting nine suspects, including senior officials from the Alfred Nzo District Municipality, allegedly involved in fraud, corruption, money laundering, and contravention of the Municipal Finance Management Act.
