Communist heavy-hitter Phillip Dexter, the new acting CEO of the Mpumalanga Economic Empowerment Corporation (MEEC), will have his work cut out turning back the tide of sleaze at the scandal-plagued agency.
The report of a PricewaterhouseCooper (PWC) forensic inquiry, obtained by the Mail & Guardian this week, paints a gloomy picture of widespread misconduct, poor management control and breach of statutory obligations.
Dexter, also former National Economic and Development Labour Council boss and African National Congress national executive committee member, was appointed to head the MEEC earlier this month.
In addition, Mpuma-langa economic affairs minister William Lubisi has installed a new board to bring order to the agency’s affairs. The entire board resigned in January amid claims of financial irregularity and mismanagement. Operating on an annual budget of R130-million, the MEEC was established in 1999 to develop Mpumalanga’s economy by helping aspiring entrepreneurs.
The PWCs investigation finds that a number of contracts and loans worth millions of rands were awarded to companies linked to board members and MEEC officials, or their relatives.
In one case, the MEEC granted a loan of R1,4-million to Interstate Clearing, trading as Bohlabela Nissan — a vehicle dealer linked to former MEEC deputy chairperson Nora Fakude-Nkuna.
An award-winning entrepreneur and friend and funder of Deputy President Jacob Zuma, Fakude-Nkuna was director of Bohlabela Nissan at the time of the loan application, the auditors say.
They add that through an entity called Dayizenza, Fakude-Nkuna’s daughter, BT Mathebula, received a R410 000 loan that had not been serviced.
Another board member, Steve Skhosana, received a R900 000 loan through a company called Vula Kabusha Joint Venture prior to his appointment to the MEEC board. The agency also gave Skhosana a contract worth more than R500 000 through a company called Silulu Investment Services.
The auditors question board CEO Ernest Khosa’s 2003 appointment of Musa Masango & Associates as principal agents in the reconstruction and extension of the Plaston factory at Ekandustria, near Nelspruit, for R35-million.
Musa Masango, owned by MEEC chief operations officer Abraham Masango’s brother, was appointed 22 days before the tender closed. It had also not submitted a quotation for the work in question.
The report says the MEEC paid Musa Masango R5,1-million in commission for the job.
The company also received almost R220 000 and R120 000 from the agency in respect of two other projects.
The investigation found that MEEC board members and senior officials made excessive travel claims, often months after allegedly incurring the expenses.
Dexter told the M&G shortly after his appointment that he would immediately set up control systems to prevent further misuse of public funds at the MEEC. He would also institute an internal probe to ensure the recovery of any losses.
Dexter will also lead a task team appointed by Lubisi to oversee the merger of the MEEC and the Mpumalanga Investment Initiative. The new board will be chaired by well-known businessman Lot Ndlovu.