The Travelgate scandal is growing. Investigators are working through a new list of 100 names that could implicate senior MPs, including two Cabinet members, members of the whippery and parliamentary office-bearers.
New information gleaned by the legislature’s axed finance chief, Harry Charlton, and liquidators indicates that Parliament may be owed as much as R36-million by travel agents and MPs for fraudulent travel claims — more than double previously published estimates.
But top parliamentary officials appear to be doing little to pursue the additional money, and claims that senior African National Congress figures are being protected by an administration with divided party and institutional loyalties refuse to go away.
Documents obtained by the Mail & Guardian indicate that the secretary to Parliament, Zingile Dingani, has been aware for at least six months that the scale of the fraud may have been much larger than previously thought, and suggest that he has been reluctant to act on it.
Dingani has also declined requests to expand the scope of the investigations, on which exisiting charges against travel agents and MPs were based. These investigations dealt with a limited time period and a 60% sample of transactions at the agencies concerned. Charlton, who was central to the ongoing travel fraud investigation, was sacked on January 10 after a disciplinary inquiry where misconduct allegations — largely in relation to the procurement of software and consulting services — were levelled against him.
He argued that the charges had been trumped up to discredit him as he continued to press for more action on the abuse of MPs’ travel warrants. The claim was dismissed by the chairperson of the hearings as a ”mirage”.
In the period leading up to his suspension, Charlton and liquidators had been pursuing new evidence.
On July 21 last year, he informed Dingani in a memo that ”another dimension to the travel fraud has been identified”. The new scam, the memo says, probably cost Parliament R19,2-million between June 2000 and July 2003.
This would increase Parliament’s total claim against the five travel agents from R16,5-million to R35,7-million.
The memo, and related documents in the M&G’s possession — including a list of names — suggests some MPs got hundreds of thousands of rands in irregular benefits. The documents outline a new variation on the schemes allegedly set up by travel agents to rip off the legislature.
In the memo, Charlton asks permission to establish more precisely what Parliament is owed in respect of this newly identified ”type 3” or ”refund” fraud, and to add it to the claims of liquidators acting for Parliament.
Dingani, it seems, did not sign off the request. More than two months later, in a one-to-one meeting, he gave Charlton verbal permission to proceed with an investigation, on condition that he use only his own financial management office. No external forensic investigators were to be employed, and payments to the International Air Transport Association (Iata) for crucial corroborating work on ticketing records would not be sanctioned.
That, sources suggest, made it impossible to proceed. Not only was Iata’s assistance crucial, but the understaffed and underskilled finance management office, which was struggling through a complex restructuring operation, could not manage the work itself.
To complicate matters further, the Scorpions, with their extensive powers of search and seizure, do not appear to have been asked to investigate type 3 fraud, leaving only the far more limited liquidations process as a means of uncovering information.
National Prosecuting Authority spokesperson Makhosini Nkosi said he couldn’t comment as the matter is currently before the courts.
According to the memo, the bulk of the refund fraud was allegedly committed through Bathong, the last travel agency to be liquidated. Dubious refunds totalling an estimated R11,2-million were paid to Bathong in respect of cancelled tickets for which Parliament was charged.
If confirmed, that would take the potential claim against the company from R1,9-million to R13,1-million.
Other beneficiaries of the refund scam, the documents allege, are Star Travel (R2,8-million), ITC Travel (R2-million) and Business and Executive Travel (R3,2-million). These are already on the hook for a combined R15-million in alleged type 1 and 2 fraud. Bathong has long been the focus of concern over the response of parliamentary officials to Travelgate. About 200 MPs conducted business there, including presiding officers, members of the whippery and Cabinet members. The tardiness with which Parliament moved against the company, court records suggest, allowed its directors to destroy crucial evidence, seriously complicating the forensic investigation.
Charlton wrote two confidential reports to Dingani, on September 30 and October 4 2004, first asking for permission to expand the investigation into Bathong, and then for authority to start liquidation proceedings against it.
Dingani declined, by all accounts directly against the explicit advice of Parliament’s own advocate, Gavin Woodland. Instead, he instructed that settlement options be explored.
Court papers include several items of correspondence between Bathong director Mpho Lebelo and Dingani, but no settlement was reached, and permission to liquidate was finally granted 10 months later. It went ahead on July 29 last year.
Dingani has hotly rejected claims that he frustrated the investigation, saying Parliament had largely done its bit once it was handed over to the National Prosecuting Authority, and that he cooperated fully whenever asked.
Asked last week about claims of a new fraud, he said there was no firm evidence. In 2004, he held at least one meeting to discuss removing the investigation from the Scorpions and returning to it to the SAPS, who had earlier been taken off the case because they could not cope with the volume of forensic detail.
He did not respond to queries sent to his office this week.
In a stinging affidavit dated September last year and lodged in court papers, former parliamentary secretary Sindiso Mfenyana and then-speaker Frene Ginwala made it clear they both believed MPs were responsible for managing travel warrants, and should be held accountable for abuse.
”Considering the fact that the making of laws [which the public is expected to abide by] is a core function of MPs, I would certainly expect them to be familiar with, and adhere to the laws applicable to themselves,” Ginwala wrote.
Court proceedings against the 21 MPs charged so far and the five travel agencies restart next month as Parliament returns to work and the local government election campaign intensifies. Charlton says he will be available to testify, despite his dismissal.
Leaked documents back Charlton
Documents leaked to the Mail & Guardian strengthen the claim by Charlton that he was nailed to discredit him as a participant in the Travelgate investigation.
This comes at a time when Charlton is considering legal action against the institution and some of its top officials over the circumstances surrounding his dismissal a fortnight ago.
”I am going to pursue all avenues open to me in terms of the civil process,” he said.
”They’ve been defamatory, and to the extent that I can deal with that, I will.”
He plans go to the Commission for Conciliation, Mediation and Arbitration to argue that his dismissal was unfair, and to seek damages.
The documents support Charlton’s defence that he clashed with secretary to Parliament Zingile Dingani over the progress of investigations into travel fraud and that he had explicit or implicit authorisation for most of the actions that gave rise to the allegations of misconduct against him.
Charlton was sacked on January 10, following a disciplinary inquiry chaired by the secretary of the North West legislature, Baba Schalk.
Criminal investigations might well ensue, Dingani suggested at the time. Charlton was suspended on November 18, and two weeks later charged on 15 counts of misconduct.
The first four charges related to an agreement with Progress Software for further work on the Manqoba accounting and business process management suite he commissioned in an effort to get Parliament’s books in order. They hinge on claims that by authorising work based on a ”gap analysis” which detailed shortcomings in the software, he entered into a contract without authority, and concealed it from Parliament.
The next substantial group of charges relate to payments made to consultants used in the restructuring of the disastrously under-resourced finance management office. He was alleged to have spent more than he was authorised to do in terms of his job grade, and engaged consultants without a written contract.
There is confusion over his precise position in Parliament — policy documents are ambiguous on whether the chief financial officer is a ”top manager” with increased authority to spend. The documents also show he had specific delegated authority from former secretary Sindiso Mfenyana to commission work on the software and to restructure his office.
That authority is set out in a memorandum of February 25 2003, ”subject to regular review”. Parliamentary sources say it was never revoked.
Correspondence obtained by the M&G includes several letters between the consultants concerned and Dingani. In several of these, Dingani directly instructs them to continue work. The remaining charges related to a miscellany of evidence collected after the suspension, ranging from claims that he criticised Parliament in e-mail correspondence, to allegations that he obstructed development on a rival software system, and made the racist remark as he was escorted off the premises that ”these monkeys are protecting each other”.
Charlton flatly denies making racist comments.
Numerous concerns were raised at the time of the disciplinary hearings about their procedural shortcomings — Charlton’s lack of legal representation, limited time given to his defence, and his limited access to the documentary record.
Three types of travel fraud
The charges against five travel agents and 21 MPs making their way through the court system detail two types of alleged fraud. Both rely on travel warrants, which are effectively blank cheques or vouchers for travel that MPs were supposed to fill in, sign and hand to travel agents. Parliament would later make payment against these warrants.
In the first and simplest scam, a return ticket is booked, for example between Johannesburg and Cape Town. The travel agent issues a physical, printed ticket and makes a photocopy of it. He or she then cancels the ticket before 11pm on the same day, when payment from the agency to the airline falls due.
The photocopy, together with a signed MP’s travel warrant for each leg of the journey, is then presented to Parliament as proof of payment, with an invoice.
Effectively, the agency bills Parliament for a journey that never took place, and that it never paid the airline for. The benefits are either kept by the agency, or in some cases transferred as cash, car hire or hotel accommodation to the MP concerned.
Type two fraud is a variation on this theme. Here the travel agents collect travel warrants from MPs, and issue fake, handwritten tickets — sometimes involving a connecting flight — for example, Cape Town-Johannesburg, Johannesburg-Umtata. In some cases, they crudely alter the destinations and dates on the warrants.
Once again, at least one portion of the journey is cancelled before payment by the travel agent is due, but Parliament is presented with a photocopy of the manual ticket, and asked to pay for it.
In some cases, members allegedly had a car-hire equivalent of all or part of the value of the cancelled leg of the airline journey. Evidence suggests that they went on to claim mileage expenses from Parliament for the road journeys they then undertook, as if they had used their own vehicles.
Type 3 fraud is slightly more complex, and went largely undetected until the liquidation of Bathong travel, where, allegedly, the bulk of such fraud was committed. Much the same procedure is followed, except that the ticket is actually paid for. It, too, is then cancelled, and the travel agent seeks a refund.
The airlines themselves do not pay refunds directly; these are handled by the International Air Travel Association, which acts as a clearing house, and returns the price of the ticket to the agent.
The net result is the same — Parliament pays for a journey, or portion of a journey, which never took place, and the benefits are pocketed by agents and/or MPs. But the trail of evidence can be more difficult to reconstruct. It is this type of fraud that could swell Parliament’s claims to R35,7-million.