Forensic audit into (BEE) fronting, uncovers a potential scandal involving at least five companies at uShaka.

durban - a forensic audit into black economic empowerment (bee) fronting, used to win contracts from the ethekwini municipality for durban's r700 million ushaka marine world, has uncovered a potential scandal involving at least five companies.

auditing firm gobodo was commissioned by the municipality to conduct an investigation to ensure that all the companies that had won contracts had met the city's procurement requirements and that empowerment firms were not fronting for larger groups.

mike sutcliffe, ethekwini's city manager, said yesterday that the process was continuing and that "anyone wanting to do business with the city would have to do it in a clear and transparent way".

"the initial investigation has resulted in certain actions being taken and a full report is expected to be ready by august," sutcliffe said.

city press yesterday reported that two employees of a joint venture established by durban tiling and ikhwezi tiling were, in fact, salaried employees who had no idea that they were directors and had not received any share of the profits.

neither had the employees had any input into the management of the contract. city press said the firm had already been paid r2.3 million on a r1.7 million tiling contract.

other companies fingered by the draft report are mvelo construction jv, storn/isichotho, comelec 80/20 electronics jv, infra projects /mswazandile construction jv and ukhozi construction.



the report recommends that some companies be prosecuted for fraud and corruption.

in another case involving the ethekwini municipality, information technology company ckb is suspected of fronting to win a r5 million contract to undertake the city's digital storage requirements.

other contracts secured by ckb on the strength of its black empowerment credentials have been with the national electricity regulator, the department of labour, the university of cape town and interpak.

the department of labour has undertaken to launch an investigation into the company.

sutcliffe said fronting was common throughout the country but ethekwini "would not tolerate" the practice.

according to i-net bridge, vuyo jack, chief executive of empowerdex, which rates companies on their black economic empowerment credentials, said at a recent empowerment conference that fronting should be dealt with once and for all to prevent it having a further adverse effect on the economy.

jack also recommended that empowerment companies stop depending on government tenders, which limited their scope of focus and market share.