Labour services firm probed for fronting


The Nelson Mandela Metro (NMMM) has laid a charge of fraud against a Uitenhage man for allegedly using illiterate black men as a front for his employment companies.

It is alleged that the man, who is yet to be arrested, used the two men's names to acquire tenders worth R2.9 million for two companies between 1 August 2003 and 16 February 2005.

The man has claimed in tender documents that Messrs Mfusi Oliphant and Kholisi Paulos were the rightful owners of Mfusi Services and Phakama Labour Hiring Services respectively.

The companies acted as the metro's employment agency.

The metro became suspicious about the suggested Black Economic Empowerment (BEE) composition of the companies in November 2004 and immediately commissioned its Internal Audit Services Unit to investigate, said a statement from the metro.

It said the internal audit services unit "worked tirelessly" to obtain the necessary evidence and forwarded it to the Procurement Unit late last week, resulting in the fraud case being laid with the Humewood Police Station yesterday.

The metro said it became apparent that the two men whose names were used had no knowledge of the crime.

"One of the gentlemen even declared in an affidavit that this is the case. After numerous attempts failed to contact [the other one], family members who were tracked by the metro told the institution that their relative could in no way be the owner of a company since he could not read or write," explained the Mandela metro.

After laying the charge, the metro's procurement manager Vuyani Limba immediately wrote letters to the Human Resources Business Unit and the Municipal Manager Mzimasi Mangcotywa, recommending that the contract be terminated with immediate effect.

"Fronting is a national cancer in the public sector and the NMMM wants to be instrumental in rooting it out in our area," Mr Limba said in the statement.

Meanwhile, the Mandela metro has committed itself to BEE and warned that all those that wanted to illegally claim BEE status "will be dealt with severely".

"We want to send a clear message of zero tolerance against fronting and appeal to the public to come forward with information of businesses involved in such practices," said the metro.