ANALYSIS

Inside the latest findings of Public Protector Busisiwe Mkhwebane to be set aside by the courts

By Rebecca Davis 2 August 2019
Caption
Public Protector Busisiwe Mkhwebane. (Photo: Tebogo Letsie)

When Busisiwe Mkhwebane released a 2017 report on allegations of maladministration in the Bapo ba Mogale community, she advised that action be taken against – among others – an attorney who has devoted years to fighting for the rights of the Bapo people against mining houses, and the current chair of South Africa’s audit watchdog. They were unlikely targets. Now a court has set aside Mkhwebane’s findings against both men: the latest in a string of court losses for the Public Protector.

In a judgment handed down in the Gauteng High Court on 31 July, portions of a 2017 Public Protector report relating to veteran attorney Hugh Eiser and the chair of the Independent Regulatory Board for Auditors (IRBA), Abel Dlamini, have been declared invalid and set aside.

This is the most recent rebuke issued by the courts to Public Protector Busisiwe Mkhwebane, in a matter which has nothing to do with President Cyril Ramaphosa or Public Enterprises Minister Pravin Gordhan.

It is also a matter which exposes some of the serious flaws in the Public Protector’s methodology, and not for the first time. These include a failure to adhere to the Public Protector Act, a failure to interview pivotal characters during her investigation, a willingness to draw questionable conclusions based on incomplete evidence, and a subsequent reluctance to submit the full record of documents on which Mkhwebane based her report.

The full judgment is not yet available due to court IT issues, but the order issued by Judge Margaret Victor has been seen by Daily Maverick. It also grants costs against the office of the Public Protector, while stating that these costs “shall not be borne by [Mkhwebane] personally”.

This marks the end of a legal tussle stretching over two years for Eiser and Dlamini, who both claimed they had been effectively slandered by the Public Protector’s findings on them.

For Eiser, the story started in 2017.

I received a call to say the Public Protector had released a report, in which I saw that I was heavily criticised, to my horror,” the attorney told Daily Maverick.

Up until the point when the report was released, Eiser was not even aware that the Public Protector was investigating a terrain in which he was involved.

At no point, he says, did the Public Protector make contact with him, attempt to interview him, or inform him before the release of the report that her findings implicated him (as she is required to do in law).

Dlamini declined to comment to Daily Maverick on the court judgment, referring queries to Eiser. But he too was not interviewed by the Public Protector and was not given notice that her report would single him out for criticism.

Says Eiser: “In terms of the Public Protector Act, section 7.9 says that if there are going to be findings made which could have an adverse impact [on the relevant individuals], they must be given the opportunity to state their case. We were not given the chance.”

This amounts to what Eiser terms a “fundamental” failure to uphold the most basic tenets of justice.

***

The Public Protector report in question dates from 2017, and dealt with allegations of maladministration relating to the finances of the Bapo ba Mogale community in the North West.

The wider picture is a depressing and all-too familiar South African saga, involving avaricious mining houses, power-hungry traditional authorities, and a corrupt and inept provincial government.

The main source of income for the Bapo community since 1991 has been royalties from mining companies, primarily Lonmin. These royalties have been deposited directly into an account (the “D-account”; the D is for “developmental”) held at the North West provincial department of finance.

The funds deposited in the D-account since 1994, plus interest, totalled more than R600 million. Yet as of 30 June 2016, the amount in the account was less than R500 000.

Around R200 million of the money appears to have been misused, stolen or squandered, in a web of corruption and maladministration implicating the North West government, Bapo administrators and Bapo traditional authorities.

There was maladministration in that community, no question,” says Eiser.

Eiser knew the context well.

A 2014 article from UCT’s Law and Society unit described Eiser as an attorney who “has been fighting the Bapo community’s case for more than a decade, tackling government and corporate authorities in a relentless effort to win a fair deal for people who have seen little benefit from the riches under their feet”.

Daily Maverick’s Kevin Bloom, meanwhile, wrote of Eiser in 2016: “In the mid-2000s, he had forced [Lonmin] to admit that it had been mining a secret shaft beneath the ancestral land of the Bapo Ba Mogale, the community that lived adjacent to its Marikana mine in North West Province. For the next decade, he would champion the cause of the 40,000-strong Bapo, filing claim after claim that Lonmin and the North West government were in cahoots to skimp on royalty payments”. 

Eiser, in other words, had gone to bat on behalf of the Bapo community on countless occasions since the early 2000s. He became the go-to lawyer for the area, and there was much to litigate.

Complicating issues of governance was a fierce and long-running power struggle between members of the Bapo royal family, into which the courts were drawn on several occasions.

The complaint which led the office of the Public Protector to investigate the situation was laid in 2012 with Mkhwebane’s predecessor, Thuli Madonsela, by members of the Bapo royal family.

Madonsela had apparently promised that she would investigate not just possible corruption and irregular spending, but also issues related to land and mining licenses.

What Mkhwebane delivered, however, was a report which dealt only with issues related to the D-account.

The report indicates that the Public Protector’s investigation came up against some shocking procedural lapses, including the revelation that the D-account “was never audited since its inception [in 1991] and was unable to provide audited financial statements”.

These lax controls meant that “millions of rand cannot be accounted for,” wrote Mkhwebane in the report.

The investigation turned up around R200 million in irregular spending. Much of it related to the construction of a royal palace complex, which ended up costing just over R115 million.

The Public Protector concluded that there was “gross misuse of funds” in this regard, and that the palace complex budget was exceeded by approximately R85 million with “no reasons advanced”.

Other large amounts were spent on consulting work, communication services, road works, legal fees, and administrators’ salaries.

It was in the latter two categories that Eiser and Dlamini were implicated.

***

Although Eiser describes himself as being “heavily criticised” in the report, he is slightly overstating things. His role in the report is relatively peripheral.

Mkhwebane’s investigation found that legal fees in the decade between 2004 and 2014 amounted to R30,5 million, which is the context in which Eiser and his firm are named.

One aspect of the complaint she investigated was that: “The payments for professional and legal fees were exorbitant because of instability within the royal family and parties were suing one another”.

Mkhwebane concluded that these fees were indeed “exorbitant”, adding: “It is further evident that no legal costs were ever recovered, if any, in some of the matters”.

As previously noted, Mkhwebane made no attempt to contact Eiser to try to obtain a breakdown of the fees or assess the quantity of work he undertook.

However, a statement to the Public Protector issued by the Bapo administration is included in the report. It states that Eiser “did a lot of legal work” unrelated to members of the royal family suing each other: including issues related to mining royalties, land claims and more.

Yet Mkhwebane, without explanation, appears to have ignored this clarification. In the report’s findings, she repeats and upholds the original claim: “The payments for professional and legal fees were exorbitant because of instability within the royal family and parties were suing one another”.

Her remedial action also included an instruction to the director general of the North West government to “refer aspects of legal costs incurred by the Bapo Administration to the Law Society of South Africa to assess and verify the fairness of the legal costs incurred”.

When Eiser read the report, he was “extremely angry”: shocked by the fact that he was being reported to the Law Society, and enraged by what he saw as an unwarranted and unjustified attack on his professional reputation.

But the allegations against Able [Dlamini] were even worse.”

Dlamini is a chartered accountant and the executive chair of professional services firm SekelaXabiso. Since August 2017 he has been the chairperson of audit watchdog IRBA, after being appointed a board member of IRBA by the Minister of Finance in 2015.

He became involved in the Bapo community when he served as one of the Bapo administrators for one year, in 2009.

In Mkhwebane’s report, it is Dlamini who is largely left to carry the can for the disastrous R115 million royal palace complex construction project.

Mkhwebane found that it was improper for Dlamini to have failed to put the construction of the palace complex out to tender, and improper for him not to have consulted with the community in order for them to take a resolution on the construction of the palace complex. (Such a resolution is, in fact, not legally required.)

She also found Dlamini responsible for allowing the construction costs of the palace to escalate so wildly.

Mkhwebane further flagged a payment of just over R8-million made to Dlamini as administrator as “irregular”.

One of the remedial actions directed by Mkhwebane’s report was that the Premier of the North West should approach the SIU (special investigations unit) to investigate Dlamini.

Such findings were shocking and embarrassing to Dlamini, particularly given the probity required of him in his role helming the audit watchdog – and particularly given that he had been afforded no opportunity to state his case to the Public Protector before the report was released.

Both Eiser and Dlamini decided they were not willing to take Mkhwebane’s report lying down. In December 2017, they launched their review applications.

This alone, says Eiser, involved “a lot of trouble” due to the apparent reluctance of the Public Protector to provide them with the documents she based her report on.

(In the case involving the Reserve Bank and Absa, the Public Protector was similarly accused of having failed to provide the banks a full record they could use to challenge the findings.)

Eiser publically accused Mkhwebane of “tampering with the record”; her office shot back that this allegation was “grossly unfounded, malicious and defamatory to the character of the Public Protector”.

Which, ironically, was pretty much what Eiser and Dlamini accused the Public Protector’s report of being to them.

***

Both Eiser and Dlamini submitted literally thousands of pages of evidence to the court to back up their stance that Mkhwebane’s investigation and findings were both legally and factually flawed.

These included records of all the work done by the men for the Bapo community, to make the case that the fees paid to them for legal and consulting work were neither irregular nor unjustified.

Dlamini’s challenge to the matter of the royal palace over-spending was quite simple: he could not possibly be held responsible, as he had left his job as administrator long before the palace project was complete and the extent of the scope creep became evident.

He stated that he was only serving as administrator up until the issuing of the first construction invoice for R9,861 million, which was paid under his watch. He had no control over costs or payments thereafter as he had left office.

To the extent that there was overspending, particularly on the palace complex, the responsibility therefore lies solely and exclusively with the officials of the North West government,” Dlamini stated.

Dlamini protested in court papers that, contrary to the Public Protector’s findings, he did indeed obtain quotations from more than one contractor for the construction work, although he acknowledged that he did not put the construction work out to public tender due to the time frames involved.

Dlamini accused Mkhwebane of “blatant dishonesty” and of not carrying out “a proper investigation, as she did not give me an opportunity to be heard”.

The matter was aired before the Gauteng High Court on 13 March 2019.

Just over four months later, judgment was delivered.

Having heard counsel and read the documents filed of record, the following order is made:

Portions relating to the Public Protector’s report dated 19 June 2017 are declared invalid insofar as it relates to [Dlamini and Eiser];

The Public Protector’s Report insofar as it makes adverse inferences, findings and directs the remedial action should be taken against the applicants, is set aside;

The Public Protector shall pay the costs on the attorney client scale. These courts shall not be borne by her personally.”

Judge Victor’s decision not to make Mkhwebane personally pay the costs order was seemingly due to a recognition that Mkhwebane had been in the post of Public Protector for under a year at the time when the Bapo report was released, and thus deserved some degree of benefit of the doubt.

***

Even at the time when the Public Protector’s report was released, in 2017, responses to it were mixed.

In an article in The Star on 3 August 2017, Constance Mogale wrote: “The disappointing fact about the Public Protector’s report is that it relies on the very same institutions which are responsible for the wrongs committed against Bapo to remedy those wrongs. Instead of holding the responsible institutions directly accountable, the Premier [of North-West province] is given the power to implement many of the Public Protector’s findings.”

The North West Premier at the time under investigation by Mkhwebane was Thandi Modise, now the Speaker of Parliament.

The North West Premier at the time of the report’s release, until June 2018: well-known Zuma ally Supra Mahumapelo.

That brings us to the final aspect of this saga: the failure of Mahumapelo, and his successor Job Mokgoro, to comply meaningfully with the remedial action directed by Mkhwebane in her Bapo report.

Defenders of Mkhwebane have argued loudly that for President Cyril Ramaphosa to try to avoid following the Public Protector’s remedial action in the case of Pravin Gordhan amounts to an unacceptable undermining of her authority.

In her Bapo report, Mkhwebane once again stressed that “the remedial action taken by the Public Protector has a binding effect”, quoting the Constitutional Court’s finding that “the remedial action taken against those under investigation cannot be ignored without any legal consequences”.

Among other forms of remedial action directed at the North West Premier’s office, the report instructed Mahumapelo to approach the SIU to investigate the irregular payments identified within it, amounting to around R200 million.

Mahumapelo was was also instructed to “provide the Public Protector with a report on steps taken in that regard within a period of sixty (60) days from the date of issuing of the final report”.

Mkhwebane further committed to “monitor the implementation of this report on a quarterly basis”.

This has not happened.

Mkhwebane’s spokesperson Oupa Segalwe told Daily Maverick: “We have a letter dated August 2017 in which former Premier Supra Mahumapelo wrote to the President to issue a proclamation to enable the SIU to kick the recovery process”.

Since then, however, it appears that nothing has been done. Segalwe said that Mkhwebane is “unhappy that there hasn’t been much movement in this regard”.

He added: “This is why the office of the Premier was among a number of organs of state ‘named and shamed’ by the Public Protector in March for their failure to implement remedial action or take it on review.”

But some would say that Mkhwebane’s failure to follow through with legal consequences in the case of the ignored Bapo remedial action casts her insistence that President Ramaphosa comply with the Gordhan remedial in an interesting light.

To quote Eiser: “If you’ve been riding a horse, make sure you can sit in the saddle.” DM

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