AMABHUNGANE SPECIAL FOCUS
SA Red Cross at war with itself
Acrimonious disputes among past and present directors of the Red Cross have disrupted the organisation, despite repeated attempts to root out corruption and mismanagement.
On the centenary of its founding in 1921, the South African Red Cross Society is beset by internal struggles going back years, which have pitted close colleagues against one another, caused the collapse of key projects, the sacking of senior executives and the withdrawal of millions of rands in donor money.
The mystery is why an established institution with an instantly recognisable brand name has foundered, and why, despite repeated interventions from the British Red Cross and the international parent body, it has struggled to pull itself together.
The Red Cross attracts public-spirited and devoted staff and volunteers, willing to work long hours for a cause, often for nothing in return. And yet, over a period of several years, whistle-blowers inside the organisation have deluged amaBhungane with reports of maladministration or corruption by their closest colleagues, often accompanied by documents and other evidence.
For outsiders, it is almost impossible to distinguish between abusers and the abused. The fractures run so deep that those who make accusations may themselves be accused by others. But what is not in dispute, is the sheer drama of the confrontations and the damage that has resulted.
Four unresolved issues, all interlinked, fester and poison the inner workings of the Red Cross:
- The termination of the organisation’s largest HIV programme, which reportedly provided aid to over 130,000 adults and children in KwaZulu-Natal;
- The withdrawal of the largest foreign donor, who said he no longer trusted the organisation;
- The suspension of the long-time CEO, who had been key to bringing in the funding; and
- The sudden and disputed sacking of the entire board.
The South African Red Cross Society is one of the country’s oldest and most venerable welfare organisations, recognised by a 2007 Act of Parliament. It was active during the Anglo-Boer War and the First World War before being formally constituted in this country in 1921, admitted to the international movement in 1929 and registered as a non-profit company in 1935. The organisation has long provided essential and non-partisan support across racial divides in times of disaster or war, floods, droughts and fires.
The sheer scope of the Red Cross programmes is remarkable. In recent years it has helped refugees and victims of xenophobia and provided medical care for those affected by HIV, TB and other diseases. There are programmes for orphans and child-headed families, Red Cross crèches, pre-schools and youth education programmes.
For the hungry and unemployed there are food parcels, and also training in home-based skills such as planting seed gardens, sewing and beading, or entrepreneurship training. All this and much more, across the entire country.
And yet, going back decades, the organisation has been under siege. The bluntest appraisal was given by the guest speaker at its November 2014 general assembly, Dr Abbas Gullet, vice-chair for Africa of the International Federation of the Red Cross and Red Crescent Societies and secretary-general of the Kenyan Red Cross. Gullet had an intimate knowledge of the South African operation, going back 25 years.
He said that when the chairman at that time, Nqe Dlamini, had taken office in 2011, he inherited “a defunct and dysfunctional society”. In the years since the dawn of democracy in 1994, “internal challenges related to poor governance, poor leadership and poor management have almost brought the society to its knees. The leadership of the society have abused the powers and positions they have been entrusted with.”
The international community had been assisting the South Africans with technical and fiscal resources since 1994, but had seen no improvement. “The SA Red Cross Society has been caught in leadership battles from one board to the other.” There had been endless power struggles between rival camps, causing the Red Cross’s African Governance Group, representing societies on the continent, to intervene. But the international movement could not solve the problems of the South African body; they had to be solved here.
After his bombshell speech, Gullet received polite thanks from the chairman. Other speakers endorsed his sentiments, listing specific examples of debts and mismanagement. The Canadian Embassy was demanding the return of R1-million. The Finnish Red Cross was demanding the return of R1.5-million.
Each province had its own separate accounting system, run on different software; indeed a root cause of the troubles was that each province ran as an independent fiefdom.
And yet, it was noted, there had been considerable improvement. The national manager, Derick Naidoo, described how a lingering overdraft crisis with Standard Bank had been solved, SARS had agreed to settle four years worth of outstanding PAYE payments, and over a million rands of overdue rent had been paid. He praised his colleague Lindel Papiah, the finance manager, for her work in completing financial audits for three years and bringing the accounts up to date. She would take charge of installing a single national accounting system.
The high point was the unanimous approval of a new set of governance procedures intended to put a stop to future mismanagement. The meeting ended on an optimistic note, with talk of South Africa becoming the Red Cross leader in Africa. A special supper followed, and a flag procession.
The next six years, however, would only confirm Gullet’s bleak assessment.
Troubles at headquarters
In August 2012, a group of newly retrenched Red Cross staff complained to the Commission for Conciliation, Mediation and Arbitration over the abrupt termination of their contracts. They said nothing had been paid towards their UIF or pension fund.
The then recently appointed acting CEO — the same Derick Naidoo — spoke to The Star with some frankness, admitting that the Red Cross had been forced to scale back on staff. “We are getting no funding from the government or local donors, so we are putting in place a restoration process and will cut down on staff. We owe the bank R11-million, with a monthly bill of R500,000, and we have a wide range of creditors: suppliers and service providers.”
Those suppliers and service providers had not been paid for six months. Naidoo reported to an internal meeting that R850,000 was needed every month to maintain the head offices, but they had only R150,000 income. “So, technically, we are increasing our liabilities by R700,000 a month.”
As to the retrenched staff, Naidoo said: “We are not a fly-by-night organisation, so we cannot flout the labour law and let them go without their dues.”
Five years later, in December 2017, TimesLive interviewed a number of welfare organisations about how they were coping during an economic downturn. None was doing well. Naidoo, now confirmed as Red Cross CEO, said cryptically: “At a time of escalating humanitarian crises‚ constrained budgets and in an increasingly unpredictable world‚ humanitarians need to be more agile‚ more anticipatory‚ and more alert to change.”
Naidoo’s spokesperson, Lungile Khambule, was more specific: Six international funders who had been earmarked to support specific programmes, had pulled out.
And yet, the organisation was still able to tell the public a good story. A high point was in July 2016, when Naidoo and the then chair, Connie Motshumi (who joined the society the year before), were guests of honour at an international Red Cross and Red Crescent Societies ball at the palace in Monaco, where Zimbabwe-born Princess Charlene of Monaco accepted an invitation to be Patron of the South African Red Cross.
As the annual report described it, accompanied by colour photographs: “This patronage by Her Serene Highness will greatly assist in repositioning [the Red Cross], and it will undoubtedly drive awareness linked to our community outreach programmes… The significance the Princess will add to our organisation is unsurpassed. This is the start of a rewarding and fulfilling relationship.”
But that is not quite what happened. Exactly two years later, both Motshumi and Naidoo were ousted. How and why that happened remain matters of contention.
The HIV programme in KwaZulu-Natal
Sir Roger De Haan is a retired British businessman who inherited from his father the Saga group of companies which specialised in selling services to the over-50 market, including luxury holidays, insurance, care homes and “smooth music” radio stations.
He sold out his interests in 2004 to devote his attentions to the Roger De Haan Charitable Trust, which supports a variety of charities, mainly in his home district of south-east Kent. A major contributor to the Conservative Party, De Haan is a regular on the Sunday Times “rich list” which values his worth at £900-million.
In 2006, the British Red Cross persuaded De Haan to take an interest in South Africa. He paid a visit to KwaZulu-Natal to see the work being done by the local Red Cross among poor rural communities affected by HIV and Aids, and was introduced to the provincial manager: Derick Naidoo.
He told amaBhungane that he was “shocked by the harsh realities of what I saw”, but was very impressed by Naidoo. “I challenged him to put together a bold and ambitious proposal that would help alleviate the suffering of vulnerable communities and the devastating impact of HIV and Aids.
“I subsequently agreed to fund a five-year programme in KZN from 2007-2011. Due to the success and effectiveness of this programme under Derick Naidoo’s leadership, I committed funding for a second phase, from 2011-2016, in conjunction with the British Red Cross. My support was extended to July 2019 and, in total, I donated more than R212-million.”
At its height, the De Haan programme employed 160 staff and 1,300 caregivers. It supported 68,511 adults and 63,798 orphans, by far the largest Red Cross programme in South Africa. “I was actively involved in the KZN programme from the onset and invested not just money but considerable time and effort. I served on the management board, visited the project regularly and took a very close interest.”
It is De Haan who gave the clearest explanation of the organisation’s ups and downs. He acknowledged the earlier troubles and commended Naidoo as the one responsible for turning the organisation around. He told amaBhungane:
“Derick was an inspirational, dedicated employee of SARCS [the South African Red Cross Society] and, through his hard work, dedication and integrity, SARCS was completely turned around — its huge overdraft was renegotiated, its debts were settled, new structures and accounting procedures were put in place, and credibility was brought back.
“When many donors pulled out, I stayed committed and helped the national headquarters get back on its feet with funding for restructuring and transformation. Over the course of my years of working with Derick, I got to know him well.”
That De Haan paid close attention to detail is demonstrated by the minutes of a meeting in Durban in November 2017, at which De Haan, accompanied by five representatives of the British Red Cross, met with Naidoo and some of the senior officials in KwaZulu-Natal.
De Haan did most of the talking, asking detailed questions about the administration of almost every project, and recommending changes to the wording of reports and auditing of finances, suggesting possible donors, setting targets, and proposing that Land Rover, who donated a number of vehicles, be asked to train the drivers.
But the underlying theme was that the HIV programme was entering its final phase in 2018, and the South Africans needed to develop contingency and sustainability plans in response to a British “exit strategy”. Since the Red Cross is a disaster relief organisation, rather than a development agency, all projects have end dates. Or as Naidoo noted, it was now up to the local organisation to urgently “develop a strategic fundraising strategy” and hire a fundraising team that could match the De Haan contributions.
Shortly after the meeting, the International Federation of the Red Cross approached a consultancy group to provide six months’ worth of fundraising training to three South African staff “to build skills and capacity to raise vital funds.”
But that never happened. A meltdown came first, just a few weeks later.
Knives come out for Derick Naidoo
In February 2018, Naidoo’s annual performance assessment came up before a meeting of the Red Cross board. It should have been a routine matter; the man had, after all, been a leading official in the organisation for more than a decade. But instead, it was revealed that two anonymous whistle-blowers had filed complaints against Naidoo, including:
- Lack of compliance at every branch, with the Pretoria branch about to lose funding from the department of health due to non-compliance;
- Unexplained cash transactions within the De Haan project account;
- Interference in procurement procedures;
- Failure to take disciplinary action against favoured staff members;
- Debt to the South African Revenue Service amounting to R459,000 in unpaid PAYE, even though the amounts had been deducted from employees; and
- Loss of accreditation from the Health and Welfare Sector Education and Training Authority, causing training courses to be abandoned.
The board approached a Pretoria firm of attorneys, Kgokong Nameng Tumagole, to investigate, placing Naidoo on suspension in the interim. The attorneys submitted a report in April 2018, based on interviews with 16 staff, but not with the chairperson, against whom there were also some allegations of neglect and abuse of travel allowances.
The report amounted to a slap on the wrist for Naidoo. Many of the more serious allegations were deemed unfounded, but he was reprimanded for failing to institute clear policies or written procedures, inadequate financial reporting controls, making insulting remarks about board members in front of staff, and poor management of employee issues.
As to the most serious allegation — unexplained fund transfers within the De Haan project — the lawyers were unable to come to any verdict, blaming a lack of time. “Although we did probe Ms Papiah [the finance manager] and Mr Naidoo about these transactions, the answers were unsatisfactory and unfortunately due to time constraints we could not go any further investigating the Project. We, therefore, recommend that an independent investigation be instituted to look into the De Haan Project.”
The British Red Cross, which was also funding the HIV programme, was alarmed enough to institute its own, separate inquiry. In a letter to amaBhungane, it said: “In February 2018 we became aware of accusations relating to possible misappropriation of funding. This triggered an audit by British Red Cross’s internal audit team, which is standard procedure. By early June 2018, the audit was complete and we were satisfied that [the South Africans] had fully complied with our requirements, which involved enhanced financial controls.”
Naidoo told amaBhungane that financial mismanagement in a project as large as the KwaZulu-Natal HIV programme was unlikely and would have resulted in a cessation of funding.
“To my knowledge, there were no cash transactions during the De Haan project,” he said. The claims made in the report were “weightless claims” against his project and his leadership. “If you can find evidence of these transactions, I would love to see them.”
“We made sure each of the 1,400 volunteers opened bank accounts so the stipends could be transferred into their bank accounts.”
Naidoo said that he worked in the best interests of the non-profit. During his time as chief executive, he stabilised the organisation, professionalised it and brought in a company secretary. He decreased debt and raised financing. There were also consistently audited financials under his watch.
In due course, Naidoo would indeed be absolved of all charges. He would even be invited back as CEO. But before that happened, came yet another drama.
The contested AGM
The South African Red Cross has a loose and sprawling structure, with strong and often competing local interests and a relatively weak centre. This has much to do with the grassroots community nature of most projects and the fact that local branches are expected to do their own fundraising.
Thus, De Haan’s millions were donated to a single programme, HIV support, in a single province — KwaZulu-Natal. This is a structure that seems to invite conflict. Both the KwaZulu-Natal and Limpopo branches have at times attempted to secede from the national body.
The Red Cross has a relatively small core of paid full-time staff, and a much larger group of unpaid volunteers, many of whom are dedicated enough to put in similar hours to full-timers. There is an undisclosed number of staff and over 2,000 volunteers, according to current Red Cross chief executive Mabel Koketso. The paid staff have their own structure, called Operations, and report to the chief executive officer at the national office in Tshwane. But the chief executive enjoys nothing like the powers of a conventional chief executive.
The volunteers have a quite separate structure called Governance, which reports to the board of directors.
Yet another power centre is the national council, which elects or removes members of the board. The national council has 20 members, elected every third year by representatives of the branches, according to a formula that divides the seats by province. The number of branches varies, but in 2018 there were 36 branches and 65 voting representatives.
The national council elects four of its own members to the board, each from a different province. The board nominates another four outside directors, chosen on the basis of specific skills. Council and board members may serve no more than three consecutive terms of three years each. Board members are not paid.
It was this complicated structure, the national council, which gathered for an annual general meeting on 30 June 2018. Or rather, according to a rival account, the structure failed to gather at this meeting, and indeed, has failed ever since. There is one point that everyone is agreed upon: at this meeting, the entire board was swept aside and replaced by another.
One version of events is that of Nqe Dlamini, former chairman of the Red Cross and then an ordinary board member, whose account is supported by Connie Motshumi, who followed him as chair. Both were ousted at the meeting. Dlamini, once considered a star of the organisation, has filed court papers against the Red Cross, disputing the outcome of the meeting and arguing that it was unconstitutional.
According to the Red Cross constitution, at least half the members of the national council must be present to form a quorum. There were, it seems, many people present at the meeting, but according to Dlamini’s court papers, some were observers, some should not have been there at all, and some were proxies. By his count, only eight legitimate council members were present when the company secretary called for a vote, and two of them have since said they voted against ousting the board.
The meeting was facilitated by an outside company secretary, Annamarie van der Merwe, an advocate who worked on the King Reports and whose consultancy, iThemba, specialises in corporate governance. It was her team that presided over the voting.
According to Dlamini’s court papers, she “deliberately failed to disclose the number of votes received, votes in favour of the resolution and votes of those who abstained. She only stated that the vote of no confidence against the board had been passed.”
Dlamini also argued that the national council had no power to remove the four outside directors since it had no role in appointing them in the first place. Motshumi, in an internal memo seen by amaBhungane, complained that iThemba refused to allow her to chair the meeting, even though she was board chair, then instructed the directors to leave the room “which is when they plotted the removal” without allowing the directors to respond to allegations.
On the other side is the version of Advocate Mothibedi Panyane, the current chair of the board. Panyane, ironically, was vice-chair when Dlamini was chair. Unlike Dlamini and Motshumi, he was not at the meeting himself. But he provided a detailed nine-page response to questions from amaBhungane, arguing that the presence of representatives from the International Federation of the Red Cross and the independent company iThemba ensured that due process was followed.
“There is most definitely a record of the voting, held by iThemba,” he said. “And where the notion that only eight people voted has come from I have no idea, and it is in any case pure nonsense. These odd notions were perpetuated by the ousted chair, Connie Motsumi, who requested that iThemba furnish her with the minutes of that meeting. This was refused, as she had been removed in a vote of no confidence.”
iThemba’s Van der Merwe declined to comment. Her email response implied that the issue was more complicated than it appeared, but that she could not discuss a matter that remained sub judice.
Panyane said: “The Society has been to court on a number of occasions to answer the allegations posed by Mr Nqe Dlamini, and on each occasion, his Counsel has failed to provide proof of these spurious allegations. They also failed to deliver any Answering Affidavits, and have since withdrawn from the case. If any one of this group of disaffected persons thinks there is a case to be made against the Society, on any grounds, why have they not initiated a case, and carried it through?”
The response from the other side is that the case never went further than the initial affidavits because Dlamini was fighting the matter in his personal capacity, using his own funds, while the 2019 board had access to Red Cross resources to fight the case.
One plane flight too many
Neither Dlamini’s account, nor Panyane’s response explains what lay behind the extraordinary ousting of an entire board. What crimes were they guilty of? No public explanation exists. But a confidential report by the Centurion-based auditing company Morar Incorporated, which specialises in forensic investigations, sheds some light. Entitled “Report on the investigation into alleged maladministration”, it is dated 30 June 2018 — the same date as the meeting. Over 50 pages, it chronicles a variety of accusations against Motshumi, some conspiratorial and speculative, but others supported by invoices and emails — once again made by an anonymous whistle-blower.
One claim was that the annual general meeting had been scheduled for the previous month, 26 May, which was when members of the national council expected to attend — but that the day before, Motshumi had cancelled the meeting. (This point alone, might explain the poor attendance on 30 June.)
A second claim was that Motshumi flew business class to Sweden in April 2018 to attend the Global Network of Senior Women Leaders in the Red Cross, at considerable expense and in contravention of the travel policy.
As Motshumi herself put it in a letter to the board, accusing them of blocking her trip just as she was about to board the plane: “I am not a ceremonial chairperson. If you want one, please go ahead and elect/appoint one… I will raise money like I previously did to repay this. If it means from my own pocket then it will be. I will not have my reputation questioned, for late cancellation and to be bullied, when I have made commitments to the network on behalf of women within the movement.”
Motshumi told amaBhungane that attending the conference was part of her deliverables as chair of the board and a founding member of the Global Network for Women Leaders in the Red Cross and Red Crescent Movement. She also said that flying business class was standard practice for Red Cross directors.
Another allegation was that Motshumi appointed two companies, a marketing and communications company and strategy and leadership consultants, without sufficient due diligence or following of protocols, giving preference to friends who charged excessively and under-delivered. An aunt of hers was appointed office housekeeper, later upgraded to office manager. The aunt, complained the whistleblower, had little to do other than spy on the national office staff and report to her niece.
Motshumi explained her decision not to demand three quotes for the strategic development in an email to Naidoo of June 2017: “One cannot request 3 quotes for every issue i.e. the strategic work is rather confidential in nature and I cannot risk this noise being heard by all and sundry otherwise this is a reputational risk on our part. Good judgment has to prevail when dealing with sensitive and complex matters such as these, which I think I applied.”
The auditors dismissed Motshumi’s argument that she derived no financial benefit from appointing the two companies, saying the issue was one of protocol.
And although the narrative of the report suggested that other members of the board were either kept in the dark or openly disagreed with Motshumi, the final verdict made no exceptions: “It is recommended that the above matters be considered by the SARCS’s legal team in order to determine possible remedies for the organisation in terms of recovery of wasteful expenditure and disciplinary proceedings against staff and/or Board Members.”
Motshumi has disputed the Morar report, telling amaBhungane that she worked hard to raise funds for the Red Cross drawing on her extensive business and social connections and her innovative business acumen. As chairperson, she recommended companies that she felt could work for the Red Cross, but she was never involved in the final decision-making process.
The ghost of Derick Naidoo
There is also reason to wonder whether perhaps the ghost of Naidoo lurked behind the ousting of the board. One of the whistleblower claims in the auditors’ report against Motshumi was that the firm of attorneys she chose to investigate Naidoo were — once again — friends of hers, and that she intended using the exercise as a ploy to get rid of him.
It was not clear why she may have wanted to be rid of him, but the implication was that the two had repeatedly clashed. On this matter, the auditors had nothing to say. But what did become quickly apparent, was that the ousting of Motshumi was followed by the rehabilitation of Naidoo.
Panyane was not initially made chair to replace Motshumi. That role went to Veli Mongwe, who was one of those who voted to oust the board. One of Mongwe’s first acts, on 18 July 2018, was to write a letter exonerating Derick Naidoo of all charges. And then, on 8 August, he wrote to Naidoo urging him to return to his position as CEO of the Red Cross.
“We kindly request you to confirm your availability to continue as the CEO of the SARCS in writing at your earliest convenience, due to the urgency of this matter, not later than the end of business on the 10th August 2018. A sub-committee made up of both the Board and National Council members has been assigned to communicate and reach an amicable conclusion with you on this matter.”
For Naidoo, a man suspended only six months earlier, the subject of a not particularly favourable review by an outside law firm, this letter represented something of a triumph. De Haan, evidently still closely in touch with South African affairs, had this explanation for amaBhungane:
“The charges levelled against Derick Naidoo in February 2018 were spurious and frivolous. Derick had, for good reason, challenged the leadership and was, in my opinion, targeted as a result. His suspension without notice, the trumped-up charges and the way he was treated were a disgrace.
“Once the legal disciplinary process was underway, SARCS realised that the charges were unfounded. Connie Motshumi and the board were replaced, and SARCS withdrew the charges against Derick Naidoo and asked him to resume his role as CEO.”
Immediately after the 30 June meeting, the International Federation of the Red Cross stepped in, giving the interim board a year to sort matters out, according to one former board member. The point man, once again, was Dr Abbas Gullet, the Africa regional head.
In correspondence from August, a weary-sounding Gullet responds to push-back from senior officials who are loath to have Naidoo return. “I do not want to believe that we are negotiating to bring back a CEO who ran a National One [sic] that is so chaotic that even records on his own employment history cannot be located,” wrote one official.
Gullet was anxious to get them to make a decision: “This process has been delayed by over two weeks for no good reason. SARCS is bleeding and we all need to stand up and stop it. You should rise above these issues and head on and work with what we have at hand and as a Taskforce find a way out of this quagmire for SARCS today and not tomorrow.”
He said it was up to the South Africans to decide whether they wanted Naidoo back or not, but if they did, De Haan would subsidise his salary:
“Derick is still an employee of SARCS until November when his current contract will expire, he is still being paid his monthly salary at the end of every month and his salary is in fact being financed by Mr Roger Dahane [sic] through the British RC and it’s not additional costs to SARCS. To me the issue is if you guys want him back or not and if the answer is yes and you agree with him, then am sure [sic] Roger Dahane will continue to pay his salary through BRCS or direct to SARCS.”
Mongwe would follow with a desperate plea to his colleagues in an email of 15 August: “Colleagues … the delays are further crippling the Society and unfortunately should things go bad only the Board is on the firing line, and only the Board is personally liable, not everyone. We need by all means to seek consensus and to discuss matters critically and constructively without applying emotions and being personal but be in the shoes of those who depend on the National Society.”
But it was not to be. There was still too much opposition to Naidoo. Inside the echo chamber of whispers and rumours within the organisation, a new theory arose. The reason for the eagerness to exonerate Naidoo and bring him back was that he alone was the key to extending the De Haan programme funding. But to bring Naidoo back required first the sacrifice of his ostensible enemies on the board.
Whether there was any merit to this rumour, only one man had the answer. De Haan responded to amaBhungane in this way: “My support of the KZN programme was never contingent on Derick remaining in his position and, if he had decided to move on to new challenges, I would have continued to support the project, provided it was still being run effectively and with integrity.
“The reasons for the withdrawal of my support were as follows: Under the chairmanship of Connie Motshumi, I lost all confidence and faith in the leadership of SARCS and in the integrity of its organisation. I could not recommend to my trustees that my trust should continue to support such an organisation …
“My funding was not contingent on Derick remaining in his post but I was not prepared to support an organisation which I no longer trusted… It was my view that, given the crisis in which the organisation found itself in at that time and given the possible alternative scenarios, it was only Derick Naidoo’s continued leadership which could have restored my faith in the KZN project.”
Naidoo never did return as CEO. By his account, negotiations broke down at a meeting where disputes arose over his terms for returning. “I felt I could not continue on this process … of dealing with agendas not focused on humanitarianism, hence I decided to be paid out till end of my contract and we parted ways.”
Gullett wrote him a letter of farewell: “I can say without fear of contradiction you should be proud of what you have done for SARCS over the last 14 years both in KZN and HQ. This matter of your disciplinary action by both the previous and current Board could and should have been handled different… One can only thank you for what you have done for SARCS in the last 14 years, when it’s all done and dusted and history is written, am sure what you did in 2014 to save this Society will not be forgotten and you should be proud of that.”
Heads keep rolling
The funding for the KwaZulu-Natal project came to an end. A province that had employed 160 staff and 1,300 caregivers on this project alone, now has eight staff covering all remaining projects.
Many of the 130,000 recipients of Red Cross aid over the previous nine years were left without support. But some were luckier: grassroots Red Cross volunteers do not expect to be paid, and some have continued to support recipients, funded from their own pockets.
Over the next two years, more in and out shuffling of board positions followed. One CEO, a Red Cross veteran, was only a fortnight into his tenure when a row with chairman Mongwe caused his exit. Mongwe himself was accused of failing to consult colleagues and ousted. Panyane took over the hot seat of chairman and has managed, until now, to hold on to it.
Unlike his predecessor, Panyane is no fan of Naidoo, accusing him and his financial manager, Papiah, of covering up previous mismanagement. Papiah, originally the accountant in KZN, was moved up to Johannesburg in 2014 to take over national finances and was praised at the time for installing a new accounting system. She too has now been suspended, accused of failing to inform the board of irregularities that she ought to have been aware of, obstructing investigations and destroying essential information upon her departure.
Papiah has briefed lawyers to dispute her suspension, claiming that she had already resigned and is entitled to a retrenchment package. She denies the allegations against her, blaming the inadequate financial records upon senior individuals exiting the organisation — and taking their laptops and documents with them. In March, her lawyers sued the Red Cross for R200,000 for defamation.
Key to Panyane’s revitalisation plans was appointing an outside development adviser. Mabel Koketso of the Botswana Red Cross already had experience of South African affairs, having been brought in to help clean up the earlier crisis between 2012 and 2014. Her services evidently impressed the international body, because she was asked once more to return to South Africa, for six months as an adviser. More than two years later, she has not returned to her Botswana office: she was made acting CEO in South Africa, taking over Naidoo’s old post.
Panyane is delighted with Koketso, and it was his board that confirmed her as chief executive. “Mabel Koketso has been invaluable as an independent manager with the skills and attributes needed to right the ship,” he said. She and her professional team have done “sterling work in this tough 2020 year to get relief out to the poor”.
Interviewed by amaBhungane, Koketso had her own views of the De Haan HIV project. “Because, you know, a painful experience has taught us that money comes in for short term projects. When the project ends, everything collapses, like the case where we had this big, big donor for the HIV project. And I think the mistake that the leadership made back then was not to put the sustainability aspects alongside that one. That is why we must find something that can sustain our operations.”
Sustainability has been a key focus for Koketso. She hopes to move away from the delivery of emergency food parcels towards providing the resources for sustainable community farming. A first farm has been established in KwaZulu-Natal, funded by the Swiss government, with a second to follow shortly in Mpumalanga.
Covid has been another challenge. The Red Cross has run track and trace projects, produced community information campaigns, partnered with schools to provide feeding schemes and even helped groups to earn money making masks and sanitiser.
But the rumblings of dissent, allegations and counter-allegations, continue. Among the criticisms voiced by ousted chair Motshumi in a memo is that in the two years since what she continued to describe as the “coup”, the Red Cross has failed to issue any audited financials, despite it being a requirement of the Companies Act.
Panyane does not deny this. He told amaBhungane: “It is unfortunately true that we have not produced financial statements in the last two years, and we are dealing with another area where we feel that there has been corruption and collusion.
“We could not obtain information from the very people who were abusing their position in the Society, and it has taken strenuous efforts over many months to remove them from their positions of power, and this is an ongoing process. Further disciplinary procedures will take place. We are also in the process of handing all proof of financial irregularities to the Hawks and the [commercial crimes unit] for investigation.”
Jennie Martin, a long-time Red Cross volunteer and now a board member, said: “The temporary board has worked very hard. The Red Cross is one place you don’t want to see corruption. We have some good people on board. It has been a wild year… We are working extremely hard to clean up the mess. We did find a mess, a lot of it.”
The list of accusations against former staff and board members is a long one, involving possibly millions in misappropriated funds. None have been resolved, with the accused in each case denying the allegations and claiming to be victims themselves.
In one case, senior former officials in the Limpopo province have been accused of setting up a side company six years ago under their own names with the intention of syphoning off millions in donor funding, then hiding their activities by failing to submit financial reports and destroying the evidence. Those accused say the company was set up to implement a provincial health programme, but never operated.
A number of officials have been sacked, some of whom have appealed to the Commission for Conciliation, Mediation and Arbitration. Several former board members, including ex-chair Dlamini, have not only been ousted from their posts, but barred from any role in the organisation. “Because we are a humanitarian organisation, we proposed … a three year period of not holding any position … rather than full expulsion,” said Panyane.
“More disciplinary steps are being contemplated, and this process will be ongoing until all bad apples have been removed,” he said
In some cases, there have been results. Panyane explained how a Western Cape manager paid back R400,000 after charges were laid against her. A top official was ordered by a court to return vehicles he had “appropriated” from the Red Cross.
The ruthless clean-up has not been universally welcomed. Koketso has been accused of victimising staff and retrenching the wrong people. Being an outsider and a foreigner has not helped, nor has bringing in support staff from Botswana. AmaBhungane has seen a copy of Koketso’s paycheck for R245,000, paid not into her bank account, but that of her sister in Botswana. Koketso was working illegally in South Africa and attempting to evade taxes, claimed several sources.
Panyane’s response was that the amount covered several months that Koketso had not been paid, due in part to Covid disruptions and in part to her dispute with the former financial manager. The board had approved the payment into her sister’s account as it was needed to support her family. Koketso said she had dual Botswana and South African citizenship, but only a bank account in Botswana.
“Actually, I had the [bank] forms, but I’m gonna do it [apply for a South African bank account]. Because it is causing a lot of problems. I’m going to do it. You know, when you’re so busy, you say I go to the bank now, it will eat 30 minutes of my time to do this. But there’s really no intelligent answer,” said Koketso.
A new dawning?
The Red Cross cannot be run as a conventional business. It has no means to generate its own income internally. It relies on the largesse of deep-pocketed donors, often living abroad. So do other non-profit organisations, but few need sums as huge as the Red Cross. In times of crisis, willing donors can be found; at other times, fundraising is more difficult.
The opening and shutting of taps pouring in money is disruptive. Huge programmes provide widespread help, then suddenly cease. The temptation for modestly paid officials to shift funds into opportunities for self-enrichment is considerable. Well-meaning attempts by sister organisations abroad to “fix” the problems of South Africa can instead disrupt local practices, misread cues and potentially target the wrong people.
The Red Cross has rounded many corners in the past. More than once, it has acknowledged its troubles and announced confidently that it has fixed its finances or cleaned up its act. A number of the leaders prominent at the 2014 annual general meeting where a turn-around was announced, people who spoke out strongly against corruption and mismanagement, have themselves been ousted or implicated.
As Gullet said in his farewell letter to Naidoo: “The challenge now is for the current Board to pick up the pieces and deal with the urgent matters and crisis the National Society is facing. It will not be for the faint of heart and fortune will be with the brave.”
The onus on Panyane and his new board is to demonstrate that the accusations against their predecessors, few of which have yet been formalised into criminal charges, are sustained. Are those people corrupt, or are they as they claim — victims of internal politicking?
Even more important, Panyane must prove that this time, the new dawn is for real. “We continue to look for sustainable funding on an ongoing basis,” he said, “and we continue to be supported wholeheartedly by the [international Red Cross bodies]. They are aware of our challenges and we are keeping them up to date with progress on our mission to establish transparent accountability across the organisation.” DM
* Additional reporting by Micah Reddy
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