Justin Arenstein
Auditor General Henri Kluever has called for a full-scale commission of enquiry to establish whether relatives or close friends of Minister of Housing Sankie Mthembi-Mahanyele may have improperly benefited from the contentious R198-million Motheo Construction housing scheme in Mpumalanga.
The special report, leaked to the Mail & Guardian this week, is a litany of ignored procedures, apparent incompetence and reckless disregard for proper financial control over more than R198-million of public money.
Controversy over the scheme has already led to the resignations of the national housing director general, Billy Cobbett, Mpumalanga housing board chairman Saths Moodley and board member Job Mthombeni.
Cobbett resigned after apparently defying Mthembi-Mahanyele and reporting a series of irregularities in the scheme to the auditor general in April. Moodley and Mthombeni were forced to resign for their part in a string of suspected irregularities.
Mpumalangas housing board was also suspended at the time. Rejecting a national housing department offer to refer the matter to the public protector, Selby Baqwa, Kluever says in his still- confidential special report on the scheme that the most appropriate manner to investigate alleged family or other close relationships is through the appointment of an independent commission of enquiry.
The M&G reported in May that at the centre of the housing project controversy was the web of relationships connecting central government, provincial government and the private sector.
They included the close friendship of the housing minister and the head of Motheo Construction, Thembi Ndlovu, from their days in exile. Ndlovu has openly described Mthembi-Mahanyele as her mentor.
Mthembi-Mahanyele and sacked banker Kevin Gibb, who helped her set up the deal, also had a close working relationship from a history of Nedcor-backed projects. Gibb met Ndlovu after hiring her sister, Granny Seape, to work at Nedcor.
Job Mthombeni, co-director of Motheo, was also a member of the Mpumalanga Housing Board, which approved a R185-million contract with Motheo.
While Kluevers report says there is no conclusive evidence of misrepresentation by either Motheo or Nedcor, there was a reasonable possibility that such misrepresentation had occurred. The report calls for intensive investigation by the proposed commission.
Warning that the contract, for 10 500 houses, inflated accepted costs on a project this size by R23,6-million, the report also questions how the Mpumalanga Housing Board could authorise an effective subsidy of R17 250 per house to Motheo without any precedent or reason for it in law or practice.
The report clearly indicates that there was substantial disregard for due process and proper procedures by individuals in positions of public trust:It is evident that the interests of the taxpayer and the principles of good governance have not been served in this instance.
One of the most shocking findings is that the housing board did not actually have the money that it promised to Motheo when former housing chairman, Saths Moodley, signed the contract in February.
Mpumalanga also had no prospect of securing the money, Kluever stresses, and had already over-committed itself by R313- million before signing with Motheo.
The departments seriously over-committed position creates a risk of [government] not being able to meet its commitments if and when they become due, the report warns.
Just as shocking is Kluevers finding that Moodley never obtained proper approval for the scheme from the provincial housing board because there was no quorum at the board meeting where the matter was briefly discussed.
The report points out that the discussions that did take place failed to address any of the 15 criteria required before approval can be granted. Neither the board nor Motheo could produce evidence on 11 separate points to prove that they had ever attempted to meet the requirements, while only superficial or theoretical attempts were made in another four instances.
Stressing that Motheos proposal to the board had hinged on a supposed joint venture with Nedcor, Kluever notes that there was never any formal agreement between the two bodies and that Nedcor vehemently denies being officially involved in the scheme.
The board failed to ask for a copy of the alleged joint venture agreement, and it made no attempt to assess the legal and financial competence of the joint venture, as required by the boards own regulations.
In addition to the almost complete disregard for due process, the board also agreed to pay Motheo an extra R930 per house, or R9,7-million for bulk infrastructure such as sewerage and water lines, and for the installation of a chemical toilet called an enviroloo.
The report points out that the chemical toilets should have reduced costs, not increased them. What, asks the report, did Motheo need the extra R9,7-million for? In any case, it adds, the board had no right to approve bulk infrastructure payments because such payments come from a different source.
Other failings highlighted in the report include an effective R24,4-million interest-free loan to Motheo, which the report says is contrary to well- established principles of government spending. The report also questions why the housing department made the first R9,2- million payment to Motheo before Motheo applied for the actual building of the houses.
In the myriad monetary transgressions listed in the report, is one of a more social nature: the report criticises Motheo for failing to consult the communities it was supposed to be helping. It details how three Motheo houses in Hazyview had to be demolished after the local chief complained that he had never been consulted, and pointed out that they had been built in his communitys agricultural fields.
The report makes no mention of the clash between Cobbett and Mthembi-Mahanyele or of his resignation but does stress that the special report was drafted at the request of Cobbett, and not of the minister.
The report does not refer to Mthombeni but notes that the fact that the Mpumalanga Housing Board allows for industry interest groups to have special representation on it creates the potential for a conflict of interest.
The full report, which has been forwarded to Premier Mathews Phosa, Mpumalangas housing department and its board, is expected to be officially tabled and debated in Parliament on Monday. African Eye News Service