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Samwu accuses City of Johannesburg of R1.5bn housing corruption and fraud

Samwu accuses City of Johannesburg of R1.5bn housing corruption and fraud
The Samwu Gauteng leadership briefs the media in Johannesburg on 4 April 2023. (Photo: Michael Barthelemy)

Last year, Daily Maverick reported that the City of Johannesburg faced a housing unit backlog of 500,000. This week Samwu blamed the backlog on rampant corruption and an unstable coalition administration that is affecting the delivery of temporary and social housing projects.

The South African Municipal Workers Union (Samwu) has called on the city’s Human Settlement Department and Johannesburg Social Housing Company SOC Limited (Joshco) to deal with the corruption in the department by the end of April. The union, with about 60,000 members, warned of Samwu-affiliated workers protesting in Johannesburg if the request was not met. The union claimed it would trump the protest that shut down M1 Freeway last year.

Last month, Samwu denounced the Johannesburg Roads Agency (JRA), the Gauteng government department responsible for the city’s roads and stormwater infrastructure, for failing to act against officials implicated in a report on more than R418-million in irregular spending — five years ago.

During a media briefing on Tuesday, 4 April, Samwu provincial secretary Mpho Tladinyane accused the City of Johannesburg Human Settlements Department, and Joscho, of fraud and corruption.

Tladinyane said corruption at the two entities was enabled by the executive director for the human settlements department, Patrick Phophi, and the implementation of Regulation 32.

Regulation 32 applies to the Municipal Financial Management Act (MFMA) and relates to the procurement of goods and services under contracts secured by state organs which are not being adhered to, or abused. The application of regulation 32 in a procurement process effectively means the accounting officer of the original contracting organ of the state is willing to forfeit a portion of its contract that has not already been used, to the accounting officer who is requesting to procure under that contract.

“Like at Johannesburg Road Agency (JRA), most corruption continues to happen at the Johannesburg Human settlement department and Joshco as a result of the implementation of Regulation 32,” said Tladinyane.

“Millions if not billions are lost due to irregular expenditure within the two entities… Some officials have resorted to using Regulation 32 … to cut corners and show they have advanced their intentions concerning corruption. The common feature … Patrick Phopi. When we try and find what the problems are … Patrick Phopi always appears,” he added.

samwu joburg

Samwu members sing and dance at the end of the media briefing. (Photo: Michael Barthelemy)

The union shared its evidence of alleged corruption with the media.

Alluding to the corruption and fraud allegations, Tladinyane referred to various city housing department projects that had failed to deliver their core mandate to improve the lives of residents living in abject squalor in congested areas by providing safer conditions for residents to follow Covid-19 lockdown regulations and had evicted residents. The city planned to provide affordable social housing for low-income residents, clearing the housing backlog and reducing homelessness. These projects are as follows:

Alexandra Temporary Residential Accommodation

According to Tladinyane, in 2020, the city of Johannesburg appointed Joshco through Regulation 32 to deliver 2,468 temporary residential housing units in Alexandra, each costing R64,000.

“Only 1,132 were delivered and are not occupied due to poor workmanship. The project was not even registered with the National Home Builders Registration Council (NHBRC)… R534 million used to pay for 1,132 units instead of the budgeted R482 million for 2,468.”

Read more in Daily Maverick: Overpopulated Alexandra to benefit from temporary housing project

Unaville and Moffatview

“The City of Johannesburg through Mr Phophi appointed Urban Dynamics to do a mixed housing development in Unaville worth R15 million … intended to build more than 10,000 units. Urban Dynamics was appointed without going into a tender but to date, nothing has been done. The same thing happened in Moffatview, a company was paid R20-million, but there is no development on the ground,” he said.

Tladinyane further alleges there is a R2-billion project in Johannesburg that was supposed to be a mixed housing development project over three years worth R669-million that later increased to R899-million. He said R899-million has been spent, but only 6% of the work has been done because “7,425 houses were expected from the project, but only 473 were delivered.”

Unstable coalition

Tladinyane said the unstable nature of the coalition government which had changed hands countless times has created instability for administrations. He said this has translated into:

Tladinyane said Samwu had brought all the issues to the attention of the city manager, COO and speaker of the council to resolve by end of April.

“If these matters are not addressed by the end of April…. What happened at M1 will be nothing. We will not invite you, you will invite yourselves.”

City of Johannesburg’s response

The city’s Department of Human Settlements has noted the allegations levelled against it by the Samwu, says Deputy Director of Media Relations in the City of Johannesburg, Nthatisi Modingoane, who told Daily Maverick the department was investigated by the Special Investigating Unit (SIU) on the Temporary Relocation Units (TRU). The department had been cleared and the case was withdrawn in September 2021.

“In the SIU’s report, it was stated that there was nothing untoward with the processes that were undertaken regarding the TRUs and therefore the unions’ allegations are baseless … there [are] no irregularities or declaration by the Auditor-General of South Africa on these contracts being irregular.

“The issue of Unaville was initiated with the goal of finalising town planning processes, however, the area was invaded, and all the work done was compromised due to the illegal occupation of land. The Moffatview matter was investigated by Group Forensic and Investigation Services and a quantity surveyor was appointed to quantify the work done at the time and it was proven that there was more work done on the ground than what was paid for.”

Modingoane added: “The union ought to have familiarised itself with matters prior to misleading the public and the media fraternity. Allegations of corruption are a serious issue and therefore, we do not take what Samwu has said lying down.”

“If evidence of corruption is in the possession of union leaders, they are free to approach law enforcement agencies or any other channel… so that we deal with facts and not fiction,” said Modingoane.

The 2022 Corruption Watch annual report released on Tuesday also put Gauteng at the top of corruption in the country in five of six sectors. The most commonly reported corruption includes; dereliction of duty, fraud, misappropriation of resources, bribery, procurement irregularities and employment irregularities.

Three of Gauteng’s metros – the City of Johannesburg, Ekurhuleni and Tshwane – collectively account for 58% of incidents reported in relation to local government. DM

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