Angry: Forensic accountant Anton Kriel uncovered the suspicious cash flows. Photo: Oupa Nkosi
In March last year, accountant Anton Kriel arrived at the Mail & Guardian offices. Carrying an armful of files, he said he wanted to speak to a reporter, and that he had a story to tell.
He said that, in 2010, the Special Investigating Unit (SIU) had begun investigating a building contractor, Khotso Frank Khasu, over a major contract with the Naledi municipality in North West province for the building of 3 000 low-cost houses in Vryburg between 2008 and 2010.
The SIU found that only four houses had been completed and that Khasu Engineering Services, which Khasu owns, billed the council for millions of rands for earthworks, roads, storm-water structures, streetlights and foundations that were never provided.
The softly spoken Kriel said he had been hired by the SIU to trace the missing millions, but he said he was frustrated that nothing had been done since his investigation.
“A possible suspect is out there and nothing seems to have happened in terms of a prosecution,” he told amaBhungane at the time. “What angers me is that the money was not used to build houses for poor people … it’s a crime against humanity, in my opinion.”
It emerged this week – more than a year after Kriel first came to the M&G – that Khasu was appointed chief director of the co-operative governance and traditional affairs (Cogta) department in October last year. A department spokesperson said his salary was “a minimum” of R930 000 a year.
Approached for comment this week, the new co-operative governance minister, Pravin Gordhan, was unaware of the allegations against Khasu. However, his spokesperson, Dumisa Jele, said: “The necessary steps will now be taken to establish the facts and determine the actions, if any, that need to be taken. Impropriety of any sort will be dealt with in an appropriate manner on the basis of sound legal advice.”
On Friday last week, Deputy President Cyril Ramaphosa told the South African National Editors’ Forum in a speech that the media should report the struggles and successes of ordinary South Africans and the effects of government policies on their lives.
“Expose us when we abuse state resources,” he told the forum at its annual general meeting in Cape Town.
No comment
Contacted at his departmental office on Tuesday, Khasu said: “I don’t want to comment. I have no story and I have said this before: I have nothing to say about this. It happened five years ago.”
This week amaBhungane established that more than three years after the SIU investigation, the case is still not ready for prosecution, and an SIU recommendation that Khasu’s properties be subject to a “caveat” (a transaction freeze) does not appear to have been acted on.
A senior SIU investigator familiar with the case said: “I’m really shocked that this matter has not gone anywhere at all. As far as I can remember, this was one of our easiest cases ever. We were fortunate in our investigation to find that money had disappeared with no work being done on the ground.
“It would have been difficult if we had found houses built, because it would have been impossible to estimate how much money was spent. But in this case only a few houses were completed. It was a cut-and-dried investigation.”
The spokesperson for the National Prosecuting Authority (NPA), Nathi Ncube, said the authority received a criminal docket earlier this year but referred it back to the Hawks for further investigation.
Ncube strongly denied that political pressure had anything to do with the delay.
Khasu is a former exile and Umkhonto weSizwe veteran, and the brother of Jomo Khasu, the spokesperson for Transport Minister Dipuo Peters.
“There is no political interference and, in time, you will see that your assumption is wrong,” Ncube said. “The investigators and prosecutors are working on finalising the outstanding investigations.”
The saga began in 2007, when the Naledi municipality appointed Khasu’s firm to build the houses in Vryburg. On the purported grounds that the project had to start urgently, no tender was issued.
Millions disappear
Kriel’s investigation showed that, between June 2008 and September 2009, the council paid R27-million to Khasu Engineering and another R58-million into two of Khasu’s personal accounts. By May the following year, Kriel found, all three accounts had been emptied.
The SIU report makes it clear that Khasu was entitled only to R59.5-million for completing the contract and called for the overpayment to be recovered.
An independent engineer who inspected the project for the SIU in March 2011 found that only R20-million of what Khasu received went into bricks and mortar.
Painstakingly tracking the missing balance, Kriel found that R30-million had passed through at least 167 other accounts, many of them held by Khasu, his relatives or business associates.
They included Khasu’s wife, Surgely Ouma Khasu. A sum of R1-million was transferred to her personal account and a further R5-million was paid to SK Technologies, of which she was the sole member.
Funds may also have been moved offshore, because an amount was deposited in Pakistan’s Habib Overseas Bank.
“To this day, we don’t know what happened to the other millions,” Kriel said.
The SIU probe identified “numerous” fixed properties registered in Khasu’s name and said it had asked the Asset Forfeiture Unit to put a caveat on all of them.
NPA mum on investigation
Deeds office records reflect no such restriction and Khasu has been very active in the property market since 2006. Asked whether the unit, which falls under the NPA, had followed the SIU’s recommendation, Ncube said: “I cannot comment because the matter has not yet been brought to court. We do not want to jeopardise our investigation.”
Hawks spokesperson Paul Ramaloko said the investigation was ongoing but that “we don’t do it based on time; if it’s not ready, it’s not ready. Unfortunately, policy does not allow us to divulge the stage of our investigations.”
When amaBhungane told the director general of traditional affairs, Charles Nwaila, of the Khasu investigation, he said: “It’s the first time I hear of this. You have actually caught me off guard.
“I remember when he [Khasu] was appointed a few months ago, the appointment letter stated that it was subject to a vetting process.”
Nwaila said that vetting was in progress and he would check on it this week. But amaBhungane has not been able to contact him since then.
A senior departmental source, who asked not to be named, said Khasu was initially appointed in July as a consultant to profile traditional councils throughout South Africa.
“Three months later, the chief director resigned, the post was advertised and Khasu was appointed. His job involves training traditional leaders, reviewing the councils’ administrative laws and seeing to it that traditional offices are well organised and administered.”
The source added that a post at that level required vetting, which normally took about six months. “I’m shocked that this is the person you’re talking about,” he said.
Whistle blower alerts municipality
The problems in the housing project were brought to the SIU’s attention in 2010 by Iqbal Motala, then head of the North West housing department. This week, he said the province entered a contractual agreement with the Naledi municipality “where we agreed on a tranche payment policy which at the time allowed us to pay in advance”.
He alleged that acting municipal manager, Eric Phukwana, “physically removed the first page of the contract and replaced it with that of Naledi and the contractor [Khasu]”.
“Khasu then had an advantage of demanding the funds in advance and, when the money was in his hands, he did not do the job.”
Motala said he had been disappointed by the municipality’s failure to hold Phukwana accountable.
“I was then compelled to rope in the SIU to investigate,” he added.
Kriel found that Khasu transferred hundreds of thousands of rands into Phukwana’s account. Asked last year what these payments were for, neither Khasu nor Phukwana responded.
Phukwana resigned from the council in August 2008. He did not reply to phone messages or SMS requests for an interview this week.
The ANC in North West said it was still reeling over the scandal. The acting ANC chief whip in the provincial legislature, Hoffman Galeng, said: “There have been many investigations on this matter and yet no action has been taken.
“This is unacceptable and, as the chief whip, I will be raising the matter with the relevant portfolio committees. Money cannot be squandered without an explanation,” he said.
Asked what the provincial government has done to recover the money, North West government spokesperson Lesiba Kgwele declined to comment, saying the matter is still being investigated.
An active player on the property market
Khotso Khasu currently owns six properties bought for R6.8-million, deeds records show.
They also show that he has been very active in the property market since 2006 and that his transactions have been worth much more than this.
In a 2011 report, the Special Investigating Unit (SIU) remarked that a deeds check had revealed “numerous” properties in Khasu’s name.
The SIU said it had asked the Asset Forfeiture Unit to put a “caveat” on all of them. The National Prosecuting Authority has refused to say whether this happened.
• In November 2007 – before Khotso received his first payment from the council but after he landed the Vryburg housing contract in June 2007 – he bought a R3.8-million stand in the prestigious Fancourt Golf Estate in George. He built a large house there which, according to deeds office records, he sold in 2011 for R5.7-million. “Yes, Mr Khasu lived here, but he sold the house about two or three years ago. It was a huge mansion,” said a source at the estate.
• In December 2007, he took transfer of a R2.5-million farm in the Southern District Municipality in North West province, which he subsequently sold.
• In April 2008, he took transfer of a property for R850 000 in Orange Grove, Johannesburg, which he still owns.
• Curiously, in October 2012, he bought two adjacent properties from the Naledi municipality for R30 000 and sold them in the same month for a whopping R500 000. This suggests he acquired the properties at well below their market value.
Anton Kriel, the accountant hired by the SIU to track down the missing millions from the Vryburg housing contract, also found that Khasu bought a seven series BMW for R1.7-million in 2009. But Khasu appears to have charitable impulses. Kriel found that in the run-up to the 2009 general election, Khasu handed out food parcels worth R300 000 to the elderly in Vryburg. – Zwanga Mukhuthu & Teetee Zwane
Another suspected official sitting pretty
Three years after auditors recommended criminal and internal disciplinary steps against a slew of senior North West government officials implicated in a highly irregular R667-million lease tender, no one has been brought to book.
Indeed, one of the officials fingered by the audit company, former provincial health superintendent general Lydia Sebego, has since moved to a top post in the national government. AmaBhungane was leaked a confidential report by Gobodo Chartered Accountants on a lease tender for the health department offices in Mahikeng.
The report went to the provincial public works department in 2011.
The deal, won by Peolwane Properties, was allegedly riddled with legal transgressions and increased the health department’s office rental by 174%.
The report calls for criminal and disciplinary action against Sebego, and disciplinary steps against the chief director of property management in public works, Pandora Hlakanye, and all the members of the bid evaluation and adjudication committees.
In an interview last week, Sebego said she was never charged or disciplined. She said she could not comment on the Gobodo report because she never saw it.
She confirmed that, after her contract with the North West government ended in March 2011, a month after the Gododo report was submitted, she moved to the national department of co-operative governance as chief operations officer.
Disciplinary hearing delayed
Public works spokesperson Aubrey Motsurupe said that disciplinary procedures were initiated against Hlakanye and the bid committee members in 2012 but this had been delayed by “the complexity of the matter”.
The officials had demanded arbitration and then objected that the presiding officer was not impartial. Motsurupe did not say how the department was breaking the impasse. Gobodo accuses Hlakanye of failing to deal accountably with public funds.
Motsurupe said that she had been suspended over a different matter. AmaBhungane made phone contact with someone calling herself “Mrs Hlakanye”.
When told what the call was about, she claimed to be Hlakanye’s daughter and said her mother was in China. Gobodo was asked to investigate the procurement of a nine-year lease for an office park for the health department whose overall value, with escalations, was set at R667-million. Among many tender irregularities, the auditors found:
• Sebego committed the department to a project “for which money had not been appropriated”;
• No appointment letter for Peolwane could be found, and no payments to it traced;
• Peolwane’s director, Reginald Kukama, refused to be interviewed about the contract, though this week he claimed he was not invited to an interview;
• The bid adjudication committee “apparently” recommended Peolwane based on a letter from Hlakanye, without having bid documents in its possession;
• The bids were apparently evaluated against a R40-million a year “pre-estimate” set by the health department – without tender conditions being properly considered and in defiance of the treasury, which “discourages” this practice; and
• Peolwane won the contract despite failing to attend a compulsory pre-bidding meeting. Kukama’s lawyers, Padayachee Attorneys, said the dispute was settled “amicably” and that “our clients deny any suggestion of improper conduct, which we consider to be inflammatory”.
There is another skeleton in Sebego’s cupboard: in March this year, the Land Bank brought a claim against her, property mogul Roux Shabangu and seven others in a bid to recoup an unauthorised R82-million Land Bank loan for a mega-development in Hartbeespoort that never materialised.
This week Sebego said she “won’t be able to comment on the matter” and referred amaBhungane to the secretary of the company concerned, Westside Trading 570. – Luqman Cloete
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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.