A decision is expected soon on whether criminal charges will be brought against Matthews Phosa. Justin Arenstein reports
Forensic investigators are finalising a secret 13-month fraud probe into former Mpumalanga premier Matthews Phosa.
The probe, spearheaded by private sector forensic auditors in the Eastern Cape to prevent leaks and intimidation, is believed to have uncovered prima facie evidence that Phosa was irregularly paid for renovations to his official residence.
The auditors are scheduled to hand their dossier and evidence to the elite Scorpions unit in the office of National Director of Public Prosecutions Bulelani Ngcuka next week for possible criminal prosecution.
The auditors, Gobodo Inc, invoked client confidentiality and refused to comment on Thursday.
Ngcuka’s representative, Sipho Ngwema, was also loath to comment for fear of prejudicing the probe but confirmed that the unit was conducting a wide-ranging investigation into government corruption in the province.
“It is still too early to comment in detail, but we are investigating corruption in Mpumalanga. We would welcome any additional information flowing out of preliminary investigations conducted on behalf of the provincial government,” he said.
Mpumalanga Premier Ndaweni Mahlangu’s representative Sibusiso Shube confirmed that Gobodo appeared to have “stumbled” on evidence of fraud while investigating a dodgy R26-million Mpumalanga Parks Board (MPB) scam to side-step the provincial tender board.
“We appointed outside auditors in May last year. They asked for their mandate to be expanded after uncovering additional information, but we have yet to receive a detailed report on their findings. We will obviously refer any evidence of criminal acts to the relevant authorities,” he said.
Shube stressed the probe was unrelated to recent revelations of a controversial plot to oust President Thabo Mbeki. Phosa has been named as one of three alleged masterminds of the plot, which is being probed by Minister of Safety and Security Steve Tshwete.
“Our probe predates the allegations of a plot and is unrelated. The Gobodo investigations are independent and there has been no political interference,” said Shube.
Evidence in the Gobodo dossier includes allegations that the provincial treasury irregularly paid Phosa an estimated R700 000 for renovations he ordered on his official residence at Tekwane Estates near Nelspruit in 1995.
The sprawling mansion was originally leased to Phosa by the government in 1994 for only R149 a month before being renovated into a R2,5-million “white palace” hidden behind elaborate security barricades and a massive gatehouse.
The wall and gatehouse cost R835 000 and the life of a labourer when they were built shortly after the 1994 elections.
The wall was later irregularly supplemented by a R400 000 electrified perimeter fence and R121 000 in garden landscaping, compliments of MPB CEO Alan Gray.
Phosa has previously confirmed that he spent R700 000 from his own pocket refurbishing the house, but has refused to answer queries on how he obtained a bond to pay for the renovations, or his reported attempts to buy the property. Phosa has also refused to say how he was compensated for the renovations when he left the government in 1999.
The house, which currently stands empty, is legally owned by Mpumalanga’s Economic Empowerment Corporation. Leaked provincial cabinet documentation indicates that it was nearly sold to Phosa for a nominal amount in 1995 when the province tried to grant a string of properties to local politicians.
A strongly worded internal cabinet report by provincial auditor Huffy Pott warned the scheme was illegal, a blatant waste of taxpayers’ money and would greatly embarrass the government if ever publicised.
Pott also warned in his report that the houses were awarded to African National Congress politicians at unrealistically low rentals purely on grounds of favouritism, nepotism and political privilege.
New evidence that surfaced during a liquidation court case in March indicates that Phosa originally financed the renovations through a personal Absa bank loan that was underwritten by a secret and unconditional government guarantee.
The guarantee, signed by provincial director general Frank Mbatha in 1995, was never disclosed to the auditor general or other government investigators.
The Nelspruit Civil Court heard that Phosa convinced Absa’s United Bank to grant him the loan without a title deed for the property. A copy of the guarantee claims that the loan would be used to cover Path Construction’s bank overdraft for work on Phosa’s house.
“[T]his overdraft will be guaranteed by this office should United Bank fail to make payments for whatever reason,” the guarantee reads.
It fails to set a limit on the loan, but confirms that the first draft is R298 277.
It is still unclear exactly how much Phosa was eventually compensated for the renovations, but Absa paid R663 000 to settle Path Construction’s outstanding accounts for the renovations. African Eye News Service