Umgeni boss in hot water again

New signs of lapses in corporate governance at Umgeni Water have cast doubt on claims by Mike Muller, Director General of Water Affairs and Forestry, that the troubled utility is “back on track”.

Muller’s assurances were given in response to a Mail & Guardian disclosure that a new report on Umgeni called for the removal of Omar Latiff, Umgeni’s chairperson. Muller and Latiff dismissed the report by advocate Manie Meyer as having no substance or standing.

But documents obtained by the M&G suggest that in November Latiff was part of a water-management consortium soliciting business in Nigeria—apparently in competition with Umgeni.
This occurred at a time when Umgeni was struggling to be paid for an existing management contract in Nigeria.

The consortium was a joint venture between a company named Thelani Consulting and MSGM Masuku Jeena (Midlands), the accounting and consultancy firm that Latiff heads.

The M&G has a copy of a letter from Mano Govender, Thelani’s executive chairperson, proposing that the consortium provide professional services to the Nigerian federal Ministry of Water Resources. The proposal lists Latiff as the person who will “act as client service director on this assignment” and as one of the “core staff” of the joint venture.

Thelani was formed in 1997, mainly from former Umgeni Water staff.

In response, Latiff said there was no conflict of interest because Thelani had responded to an advert and because Umgeni had not tendered for the job. He said MSGM provided financial services not offered by Umgeni.

The potential competition from Thelani/MSGM should have been of concern to Umgeni because it had identified Nigeria as a strategic area for expansion and had signed an agreement in March last year to provide management services to the Rivers State Water Board in Port Harcourt.

That project was intended to be a showcase partnership that would bring Umgeni Water substantial further business in Nigeria and the rest of Africa. Since then, however, the Nigerians have failed to make quarterly payments and by April Umgeni estimated it was R898 858 in the red, if the costs of winding up the project were included.

The M&G also has a letter from Govender instructing his attorney to register a company with the name of Mgeni Water Specialists or Mgeni Water Africa, with members of his staff as directors.

The potential for this company to be confused with Umgeni Water is obvious. Furthermore, Govender requests that Pradeep Ramllal, a person still employed by Umgeni, should be registered as a director of Mgeni Water.

Latiff said he had no knowledge of Mgeni.

As early as November 2000 the National Education Health and Allied Workers’ Union (Nehawu) raised concerns about the involvement of MSGM in providing services to Umgeni.

In one case where Umgeni bought minority shares in a company called Watertite Conservation, the services seem to have been of questionable value.

A sale and shareholder agreement drawn up by MSGM commits Umgeni to making a R1,6-million interest-free loan to Watertite that “shall only be repaid as and when the board of Watertite determines by unanimous decision”.

Sources at Umgeni say this is unlikely to happen in the foreseeable future.

Latiff said this was an old story and he had recused himself from the meeting where MSGM was appointed to draw up the contract. He said MSGM was not responsible for the contents of the agreement.

As recently as January an Umgeni Water internal audit report raised concerns about unauthorised payments to executives, including R45 846 to Latiff.

In a scathing overall opinion, internal auditor Lizette Francois said: “Regarding executive and non-executive payroll, we are of the opinion that certain executives and non-executives are exercising too much discretion and over-riding controls, resulting in mismanagement of funds and personal enrichment, to the detriment of Umgeni Water ...

“It is obvious that transparency and corporate governance issues are not afforded the attention they deserve.

“Consequently, we strongly recommend that a forensic investigation be conducted to determine the under-lying causes, the extent of the problems/or financial losses.”

Nehawu has called on Latiff to resign and for the government to appoint a judicial commission of inquiry into Umgeni.

“The recent media revelation of what Nehawu terms the ‘corruption scum’ on Umgeni Water is not surprising,” the union’s provincial office said this week. “Nehawu is on record in dismissing the legal investigation team and its original report. Nehawu saw it as the ganging up of the new forces to conceal the ongoing financial mismanagement and rampant conflict of interest in order to redirect the loot ...

“It is not important now to argue whether Manie Meyer exceeded his mandate, what matters is how much truth the recent report carries ... Nehawu believes that as long as Omar Latiff remains the chair- person of the board of Umgeni Water, the truth of allegations of financial mismanagement and fall of corporate governance will always be compromised.”

Umgeni Water said it did not know about a consortium between Thelani and MSGM “to respond to opportunities in Nigeria”.

“Umgeni Water will take the necessary steps to prevent any organisation or group of individuals involved in creating companies which use the Umgeni Water brand for their own purposes. We have no knowledge of any of our current employees being involved in the formation of such a company.”