A R1.5-million alleged golden handshake and a sweetheart consultancy deal have pitted a former Cabinet minister against a doyenne of South African philanthropy.
At stake is the South African Institute of Advancement, better known as Inyathelo, and its roughly R50-million in cash and investments, plus prospects of future fees for services to the nonprofit sector. Inyathelo connects nonprofit organisations and potential funders.
The new executive director, Nozizwe Madlala-Routledge, is up against the former incumbent, Shelagh Gastrow, a founder of the organisation. Last week Madlala-Routledge was notified in a board meeting that she was to be suspended and a full investigation launched into her conduct.
Gastrow is renowned in nonprofit circles and has connections with global mega-funders and deep-pocketed local philanthropists, such as Atlantic Philanthropies, the Kresge Foundation, the DG Murray Trust, the Ackerman Family Foundation and Jonathan and Jennifer Oppenheimer, and is on her home turf in Inyathelo.
Madlala-Routledge has been quick to remind her opponents, the Inyathelo board, of her history.
“As you may know, I am no stranger to conflict, as I came to adulthood during apartheid, which I actively campaigned to end,” she wrote in a memo to the Inyathelo board early in December. “I am also no stranger to challenges which I faced during my 10 years in Cabinet, most notably when I found myself confronting President [Thabo] Mbeki on a matter of ethics with regard to babies infected with HIV.”
The move to suspend her was the culmination of a brewing storm that Madlala-Routledge alleges started because she asked difficult questions about how Inyathelo operates.
Inyathelo was the main driver in the creation of the independent code of governance for nonprofits in South Africa, which it considers the equivalent of the King code of governance principles for corporates.
Inyathelo can “be proud of the role it has played in encouraging good governance in the NPO sector”, wrote Gastrow in the organisation’s 2015 annual report.
But Madlala-Routledge, backed by sources in Inyathelo, alleges all is not well in the body that charges other nonprofits thousands of rands to teach them the art of good management and ethical conduct, or to connect them with donors.
A human resources consultant commissioned by Madlala-Routledge reported huge schisms, conflict and negativity among Inyathelo staff, threatening its sustainability.
The allegations of dodgy management extend to the financial benefits Gastrow received.
On August 27 2014 the Inyathelo board passed a resolution, which the Mail & Guardian has seen, granting Gastrow a R1.5-million payment once she retired in June 2015. The payment was equivalent to a full year’s salary.
Gastrow was obligated by the resolution to provide advice to the new director, make introductions to existing donors, and be involved in clinics and workshops held in the 12 months after she had left, if requested to do so by Inyathelo.
Inyathelo insiders say she has not fully met these commitments, and instead set up her own for-profit consultancy, GastrowBloch Philanthropies, while still employed by Inyathelo.
The resolution also held that, after her resignation, Gastrow’s private company would undertake all work relating to the Private Philanthropy Circle (PPC) for a fee that would only be negotiated later.
PPC was an exclusive club of high net-worth individuals and organisations, to which members pay an annual subscription, “usually a percentage of their personal wealth”., insiders said.
When Gastrow headed Inyathelo, Amanda Bloch ran PPC. She is now Gastrow’s business partner.
When approached for comment, Madlala-Routledge told the M&G that the board’s resolution made no sense to her and when she questioned Gastrow about it, the latter became very “upset”. She describes the resolution as counter to the fiduciary duties the board holds for Inyathelo. “I feel they have failed in their duty. The resolution was ill considered.”
Inyathelo chairperson Zenariah Barends told the M&G she had no comment.
Gastrow initially responded to the M&G saying she was aware that Madlala-Routledge is currently being investigated by the board of Inyathelo for various infringements. It would be irresponsible, she said, to “comment on what are clearly spurious allegations” until the outcome of that investigation was made public.
But on Tuesday lawyers representing Gastrow, Bloch and their new enterprise responded to detailed questions with a letter denying several of the allegations relating to Gastrow.
Shelagh Gastrow, former executive director and a founder of Inyathelo.
An Inyathelo insider said the board was dominated by Barends and, during her tenure, Gastrow. “There is not a lot of other voices in that room.” The insider said that, in terms of accountability and strategy, the board had little oversight.
The M&G has seen a briefing written by Madlala-Routledge to the board about her performance since she began working at Inyathelo in June this year.
In it, Madlala-Routledge says she inherited an organisation in a “shocking” state that was in “complete disarray”, “seriously dysfunctional” and that “things are very unwell in the land of Inyathelo”.
“Almost the entire philanthropy programme had been privatised out to Shelagh Gastrow, in her pursuit to set herself up in a for-profit consultancy,” Madlala-Routledge wrote. “This includes the board signing over pieces of work to Gastrow, and also allowing her to spend the 10 months prior to her departure earning an executive director’s income while spending the time establishing her own private consultancy.
“In addition, the board agreed that the ED [executive director] could direct the earnings and income from any consultancy work that came to her – as ED – into her private consultancy, while still being paid as ED,” wrote Madlala-Routledge. “This is clearly recorded in a written and signed agreement.”
Madlala-Routledge writes that Gastrow had, in the first half of 2015, instructed that Inyathelo’s philanthropy website be closed down.
She had “serious concerns” that a key income stream for Inyathelo from donor advisory services had been “decimated” in the organisation “apparently deliberately” and had been “effectively handed over to the departing ED’s private consultancy”.
“None of this, or its implications, was made known to me on taking over the post of executive director – and it has been extremely worrying to discover this level of misrepresentation in the state of the organisation that was handed to me,” wrote Madlala-Routledge.
“The above remains of great concern to me, given the extent of the investment made by donors in Inyathelo’s philanthropy promotion work,” she added.
Madlala-Routledge complained in the briefing that the handover was negligent and that she faced serious resistance from senior staff, who obstructed her work.
“All three directors have treated me with an extraordinary and inexplicable amount of antagonism and aggression,” she wrote. “It is unclear who the directors thought was taking over the reins of Inyathelo, but there has been a distinct lack of engagement with my abilities and a complete absence of any efforts to engage with me about the work and to raise the levels of energy around delivery and planning.”
A breaking point in the relationship between Gastrow and Madlala-Routledge was a trip to the United States to meet funders, according to her comments to the M&G, and independently confirmed by sources with Inyathelo.
“[Gastrow] was going to accompany me to New York in November to introduce me to current and potential new funders,” Madlala-Routledge sadding, adding that she quickly realised Gastrow had her own agenda for the trip relating to her consultancy.
“I told her that I don’t think I needed her on the trip as I had knowledge of all the people I was going to meet,” said Madlala-Routledge.
The refusal to take Gastrow to New York is said to be part of the investigation against Madlala-Routledge. She said she was given 72 hours to argue why she should not be suspended. “I really am at a loss as to what I am being suspended for,” she says. “I still haven’t seen any charges. What am I supposed to respond to?”
While she was in the US, the board hired a consultant behind her back to launch an investigation into her, she said, contravening its own code of corporate governance.
The board told her that the consultant was doing a performance review of her, but in fact is investigating complaints made against her.
Gastrow’s side of the story
Nozizwe Madlala-Routledge inherited an organisation in good health and in high esteem, lawyers representing her predecessor said this week, claiming that Madlala-Routledge is dealing in fabrication.
In a 12-page letter on behalf of Shelagh Gastrow, her business partner Amanda Bloch and their Gastrow Bloch Philanthropies, law firm ENS Africa on Tuesday said Madlala-Routledge had provided the Mail & Guardian with facts that are “inaccurate and in certain instances simply false. There is accordingly reason to doubt the accuracy of the report and information received from her”.
Gastrow and Bloch, through their lawyers, said they had no knowledge of the reasons behind Madlala-Routledge’s suspension, or the investigation into her.
The pair denied other accusations in considerable detail, saying:
- Gastrow did not receive R1.5-million but an unspecified “modest payment” considered fair in light of 13 years of service without pension benefits and “only inflationary increases in salary”;
- The handover requirements that payment imposed on Gastrow would only end in June 2016, and she was honouring the requests to help as they were made, including giving nine out of a required 12 “clinic services” at the Inyathelo clinic;
- The new for-profit company formed by the pair was not in conflict with Inyathelo as the latter is not in the business of providing philanthropy advisory services.
- The board had agreed that Gastrow could set up a business while exiting Inyathelo so that “she would have a viable business to enter, rather than spend another year without any income” while smoothing the way for her successor;
- Inyathelo and Gastrow had agreed that should the Private Philanthropy Circle (PPC) continue to contract Inyathelo for secretarial work, Inyathelo would subcontract the work to Gastrow’s for-profit company – but that this issue is now moot because the PPC no longer exists;
- Gastrow had not instructed Inyathelo’s philanthropy website be closed down;
- The organisation Gastrow left was in good shape financially, and in terms of staff and culture. The organisation had some R48-million in reserve funds, several fully-funded projects, and moved into a brand new R20-million headquarters in Woodstock, Cape Town, in January.
- Gastrow had “made every effort to ensure that the handover was conducted professionally and in good faith” – and Madlala-Routledge thanked her for that in October; and
- Examples of emails exchanged between Gastrow and Madlala-Routledge regarding the US trip do not “show any break in their relationship”.
The M&G, Gastrow and Bloch’s lawyers said, had compromised its rights by asking others in the philanthropy world questions about the “scandalous and malicious rumours” of allegations against them, and appeared to have been taken in tow to promote a particular agenda.