Daily Maverick

CoGTA in the Works: Department’s irregularity-riddled tender awards exposed

A general view of a street in the township Khayelitsha, South Africa 07 May 2014. EPA/NIC BOTHMA

An urgent application that came before the Pretoria High Court in April reveals that the Department of Co-operative Governance and Traditional Affairs may be fiddling with the most important public employment programme in the country. Given that the tenders for the 2018-2021 Community Work Programme are reported to be valued at upwards of R4-billion, this, at best, is cause for concern. At worst, it is indicative of a fraud that compares in size, scope and societal damage to the heyday of State Capture.

In 2008, largely unnoticed by the press and the country at large, a government-funded social programme designed to provide a safety net to the poor and unemployed was launched in South Africa. Unlike the social grant, it did not take the form of a simple monthly cheque – instead, it provided the jobless and the destitute with work that was essential to the common good; such tasks as maintaining feeder roads, repairing dongas, protecting springs, fixing classrooms, cultivating food gardens, planting trees and caring for orphans.

Known as the Community Work Programme, or CWP, the idea was that the payment of wages would be through a cashless system, with the government depositing funds directly into participants’ bank accounts, and non-profit “implementing agents” collaborating with communities to manage the process.

By January 2018, although it remained far from the limelight, the CWP had become the most successful initiative of its kind in the country, counting in its wide embrace thousands of projects and hundreds of thousands of workers, a truly progressive endeavour that had silently strengthened the social fabric of South Africa.

Then, in April 2018, an urgent interdict was lodged in the North Gauteng High Court that, to a nation still reeling from State Capture, would have seemed all too familiar. Seriti Institute, a non-profit organisation that had formed a core part of the CWP pilot programme and had acted as an implementing agent since the CWP’s inception, was taking on the Department of Co-operative Governance and Traditional Affairs (CoGTA) in the persons of the minister, the director-general and the acting director-general, as well as four non-profit companies to whom the new CWP contracts had apparently been granted.

In its application for an urgent interdict, Seriti explained to the court how its response to CoGTA’s requests for proposals for the 2018-2021 contracts had been met with a curious silence.

[The applicant] has had no substantive response to its requests for information regarding the CWP procurement process despite numerous requests,” the papers stated.

A few pages later, the application pointed out that Seriti had since April 2014 been managing and implementing the CWP at 48 sites in Gauteng, Limpopo, KwaZulu-Natal, Mpumalanga, North West and Free State, a contract involving more than 60,000 participants. According to CoGTA’s 2017/2018 financial year budget, the wage and non-wage costs of these sites alone (for just one year) were R751.2-million.

So which companies allegedly got the contracts? There were 11 of them, with four – Beulah Africa, NPO Iketsetse, Out the Box and Icembe Foundation – displaying zero previous experience in the management of such projects.

The fourth respondent in the court application was listed as Insika Foundation NPC, a company that – pending a review process – has reportedly been awarded the CWP sites for the Western Cape and KwaZulu-Natal. Insika’s chairperson, according to Bloomberg, is Ziphozethu “Gabsie” Mathenjwa, who also serves as non-executive director of the Umgeni Water Board. An internet search reveals that Mathenjwa’s name came up in an exposé published by Corruption Watch and Daily Maverick in 2013, in which Mvula Trust, where Mathenjwa then served as a trustee, was accused of “fronting” in a R30-million tender it won for a CWP job creation project.

The rules of the tender made it clear that only a non-profit organisation could qualify,” Corruption Watch explained, “which put Mvula Trust in the running. There are conflicting accounts of how the trust became involved, but what is known is that another company, Ubuntu Sima, was aware of the tender and agreed to be a partner. Ubuntu Sima was a for-profit company and one of its directors, Gabsie Mathenjwa, was – and still is – a trustee of Mvula Trust.”

On 22 August 2013, at a special meeting held at the Sedibeng Building of the Department of Water Affairs, the Mvula Trust board resolved to remove Mathenjwa as a member. A copy of the minutes in Daily Maverick’s possession states:

A considerable debate ensued around what else the board can do to make [Mathenjwa] realise that she cannot have it both ways; namely, continue to serve on the board while being the owner of a company that brought the name of the Mvula Trust into serious disrepute. It was also indicated that she is busy forming a breakaway board with some unregistered trustees who have taken to her story of being unfairly treated.”

A subsequent special meeting of the Mvula Trust board held on 21 October 2013 dealt with a litigation report prepared by Bowman Gilfillan Attorneys, who were acting on behalf of the Trust against Ubuntu Sima. In the report, it was recorded that a “notice of default” had been sent to Mathenjwa “outlining the failure of Ubuntu Sima to account to [Mvula Trust] by provision of reports and updates on the progress of the CWP, including accounting on how money was spent by Ubuntu Sima especially the sum of R230,108,661 and the balance of R56,132,918.” The report further noted “the failure of Ubuntu Sima to avail CWP documents to Mvula and the non-payment of wages to beneficiaries”.

Daily Maverick has been unable to establish whether those wages ever got to South Africa’s poor and unemployed, but in November 2017, a year in which Umgeni Water was accused of tender fraud, the company was publicly defended at an event in Durban by its acting chairperson Mathenjwa. According to Fin24, Mathenjwa said that the utility had ended its year to June 2017 in “stable and financially sound position” even though “during the turbulence our good governance was tested”.

None of which proves irregularity on behalf of Insika Foundation or its chairperson Mathenjwa in the award of the 2018-2021 CWP tenders, of course – all it does is beg some questions in light of the fact that another listed director of Insika is Sizwe Christopher Zuma, reported to be the former president’s nephew.

Mathenjwa, for her part, has denied the allegation that she brought the name of Mvula Trust into “serious disrepute”. She informed Daily Maverick that she resigned from the board in August 2013 due to “work and travel commitments”. Regarding the litigation report submitted in 2013 by Bowman Gilfillan, she again denied the allegations, stating that “Mvula Trust is not owed anything”. As for Mathenjwa’s co-director at Insika Foundation, Sizwe Zuma, an employee at the company hung up the phone when Daily Maverick identified itself and requested contact details.

And then there is the matter of George Seitisho, the acting deputy director-general of CoGTA, the government official in charge of the CWP. As the third respondent in Seriti’s application, Seitisho is assumed to have final say over the entire tender award process. In 2014, when he was acting municipal manager of the Merafong local municipality in Carletonville, Seitisho was implicated in the alleged award of more than 21 irregular tenders – among these, according to reports, was an amount of R22-million spent on the Merafong municipality’s website. Seitisho joined CoGTA soon after the allegations surfaced, serving most of his tenure under former minister David “Des” Van Rooyen, who in turn has been implicated in a host of allegations surrounding State Capture.

Seitisho declined to respond to Daily Maverick’s request for comment. But in his answering affidavit to the 2018 court action, in his capacity as a high officer of CoGTA, he sought to call into question the integrity of Seriti. As Juanita Pardesi, Seriti’s CEO, noted in her reply to Seitisho’s submission:

It is clear that the purpose of that affidavit is to sway this court into believing that the applicant is a corrupt, mismanaged organisation which is intent on sabotaging the CWP for their own benefit and to the detriment of thousands of poor beneficiaries.”

Indeed, CoGTA alleged that Seriti had committed fraud by not registering for the Unemployment Insurance Fund or paying VAT, and also, that it had engaged in “corrupt activities”.

But Pardesi explained to the court that Seriti did not submit proof of UIF registration with its proposal as it believed that the Department of Labour’s “letter of good standing” was sufficient. Then Pardesi provided the court with Seriti’s UIF registration number, plus documentary evidence. A current and valid SARS tax clearance certificate was also provided. As for CoGTA’s allegation that Seriti was guilty of corruption, Pardesi’s reply makes for interesting reading:

[Seriti] on its own initiative commenced forensic investigations to exact accountability from former staff and service providers implicated in irregularities following [Seriti’s] own internal investigations. The report of this investigation was shared with the Department in the interests of transparency.

I point out that the fraudulent conduct identified in this investigation was directed at [Seriti] which bore the resultant loss. There was no prejudice to the Department or the CWP beneficiaries. Three of the four implicated staff left [Seriti’s] employ before finalisation of the forensic audit and the fourth Mr Daniel Khanyile was disciplined by [Seriti] and dismissed in 2017. As I pointed out earlier, Mr Sibusiso Mkhize, who was one of the implicated staff members and who left [Seriti’s] employ before finalisation of the forensic audit, now heads the CWP operations of an implementing agent which the Department has appointed to the Eastern Cape province, knowing full well that he was implicated in corrupt and fraudulent activities [emphasis Pardesi’s].”

In light of all this, it appears significant that Seriti’s initial reason for lodging the urgent application, according to Pardesi, was that the CoGTA evaluation committee had decided to “reconsider bidders who had initially been disqualified allegedly based on the minimum submission requirements of the RFP”.

Seriti told Daily Maverick that “81 of the 89 bidders had allegedly not submitted some of the required documents” and that “the evaluation committee decided to give all the non-compliant applicants the benefit of furnishing the outstanding documents”.

Seriti also explained that, in its own case, “CoGTA failed to send the request for documents to the correct email address resulting in its erroneous and unfair disqualification before the Seriti proposal could be evaluated”.

The urgent application to maintain the status quo at the sites managed by Seriti, heard on 26 April 2018, was unsuccessful on technical grounds.

However,” said Pardesi, “the judicial review of the tender process will proceed as Seriti’s board feels strongly that we need to bring to light the irregular process followed in awarding the CWP tenders.”

Given that the 2018-2021 CWP tenders are reported to be valued at upwards of R4-billion, the above, at best, is cause for concern. At worst, it is indicative of a fraud that compares in size, scope and societal damage to the heyday of State Capture. DM

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