Internal correspondence reveals Limpopo education minister Dickson Masemola agreed to pay millions to EduSolutions despite Limpopo's cash crunch.
Limpopo education MEC Dickson Masemola approved payment of R138-million to controversial textbook firm EduSolutions last year after being alerted that the provincial education department was broke.
The instruction to go ahead with the payment is revealed by internal correspondence seen by the Mail & Guardian. Once again, it appears to underscore the favoured status of the politically connected EduSolutions.
The correspondence shows that Masemola and the Limpopo education department’s chief financial officer, Martin Mashaba, were warned in an email by former budget manager Solly Tshitangano on February 25 that there was insufficient money in the department’s bank account to cover its costs, including salaries.
Tshitangano referred to a “resolution taken by the finance branch” to stop payments until further notice and proposed that the department “should not participate in BAS [the basic accounting system] until an overdraft facility is granted by the provincial treasury”.
Despite this, Mashaba, after consulting Masemola, instructed the department’s financial managers to “authorise all invoices that you have received”. An email from Mashaba, dated March 7 last year, says: “After consultation with the MEC [Masemola] to appraise [sic] him on the challenges facing the department, he indicated that the processing of infrastructure payments should continue due to the implications on conditional grant expenditure.” As a result, four payments totalling R138-million were made to EduSolutions in March 2011 for services rendered during the 2010-2011 financial year. Between December 2010 and March 2012, the company received R387-million. And while these payments were being made, Mashaba, in a series of emails in early March and with the endorsement of Masemola, ordered that the budget for goods and services be cut to help the department to pay the salaries of its employees.
Masemola, also the ANC’s provincial deputy chairperson, is facing mounting pressure from the Limpopo ANC Youth League to step down for “underperforming”.
A report compiled by the former administrator of the Limpopo education department, Anis Karodia, for the National Council of Provinces in March accuses the provincial minister of contributing to the department’s R2-billion over-expenditure.
He said there was “subtle interference” by Masemola and other senior officials in the bid adjudication committee in relation to the awarding of contracts and that the national treasury should manage all tenders above R1-million.
On Thursday this week, the New Age reported Masemola as saying that he had done nothing wrong. “The department had operated on an overdraft since 2007 when, countrywide, unions agreed with government in the bargaining chamber to pay occupation-specific dispensation which was not budgeted for.
“This happened before I became MEC and resulted in money moved from the purchase of textbooks, feeding schemes, school transport and others to compensation of employees.”
The Sunday Independent last week quoted three sources who described Masemola as “untouchable, because he is a Zuma man”.
The correspondence seen by the M&G includes a number of emails from February 2011 in which Tshitangano alerted Mashaba and Masemola to the department’s cash crisis.
In them, he noted that “if all BAS payments are stopped during March 2011, the department will still have insufficient cash to pay salaries. Projected available cash will cover only half of the salary bill in March.”
In his response ordering the payment of service providers, Mashaba said that deferring the payment of other invoices would not “have any significant cash-flow effect on the department” and would “actually unnecessarily negatively affect service providers”.
The education department awarded EduSolutions a three-year, R1-billion contract in October 2010 to supply textbooks to 4 000 Limpopo schools. However, the books started to arrive at the schools only in June, after a court application by education non-governmental organisation Section27.
The M&G has reported that the police’s Special Investigating Unit is probing a number of provincial education officials involved in awarding the contract to EduSolutions.
Under particular scrutiny is an advance payment of R19.7-million to the company in December 2010 as part of a management fee allegedly negotiated outside of the original tender process.
A political issue
A January 2012 memo, compiled by senior counsel advocate Pat Ellis for the national department, concluded that the tender was “neither fair, equitable, transparent, competitive nor cost-effective”.
Karodia, who took over the department’s administration in February, also called into question the legality of the tender process, saying in a letter circulated to Masemola, Mashaba and others that the contract was allocated to EduSolutions “at an exorbitant tender price that had compromised the department”.
Basic Education Minister Angie Motshekga sacked Karodia in May. According to her director general, Bobby Soobrayan, the action was taken because Karodia had “made allegations about the MEC [Masemola] which were embarrassing to the minister”.
Soobrayan would not comment on Masemola’s prospects, saying this was a “political issue”. However, he did concede that the department needed “an overhaul” because it lacked “capacity and oversight”.
The M&G approached Masemola and the provincial department for comment on Wednesday, but had not received a response by the time of going to print. Mashaba could also not be contacted.
Official has family link with EduSolutions
In the latest example of cross-pollination between the basic education department and EduSolutions, the Mail & Guardian has learnt that a son of a former top department official works for the company and another of her children was formerly employed by it.
Salama Hendricks was the chief director of early childhood development in the national department until about 2002. The M&G revealed last year that she was the mother of basic education director general Bobby Soobrayan’s former fiancée, Fatima Hendricks.
Now the newspaper has confirmed that Hendricks’s son, Sha’baan, works for EduSolutions as chief operations manager. Another of Salama’s daughters, Zaynab Williams, was Soobrayan’s personal assistant until April this year when she moved to the department’s teacher training division. Williams worked for EduSolutions and its parent company, African Access, before joining the department.
Asked this week about her time with EduSolutions, Williams laughed and said: “Yes, but that was a long time ago.”
Hendricks left the department under a cloud in the early 2000s before she joined EduSolutions, which won its first textbook tender in Gauteng in 2003. She then moved to another major beneficiary of education tenders, the Lebone Group, in 2006.
Lebone was part of a joint venture with Paarl Media, which was awarded a three-year tender valued at R2.8-billion to print, package and distribute workbooks to 19000 schools across the country in November 2010.
Lebone’s Keith Michael told the M&G last year that Hendricks was not involved in the workbook contract, saying she held a directorship in the Lebone Group, not in Lebone Litho, which won the tender.
In a telephone conversation this week, Soobrayan “categorically” denied that his personal links with the successful bidders had any bearing on the awarding of tenders for textbooks or workbooks.
“At the time of awarding the workbook contract, I was unaware of Hendricks being part of Lebone. Furthermore, the national department sourced external auditors to monitor the entire process, making it watertight,” Soobrayan said.
He said it was a “stretch of the imagination” to link him to the EduSolutions tenders, because they were all concluded before his time at the department, which he joined in 2010. – amaBhungane reporters
The M&G Centre for Investigative Journalism (amaBhungane) produced this story. All views are ours. See www.amabhungane.co.za for our stories, activities and funding sources.