Gross mismanagement, incompetence, fraud and outright theft are bleeding Robben Island dry, according to a forensic audit of the world heritage site completed this year.
The report, kept under wraps until now but shown to the Mail & Guardian this week, has led to a raft of disciplinary charges against the island’s top management and an investigation by the Special Investigating Unit of the National Prosecuting Authority.
“The management of the island treated it like their own private ATM,” an angry board member said this week.
The report by consultancy Orca identifies a R25-million hole in the accounts of Robben Island Museum (RIM), an extraordinary series of managerial lapses and evidence to suggest criminal misconduct.
“For every rand received from tourism revenue R2,50 was paid to staff. Salary increases were in excess of inflation and salary increases to executive management [were] 259% between 2004 and 2007. General salaries increased by 29% between 2006/2007,” the audit report found. “Costs [grew] six times faster than revenue.”
At the centre of the saga are the year-late delivery of a new ferry from a Cape Town boat-building company, Farocean Marine, and the suspended RIM chief executive Paul Langa -- the former head of security at the ANC’s Luthuli house headquarters and director of numerous businesses.
“The process of managing the acquisition of the ferry … was grossly mismanaged,” the audit states.
The ferry, which cost just more than R22-million, does not even appear on the island’s asset register.
Delivery was due in February 2007 but took place only in February 2008. The contract, signed by Langa, made no provision for penalties.
The audit report queries the apparent payment of an extra R1,7-million for the R21-million vessel and missing details about the purchase.
“There is no audit trail reflecting the capitalisation of the RIM’s most material asset ... due to lack of documentation we were unable to confirm that RIM deducted the penalty of 3% of the contract value of the boat due to late delivery,” the report says.
The forensic audit concludes that “the agreement between the RIM and Farocean for the construction of the ferry is overly skewed in favour of Farocean; we couldn’t ascertain which attorneys drew up the contract and whether they were appointed by Farocean or RIM”.
But Farocean’s Peter Kuttel says the company has not been paid “in full” for delivering the ferry. “The RIM keeps on saying that it doesn’t have the money to pay me. I believe it will, though. The expectations of the management were too optimistic when they ordered the boat. Just to get the plans okayed took six months,” Kuttel said.
There also appears to have been massive theft of fuel from the ferry. On May 9 the ferry filled up with 3 107 litres of diesel. For the next three days the ferry undertook no trips. On May 13 the ferry made six trips to the island. For this “the expected fuel consumption would be in the order of, at most, 1 500 litres of fuel. Yet on May 14 the boat refuelled with another 3 111 litres ... We believe that there is a strong inference that fuel was stolen [siphoned] off the ferry,” says the report.
The island’s curio shop also appears to have been a financial black hole. “Nineteen moneybags went missing on 19 different days,” the report records, while the shop’s bank records are out of sync with its accounting records to the tune of R9,2-million.
In February Langa, chief financial officer Nash Masekwameng and chief operating officer Denmark Tungwana were suspended and have since been informed that they will face disciplinary charges. The decision to press charges was made despite a recommendation by Minister of Arts and Culture Pallo Jordan that they be allowed to resign quietly to avoid “embarrassment”.
Letters from Robben Island chair Naledi Tsiki to the three managers detail charges of negligence and gross financial mismanagement.
Among other charges, Langa is cited for poor work performance, failing to implement a fraud-prevention plan, gross financial mismanagement and receiving unauthorised salary increases.
Tungwana is accused of failing to disclose interests in at least eight companies. Other charges include allegations that he misled a special audit committee that was probing the ferry contract. He allegedly failed to investigate the financial viability of the ferry plan, claimed a penalty clause had been invoked when it had not and failed to appear at project meetings .
Masekwameng faces wide-ranging charges including misrepresenting his qualifications for the job of chief financial officer, accounting failures and receiving unauthorised salary increases. “The employee gave out that he was sufficiently qualified and experienced to perform the assigned duties when he knew, or should have known, that [he] did not have the required qualifications and/or experience,” Tsiki’s letter reads.
Among 18 separate charges of negligence levelled at Masekwameng are failure to implement basic accounting procedures and failure to manage costs.
None of the suspended RIM employees could be reached for comment. Langa is on leave in Sweden.
The bungled Australian connection
Bill Harry was worried about bidding for the construction of a new Robben Island ferry. His Sabrecats yard, in Freemantle outside Perth, supplied the Makana and the Aushumato, which took over from the creaking prison-service tubs that serviced the island in the late 1990s. But he was concerned about the stringent empowerment rules surrounding the bid.
“I explained to [Robben Island management] that we’d be non-compliant -- we just don’t have the people in Australia who were disadvantaged by apartheid to do the work,” he told the Mail & Guardian. “It was going to cost us R100 000 to get the tender.”
The reply from Robben Island Museum, in an email obtained by the M&G, was that this was no problem -- foreign bidders were exempt from BEE requirements.
In fact, management abruptly announced, they wanted to visit Sabrecats and inspect a 30m vessel under construction there that they thought might fit the bill.
Harry postponed a trip to the Fort Lauderdale boat show, rented a minibus for the seven-person delegation and prepared to play the gracious host.
When the delegation arrived, he said, they told him he had 90 minutes to provide breakfast and show them his operation before driving them to the airport for an onward flight to Melbourne. It isn’t clear what they did there.
“I kept telling them they had the wrong boat anyway,” Harry said. “I gave them the option of two smaller ones with more passenger capacity for a lower price than [I quoted] in my tender.”
Eventually in December 2006 he was given 48-hours notice to appear before the tender committee in Cape Town and answer questions. “It lasted half an hour and I flew back to Australia on the last available flight before Christmas,” he said.
After three months he received a letter saying his tender had been rejected because it failed to comply with empowerment rules.
“I kept the drawings around here for a while but it made me so angry that one day I just took it and threw it in the bin. I’ll never do business with Robben Island under the current management again.”
Island's management in hot water
The following is a shortened version of the letter Pallo Jordan sent to Robben Island Museum council chairperson Naledi Tsiki: "It’s clear that top management of Robben Island Museum [RIM] have not fulfilled their mandate in the best interest of this national asset and World Heritage Site to the extent that RIM is technically bankrupt.
“In considering the matter, cognisance must be taken of the principle of apportionment of blameworthiness to the extent that the CEO [Paul Langa] must be held more culpable than the COO [Denmark Tungwana] and the CFO [Nash Masekwameng].
“It’s deemed prudent that the council pass a resolution to approve the final report and charges and further that the CEO, COO and CFO be given the option to resign with immediate effect in lieu of being charged and facing a disciplinary hearing, on conclusion of which the likely sanction would be dismissal.
“The exercise of this option will spare RIM and the department of arts and culture adverse publicity, and also spare the CEO, COO and CFO the ignominy of being charged and subjected to the humiliation of a disciplinary hearing.
“Although the RIM top management advanced a multitude of reasons for the [R25-million] deficit, it must be conceded that the top management failed dismally to provide the requisite leadership and sound financial management necessary to maintain RIM as a declared cultural institution and World Heritage Site ...
“The department had a meeting on 25 June 2008 with Michael Leaser, a regional head of the special investigation unit of the Western Cape, in order to discuss the matter of further allegations made by a member of staff of RIM, including allegations of tender irregularities, financial mismanagement and other aspects.
“It’s anticipated that the department will receive this information within the next few days and it’s envisaged that this information will be passed on to [forensic audit firm] ORCA to further investigate.
“Currently RIM is facing litigation in the region of about R3-million in respect to photocopies that were procured without following the necessary procurement process.
“The issue of the overpayment of salaries and the alleged refusal to pay back must also be investigated by ORCA.”
Source: Mail & Guardian Online
Web Address: http://mg.co.za/article/2008-08-01-how-robben-island-was-robbed