Nine arrested for alleged multimillion-rand tender fraud in Eastern Cape

Nine people have been arrested in connection with alleged yellow-fleet fraud, corruption, and money laundering worth millions, related to a lucrative tender awarded by the Alfred Nzo District Municipality (ANDM) in the Eastern Cape.

The Hawks’ Serious Corruption Investigation (SCI) and Serious Commercial Crime Investigation (SCCI), in collaboration with other law enforcement agencies, handcuffed a group aged between 43 and 73 years, including two corporate entities from various localities, including areas outside the province, on Wednesday.

Investigations

Investigations have revealed that R75 million was paid to the implicated business entity between 2015 and 2018.

The suspects are former ANDM senior officials, Avis employees, and a businessman.    

According to the Hawks, the investigation was initiated following information received from a whistle-blower, who alerted authorities about irregularities in the procurement processes relating to the appointment of a particular service provider at the municipality.

It is alleged that the appointed company did not possess the requisite yellow plant machinery and equipment at the time when the contract was awarded, instead relying on hired or leased assets from third-party service providers.

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Irregularities

Hawks spokesperson Warrant Officer Ndiphiwe Mhlakuvana further probing revealed that similar procurement irregularities were replicated across several municipalities, including ANDM, prompting a comprehensive investigation by the crime-fighting unit.

“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,” he said.

Agreements

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.

Under the agreement, fleet and machinery remained the property of Avis, with explicit provisions stating that ownership would never vest in the company. Therefore, the equipment would be returned upon termination of the 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.

Further investigations 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.

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Payments

Mhlakuvana said that during the period between January 2015 and April 2018, ANDM paid an estimated amount of approximately R75 million to the business in respect of purported HP 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.”

Collusion

Mhlakuvana said the investigation further 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.

He said the evidence pointed to collusion among certain municipal officials, service providers, and third-party beneficiaries, resulting in the fraudulent approval of invoices and the 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.

“As a result of evidence gathered, several individuals and corporate entities have been formally identified as suspects in relation to offences of fraud, corruption, and money laundering,” said Mhlakuvana.

Court

The suspects are scheduled to appear before the Maxesibeni Magistrate’s Court on 12 February 2026.

The Provincial Head of the Hawks, Major General Mboiki Obed Ngwenya, commended the investigating team for their meticulous work in ensuring that all perpetrators of corruption and economic crimes are brought to book.

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