The trashing of ‘Mr Clean’

Communications Minister Ivy Matsepe-Casaburri has moved to remove South African Post Office CEO Khutso Mampeule, dubbed ‘Mr Clean” for his robust campaign against procurement sleaze.

Mampeule’s cancellation of contracts at the parastatal, among them a controversial R100-million deal to revamp branches, earned him powerful enemies and soured relations with his board. This week Matsepe-Casaburri initiated a process to have him fired.

The board suspended Mampeule in November pending a forensic investigation into corporate governance and management issues.

It was the outcome of this investigation, conducted by auditors SizweNtsaluba VSP, that was cited by Matsepe-Casaburri as she rounded on Mampeule.

The minister briefed the board on the outcome on Monday, giving notice of her intention to remove him as a director. She will convene a meeting where the shareholder — government, as represented by her — will consider his removal based on her ‘loss of confidence” in him and a ‘breakdown of trust” between him and the board.

Further ‘corrective action” would be left to the board, said a statement issued by Matsepe-Casaburri’s department — reference to a recommendation by SizweNtsaluba that disciplinary action be instituted against him in his capacity as CEO. Such action is within the competence of the board and not the minister.

It is hard to see how, once Mampeule has been removed as a director, the intended outcome of disciplinary action would not be to axe him as CEO.

The briefing Matsepe-Casaburri gave the board consisted of an 11-page summary of SizweNtsaluba’s findings and recommendations. The summary concentrated on Mampeule’s alleged failings and not those of others.

As Matsepe-Casaburri is refusing to release the full report, one cannot judge whether her summary accurately reflects SizweNtsaluba’s report. Matsepe-Casaburri presented the same summary to the Cabinet last week.

Mampeule said in a statement that the findings, as conveyed, ‘neither reflect a balanced view nor the reality of events and facts, including some in respect of which I have already been exonerated”. He said he intended to cooperate with the envisaged disciplinary process and believed ‘a fair and independent judge will clear me of all allegations”.

Mampeule’s claim that he has already been exonerated on some matters appears to be a reference to the outcome of an arbitration between the Post Office and Vision Design House (VDH), the company whose R100-million contract to upgrade Post Office branches he terminated in 2005.

Mampeule terminated as many as 13 ‘suspect” supplier contracts after he was appointed CEO that year. This, and the resignation or axing of seven executives in the hurly-burly of his anti-corruption drive, earned him the ‘Mr Clean” tag.

The VDH contract, first publicised by the Mail & Guardian, was certainly suspect: the company was appointed on a case-by-case basis and then under a contract, but without proper authorisation after a tender process was aborted. By the time Mampeule cancelled the contract, VDH had been paid R31-million in undisclosed profits on top of its agreed project management fee.

In arbitration, VDH demanded R4-million in outstanding fees, while the Post Office counter-claimed repayment of the R31- million. Both claims failed, with the arbitrators saying the Post Office had only itself to blame for the overpayments as it had not followed its own rules. The Mampeule camp regards this as vindication of his decision to cancel the contracts.

Mampeule may not have anticipated the force of a counter- campaign by VDH and Maanda Manyatshe, his predecessor, against whom he laid criminal charges for his role in the VDH debacle.

VDH and Manyatshe were assisted by street-fighting ‘certified fraud examiner” Bart Henderson, who made claims against Mampeule ranging from corporate impropriety to sexual harassment — all denied by Mampeule.

On March 19, a day before Matsepe-Casaburri presented SizweNtsaluba’s findings to the Cabinet, Henderson’s newsletter stated in typically combative fashion: ‘Kry vir jou Mampeule jou poephol! Ek hoor jy’s op pad uit [Take that, Mampeule you arsehole! I hear you’re on your way out].”

Who says what

These are the main findings of Matsepe-Casaburri’s summary of the report, followed by rebuttals offered by pro-Mampeule sources (both paraphrased):

A breakdown of trust between Mampeule and the board occasioned by his failure to provide it with proper information, and by his public statements, inter alia that his fight against corruption also impacted on influential board members.

The main complaints of not informing the board related to Manyatshe and the Post Sure matter. (See below.) Mampeule made the comments about board members emotionally after he was suspended, but the substance remains valid.

Mampeule should have informed the board before he laid criminal charges against Manyatshe.

Mampeule did not deem it necessary to inform the board beforehand as it was his duty under the Public Finance Management Act to report what he perceived as criminal activity. When he informed the board after the fact, he did not specifically mention Manyatshe as it was irrelevant whether the suspect was ‘a street sweeper or the president of the country”.

With respect to Post Sure, an intended insurance venture, Mampeule did not follow due process; did not disclose to the board risks created as the expectations of potential partners were raised; and did not submit a board-approved business plan to the minister.

Mampeule kept the board updated on the Post Sure plan, which involved going into partnership with a private operator to sell insurance products. The board approved of each step – if mistakes were made, he cannot shoulder the blame alone. Although he recommended a shortlist of three, topped by Hollard, no guarantees had been given to Hollard. There were differences between him and the board as to the form of the proposal to take to the minister, which resulted in him giving an unapproved version to the minister as a courtesy.

Some of the contract cancellations were not done with proper authority, in accordance with the contractual provisions, or before first informing the board. The Post Office could have been placed at risk, and some are subject to litigation.

Contracts were cancelled precisely to avoid risk to the Post Office – the R31-million over-expenditure on the VDH contract being a good example. It is a standard feature of business at this level to sue and be sued.

A contract for Mampeule’s personal security was arranged in a deviation from tender procedures and approved by him personally.

Deviations from tender are permitted under certain circumstances, including urgency. Mampeule received death threats during his campaign against VDH and the acting head of security at the Post Office found an urgent solution. Mampeule approved the deviation, but the circumstances justified it.