Mabona's 'dirty' legacy
A new probe into the finances of the Mpumalanga Department of Public Works, Roads and Transport has found that the department is riddled with rot.
Two probes last year — one by the provincial auditor general and the other by the provincial treasury — also uncovered numerous examples of mismanagement and wasteful expenditure.
Now the Mail & Guardian has obtained a copy of a 90-page draft forensic report handed to the provincial treasury last month by consultants Ramathe Fivaz Forensic and Investigative Accounting Services. The reportâ€™s findings seem to suggest that the department has made no progress in cleaning up its act.
Until the April election, Steve Mabona was the provincial minister responsible for the department.
The Ramathe Fivaz report looked at transactions between January and March this year — the last months of Mabonaâ€™s tenure. Mabonaâ€™s receipt of R1-million from a company with which his department did business was exposed by the M&G last year.
Mabona is now an ordinary member of the provincial legislature.
With a budget of R800-million a year, Mabonaâ€™s department was considered to be the entry-point for businesses seeking opportunities from the provincial government.
The many multimillion-rand contracts it handled included the refurbishment of the provincial road network and the building of new infrastructure.
But last yearâ€™s reports by the provincial auditor general and the provincial treasury lifted the lid on the chaotic way the department was run. The reports, first highlighted by the M&G, showed how contracts worth millions of rands were awarded without proper tender procedures being followed.
They also berated the department for its failure to control budgets and manage infrastructure projects. The treasury report said many of the departmentâ€™s projects, including bridges, roads and health-care facilities, had been halted, allegedly because of serious mismanagement in the department.
Mabona at the time responded angrily to the treasury report, saying it was “rubbish” and “fictitious”. He accused the provincial treasury of being “malicious”.
The forensic probe by Ramathe Fivaz — the firm co-founded by former police commissioner George Fivaz — was also commissioned by the provincial treasury. The brief was “to assist with the verification of payments to various contractors”.
The firmâ€™s draft report found a sorry picture of misconduct, poor management controls and fraud. It said the management of roads projects contracts was “totally inadequate”, with “no or little compliance with quality and acceptance control procedures”, “lack of commitment to complete the projects on time” and “payments to various contractors for services not rendered”.
On other contracts, the report complained, among other things, of “no or little compliance to the principles of fairness [and] equitable, transparent, competitive and cost-effective [service delivery] as enshrined in the Constitution”.
The draft fingered more than 10 senior officials for pursuing irregular transactions running into millions of rands, and recommended that disciplinary action be taken against them.
High on the list of transgressors is William Mthombothi, former acting head of the department.
Last year Mthombothi was implicated in the saga in which Mabona received R1-million from Positioning Corporate Underwriters and Insurance Consultants (PCUIC). This was after the department had transferred R6,6-million to PCUIC relating to a roads contract.
The matter was first exposed by the M&G last August. In October, both PCUIC boss Walter Senoko and Mthombothi were arrested by the Scorpions in relation to the R6,6-million transaction.
Despite the criminal charges being laid against Mthombothi, the department, at the time still under the leadership of Mabona, did not act against him. Instead, he was returned to his original position as chief director, which he held before becoming acting department head.
The department — separated into two entities — and the province have been under new political leadership since the elections. The M&G has heard that Mthombothi was suspended last week pending disciplinary charges, but departmental spokesperson Ina Georgala this week refused to confirm or deny it.
The M&G is in possession of a draft charge sheet prepared by the provincial government against Mthombothi. It shows that he will face charges relating to the R6,6-million transaction.
Further documents indicate that the department wants to file additional charges against Mthombothi flowing from the Ramathe Fivaz report.
Speaking to the M&G this week, Mthombothi said it was not true that he had been suspended. He said no one had informed him about the findings of the Ramathe Fivaz draft report.
The report found that Mthombothi flouted the Public Finance Management Act.
But Ramathe Fivazâ€™s report did not only finger senior departmental officials. It also recommended that criminal charges be brought against about five contractors who allegedly defrauded the department by claiming for services not rendered, or certifying claims knowing that the work had not been done.
The report was particularly scathing about the departmentâ€™s failure to control budgets for pro-jects, leading to over-expenditure. In one instance, a contractor who was awarded a R27-million contract was paid more than R33-million.
The report also zoomed in on the R6,6-million that Mthombothi is being prosecuted for. The R6,6-million stemmed from a three-way deal between the department, PCUIC and a construction company, DZ Civils.
Contractually the R6,6-million “retention money” was due to DZ Civils for road construction commissioned by the department, but the money was released to PCUIC, for DZ Civils, before it was due to DZ Civils.
PCUIC supplied “guarantees” to the department to enable it to release the money. The report found that the R6,6-million payment to PCUIC was contrary to treasury regulations.
Meanwhile, Senoko appeared before the Pretoria Regional Court this week on charges of fraud relating to the R6,6-million transaction.
Testifying against Senoko on Monday, Dave Zietsman, a director of DZ Civils, said he had revealed details of the R6,6-million deal to African National Congress secretary general Kgalema Motlanthe, whom he claimed had agreed that PCUICâ€™s guarantees were “fraudulent”. The matter will resume in October.
Mabonaâ€™s lawyers, Bhadrish Daya Attorneys, this week said on his behalf that they could not comment until they had perused the Ramathe Fivaz draft report.