Andy Duffy
The Independent Development Trust (IDT) has uncovered an alleged R2-million fraud involving two staffers and an employee of the agency’s auditing firm, Deloitte & Touche.
The staffers, who helped administer funds for development projects across the country, allegedly signed cheques for themselves. The Deloitte & Touche official, seconded to the agency as a watchdog, instead allegedly collaborated in the scam.
Fowzieya Navelling and Bongi Dlamini, who worked in the IDT’s Johannesburg office, are due to appear in the Johannesburg Regional Court later this month on fraud and theft charges. The Deloitte & Touche official, Zambian citizen Richard Kangwa, has fled to London.
The IDT has also brought a civil action to freeze the two employees’ assets, including fixed deposit accounts, where some of the loot is thought to be sitting.
The alleged scam is believed to have run for nearly a year before it was uncovered last July, when the IDT’s bank raised the alarm. The bank queried a R45 000 cheque, drawn on the IDT’s funds, which had gone into Kangwa’s account. Another cheque for R50 000 had been deposited into his account the previous day.
IDT acting chief executive Michael Ridley says the full extent of the alleged fraud was only determined at the end of last year, after an investigation by forensic auditors Gobodo and the South African Police Service’s commercial crime unit.
”The fraud was on quite a big scale by fairly senior administrators,” Ridley says. ”They should have been looking after the funds, not allegedly looting them.”
He adds that the IDT had struggled to track expenditure on the community employment programme because it consists of thousands of rural projects across the country. The agency’s latest status report shows the IDT set aside R10-million for community employment programme projects last year.
Ridley says it would be natural for Deloitte & Touche to be ”highly embarrassed”, but the IDT will retain the auditor’s services. Deloitte & Touche refused to comment.
Ridley says the alleged scam is the first such incident to hit the IDT, and does not reflect weak internal controls. The IDT can recover its losses from its insurance.
It nevertheless represents a blow to the agency, on the eve of a long-planned reshaping that will bring it firmly under government control.
The IDT was set up in 1990 with R2-billion capital to fund development projects in areas such as education, housing, primary health care and job creation. It has also invested in businesses such as the ill-fated Community Bank, which collapsed under a burden of bad debt from low-cost housing, and poor management. Other investments were more successful.
The IDT had raised close to R4-billion by the end of 1997, and had spent nearly R2,7-billion, with more than R600-million committed. The agency has redefined its role to implement rather than fund development projects, in line with the government’s drive to restructure development initiatives.
The government is also to appoint eight additional IDT trustees in the next few weeks. Such changes have prompted the departure of chief executive Merlyn Mehl, who quit last month after nearly three years at the helm. His deputies, Ben van der Ross and Naledi Tsiki, are also leaving.
Its chair, Dr Mamphela Ramphele, will resign at the end of next month, to devote more time to her responsibilities as vice- chancellor of the University of Cape Town.