South African Maritime Authority (Samsa) boss Sipho Msikinya stands accused of widespread financial mismanagement, irregularities and massive wasteful expenditure of taxpayers’ money.
Samsa is a public entity responsible for sea safety and reports to Minister of Transport Dullah Omar.
The accusations against Msikinya have added to a growing list of management setbacks that have rocked Omar and his department in the past few years.
Omar already presides over two embattled parastatals: the Civil Aviation Authority (CAA) and the Road Accident Fund (RAF). Last year another parastatal under Omar, the Cross Border Road Agency, fired its CEO, reportedly on corruption charges.
The CAA and RAF have had ongoing problems with lapses in corporate governance over the past few years. Last year the RAF suspended a number of its senior and junior officials on corruption charges.
CAA chief executive Trevor Abrahams was suspended last December after a Mail & Guardian investigation revealed allegations of irregularities and corruption against him [See Fall of a high-flier].
During the past few weeks the Department of Transport has come under heavy fire over the high number of road deaths during the festive season [See ‘It took just one bad driver’].
Omar’s spokesperson, Ndivuwo Mabaya, this week said the minister believes that if there is any evidence of irregularities and mismanagement against Msikinya, the Samsa board should take the necessary steps against him. ”The minister says he will support any such action by the Samsa board,” Mabaya said.
Samsa was in the spotlight last year after it emerged that its chairperson, Chris Nissen, was drawing two salaries from the parastatal — one as chairperson and the other as acting CEO. The matter was amicably settled after Omar ordered the board to do so without having to take action against Nissen. Some board members felt that Omar had been too soft on Nissen. Samsa’s former CEO was dismissed following allegations of mismanagement last year.
New information shows that Samsa has not managed to tackle its corporate governance weakness. The M&G has uncovered a sorry tale of poor management controls and failure to adhere to regulations within Samsa. At the centre of the saga are Msikinya and some of his senior managers.
Msikinya has been head of Samsa for less than a year. He is a former director general in Omar’s department. He was redeployed to Samsa in March last year after reportedly clashing with Omar and some senior officials. Almost a year later a new director general has not been appointed.
Msikinya this week denied any wrongdoing, saying the allegations against him were orchestrated by ”a cabal which comprises members of the now defunct Samsa transformation committee”.
But an M&G investigation has established that Msikinya and some of his managers made certain decisions without proper board approval, authorised expenditure above their allocated limits and made decisions that resulted in Samsa losing hundreds of thousands of rands.
Samsa derives its revenue from a combination of government funding — about R6-million a year — and direct user charges. The agency’s total revenue is estimated at about R30-million a year.
Senior Samsa officials this week claimed that massive spending by Msikinya and some of his senior managers have damaged the financial status of the parastatal. This included expenditure for lavish travel incurred by Msikinya, his senior managers and a legal consultant appointed by him.
In one case Msikinya flew business class on an overseas trip at a cost of R37 000. He was initially booked on economy class at a cost of R8 000. Other Samsa senior officials who accompanied Msikinya on the trip flew economy class.
A raft of legal cases is also affecting Samsa’s finances. The cases have run up ”staggering” costs, one Samsa official noted. In one case Samsa spent more than R800 000 in legal expenses paying a law firm to conduct a disciplinary hearing against two employees. Msikinya disputes this figure.
One of the employees, a secretary to the Samsa board, was found not guilty by the inquiry. The other employee, an IT specialist, was found guilty only on two minor charges.
Msikinya rejected the findings of the inquiry and hired his legal consultant, Ace Ndou, to review the case. Ndou found one of the employees guilty.
Samsa also spent more than R100 000 on a settlement agreement with four trainees whose contracts had been terminated by Msikinya. In addition Msikinya and his senior managers spent more than R50 000 on a trip to Durban to discuss the settlement with the trainees.
Ndou also benefited from Samsa’s travel purse. Samsa paid more than R40 000 towards his airline tickets, accommodation and car hire.
The allegations against Msikinya include:
- The CEO, without board approval, paid Samsa human resources manager Manie Roodt R120 000 on January 10 2003 for acting as executive manager for human resources. Senior Samsa managers say Roodt never acted in the position. The matter was subject to a legal battle between the Samsa board and Roodt last year. They settled the matter out of court in September. The settlement did not make provision for back pay for Roodt. The board did, however, formally appoint him to the position effective from September 5.
Msikinya said he had to pay Roodt.
”I had to pay him. He had a semi-agreement with the organisation. I had two choices to make. It was a question of paying him or go to the CCMA [Commission for Conciliation, Mediation and Arbitration]. I figured that it would be cheaper to pay him rather than go to the CCMA because of the evidence he had against Samsa.”
Msikinya refused to disclose what evidence Roodt had, but said the CCMA ”would have agreed with him”.
- Msikinya failed to disclose his interests to the Samsa board in accordance with the Public Finance Management Act.
Msikinya said he did not declare his interests as he had done so when he was director general at the transport department.
- He fired the Samsa board’s secretary without the board’s approval.
Msikinya said he did not need board approval to fire the secretary. ”It is an executive prerogative to fire the board’s secretary. I informed the chairperson and I did not have to tell all board members about that.”
- He hired law firm Savage Jooste to conduct a disciplinary inquiry against the secretary and another employee at a cost of more than R800 000, without board approval. The case began in May last year, and ended late last year.
Msikinya says that he only paid R330 000 to Savage Jooste.
- In November last year Msikinya invited three staff members — Carl Briesch, Francis Chilalika and Bill Dernier — to accompany him to the United Kingdom to attend a meeting of the International Maritime Organisation without board approval. He irregularly changed his economy class ticket — initially booked with Kenya Airways — to SAA business class, costing Samsa about R37 000. Other employees’ economy class tickets with Kenya Airways cost between R8 000 and R9 000 each.
Msikinya said he had requested and secured board approval for the trip. On travelling business class, Msikinya said: ”I always travel business class.” However, the M&G has learned that, in accordance with a board decision made in 2001, no one at Samsa is allowed to travel business class.
- Msikinya misled a board member about the availability of funds. The board member made a formal request to the board chairperson and Msikinya to attend a conference on maritime law. Msikinya told the board member that there were no funds available. A week later Msikinya left for the UK.
Msikinya denied misleading the board member in question, but added that Samsa does not fund ”non-value-adding trips. We do not just go to meetings. We assess the agenda first and then decide. In this case there was no value-adding for the board member to go there.”
- He irregularly appointed Ace Ndou as legal consultant. The board had approved Ndou’s inclusion in the list of Sama service providers, but it had not approved his contract to render services. Msikinya did not institute a selection process as required by government regulations.
Ndou travelled at Samsa’s expense, even though as an outside service provider he should have taken care of costs and invoiced Samsa afterwards. In July Ndou travelled to Port Elizabeth twice at a cost of more than
R7 000. In August he travelled to Cape Town and Durban at a cost of more than R10 000. In September he travelled to Cape Town again at a cost of more than R3 000. In November he went to Durban and Cape Town at a cost of more than R7 000.
Msikinya said: ”Yes, I did appoint Ndou. It was my prerogative to appoint him. Yes, he did spend Samsa funds.”
Asked to explain the selection process in appointing Ndou, Msikinya said: ”A round robin submission was prepared by the CEO on May 31 2002 and forwarded to the board members for the approval of the inclusion of Mr Ace Ndou & Associates in the list of the existing panel of experts. The board unanimously approved the submission on a round robin basis, which was ultimately confirmed at the board meeting held in Cape Town on September 17 2002.”
- Msikinya terminated the contracts of four trainees without the board’s approval or knowledge. One of the trainees challenged the matter at the CCMA and won. Samsa was ordered to pay him R38 000. After that Msikinya settled with the rest of the trainees at an additional cost of more than R60 000.
Furthermore Msikinya undertook a trip to Durban with Ndou, Roodt and B Ramaboa, a Samsa employee, to discuss the termination of the trainees’ contracts. Ndou’s plane ticket was paid for by Samsa at a cost of R1 856. The trip cost Samsa more than R40 000.
On this allegation Msikinya said he had to cancel the trainees’ contracts as they had failed to pass Samsa’s tests.
- He irregularly cancelled contracts of surveyors, opening up Samsa to possible costly legal action.
Msikinya said: ”Yes, I did cancel the contract of surveyors. One was part-time. He was too old to do surveying work. The other two were also too old and they had reached their retirement age.”
- He appointed an acting CEO without board approval.
”I did not need board approval to appoint a CEO. The Samsa Act says the board ‘may’ appoint. It does not prevent me from appointing a CEO,” said Msikinya. ”Does it mean that every time I go the board must convene and appoint a CEO?”
Related:
Fall of a high-flier