/ 31 August 2007

Mashatile and the ‘Alex mafia’

A major information technology company employed Gauteng finance minister Paul Mashatile’s daughter as it awaited the outcome of two multimillion-rand tenders from an agency answerable to him.

Business Connexion, part of the listed Business Connexion Group, won both tenders in June 2005. This was two months after it had employed Palesa Mashatile, who now goes by her married surname of Nonkwelo.

Nonkwelo is the second Mashatile relative known to have benefited from a contractor. The Mail & Guardian reported last month that a consultant to the provincial government had paid tuition fees for Mashatile’s nephew.

Gauteng Integrity Commissioner Jules Browde last year cleared Mashatile of a conflict of interest after the M&G reported that he had declared, but then disowned, shares in a vehicle that holds 25% of Business Connexion.

But confirmation of Nonkwelo’s job refocuses attention on the warren of ties — in friendship, business and employment relationships — that bind Mashatile and three more members of the ‘Alex mafia”.

The ‘Alex mafia” is a reference to a group of former activists from Alexandra township who have risen to positions of influence. Mashatile, Mike Maile, Nkenke Kekana and Bridgman Sithole are at its core.

Maile is chief executive of the Gauteng Shared Service Centre (GSSC), the provincial agency that answers to Mashatile and that awarded the tenders to Business Connexion.

Kekana and Sithole are shareholders in Business Connexion — through the same vehicle in which Mashatile declared but then disowned shares — and serve on the boards of Business Connexion Group firms.

Ties between the men include:

  • Mashatile, Maile, Kekana and Sithole formed an investment company in 2005. Mashatile and Kekana have contradicted each other on its intended purpose.
  • Maile, Kekana and Sithole partner a security contractor who was engaged by two further Mashatile agencies last year. The contractor has also done private work for Mashatile.
  • Sithole, like Maile, worked under Mashatile in his previous portfolio of housing. Sithole and Kekana both serve as deputy chairs of provincial agencies answerable to Mashatile.

Business connection
The GSSC was set up in 2001 to provide administrative backbone to Gauteng’s 11 departments, and spends hundreds of millions of rands on IT each year.

Since Mashatile was appointed to his current portfolio in 2004, Business Connexion has won three substantial GSSC tenders, worth about R20-million in total, but did not succeed in twice as many.

Business Connexion spokesperson Alice Andersson maintained that Nonkwelo, Mashatile’s daughter, was ‘not involved” in GSSC or Gauteng government work and ‘not employed in a position that could influence the award” of GSSC or government work to Business Connexion.

Business Connexion submitted bids for two tenders — for file servers and for a Gauteng government-wide IT ‘enterprise architecture” solution — in December 2004. These were the first GSSC contracts the company tendered for since Mashatile assumed the portfolio.

Nonkwelo, 21 at the time, started working at Business Connexion in early April 2005, according to Andersson. Both tenders were awarded to Business Connexion two months later, in June 2005. Nonkwelo is a sales executive.

The enterprise architecture contract, a source says, has netted Business Connexion about R7,5-million. The file server contract was never entered. In May this year, Business Connexion won another GSSC tender: for a master systems plan related to the enterprise architecture solution. The source values it at about R10,5-million.

The code of ethics for national and provincial ministers prohibits them from ‘exposing themselves to any situation involving the risk of a conflict of interest” and ‘using their position — to enrich themselves or improperly benefit any other person”.

The M&G reported in July that Mashatile got consultant Donovan Nadison to pay R20 000 for his nephew’s college tuition.

Nadison has consulted on Gauteng’s controversial monorail plan, driven by Mashatile and his transport counterpart. This year a travel company that Nadison co-owns won a tender conducted by the Gauteng Economic Development Agency (Geda), another of Mashatile’s agencies.

The ‘Alex mafia’
The story of Mashatile, Maile, Kekana and Sithole is one often replicated in South Africa; of how struggle connections have evolved into corporate contacts, and sometimes contracts. The young men who fought in the trenches in the 1980s now occupy boardrooms and positions of influence in the public sector.

Although some see this as a story of people who pulled themselves up by their bootstraps to make good in the freedom years, a reliance on state tenders carries the risk of cronyism, more so when tender systems bend to who you know or to which struggle network you connect.

During the 1980s Mashatile, Maile, Kekana and Sithole were Alexandra township’s ‘young lions” who battled apartheid’s security forces together and got arrested together.

The four friends’ paths keep crossing.

Mashatile, in his previous portfolio of housing, appointed Maile to head the Alexandra Renewal Project. In his present portfolio he appointed him to head the GSSC.

Sithole served for a while as Mashatile’s administrative secretary in the housing department. This year he became deputy chairperson of Mashatile’s Geda.

Kekana, who chaired the national assembly’s communications portfolio committee until he resigned as an MP in 2003, is deputy chairperson of the Gauteng Film Commission, which also answers to Mashatile.

In his declaration of interests to the legislature last year, Mashatile declared shares in Gadlex Holdings, which owns 25% of Business Connexion. He also declared stakes in empowerment firm Mowana Investments and in Dibata Bata Investments.

Kekana and Sithole are shareholders in each of these companies, and Maile in Dibata Bata.

The Gadlex declaration suggested a very direct conflict of interest for Mashatile, in view of Business Connexion’s contracts with the GSSC.

When confronted last year, Mashatile disowned both the Gadlex and Mowana shares, claiming that what he had meant to declare was an earlier offer not taken up. Browde, the integrity commissioner, accepted this version.

Further muddying the water is Dibata Bata Investments, which was formed in 2005 with all four men — Mashatile, Maile, Kekana and Sithole — as partners. Mashatile told the M&G last year that the intention had been to make general investments such as in property and mining.

Kekana, however, gave a different explanation to Browde — he said it was formed to invest in a holiday home.

Although Mashatile is still reflected by the companies registration office as an active director of Dibata Bata, he did not declare it again this year. Asked for an explanation, Mashatile’s spokesperson said it was ‘a defunct company and up to this day has never invested in anything”.

Camera contracts
Another company that ties the men is the prosaically named Cordless Security Camera, which installs security cameras.

Cordless is managed by Stevan Ninkovic. Company records indicate Jabu Mtetwa was his first partner when the company was registered as a close corporation in 2002. Mtetwa is close to Mashatile and in the 1990s they shared a home in Alexandra.

In December 2005 Ninkovic converted Cordless from a close corporation to a Pty — with Maile, Kekana and Sithole as his new partners.

This puts Maile, who heads GSSC, in a direct relationship with Kekana and Sithole, whose Business Connexion benefits from GSSC contracts.

Compounding the conflicts, Cordless installed security cameras at Geda and the Gauteng Enterprise Propeller (GEP), both Mashatile agencies, last year. Ninkovic has also installed cameras at Mashatile’s private home.

Geda spokesperson Barba Gaoganediwe said a contract valued at R196 000 had been awarded to Cordless in March last year. A three-quote selection procedure was followed rather than a full tender, as the amount was less than R300 000.

GEP spokesperson Ntsoaki Tsokolibane confirmed a contract valued at R661 702 had been awarded to Cordless in May last year. There was no tender as treasury regulations permitted a deviation where it was ‘impractical” to invite competitive bids. ‘The decision to urgently award the contract to Cordless Security Camera was based on an internal audit report which specifically outlined — weaknesses in terms of physical security and access control.”

Both spokespersons claimed the contracts had been awarded to the close corporation, rather than the Pty. Gaoganediwe said Ninkovic was reflected as the sole proprietor — no mention was made of Maile, Kekana or Sithole in documentation submitted by Cordless to Geda.

Kekana confirmed that he and Sithole had agreed to join Cordless when it converted to a Pty, but denied knowing of any work it had done since they joined.

Later he, too, claimed that Ninkovic had performed the contracts using the close corporation.

These answers are undermined by the fact that Cordless was converted from a close corporation to a Pty — with Maile, Kekana and Sithole as co-directors — in December 2005, three months before it contracted with Geda and five months before GEP. The close corporation had ceased to exist.

Ninkovic confirmed to the M&G that he had also done installations at Mashatile’s personal residence, but refused to say when last. Mashatile’s spokesperson said it was while he was housing minister.

Ninkovic denied that Malie, Kekana or Sithole had ‘influenced extra business” for him, but threatened: ‘I am going to inform very powerful people about what you are doing.”

How they replied
Nkenke Kekana
I have a relationship with every MEC [provincial minister] in Gauteng. We were in the anti-apartheid struggle together. I do not apologise for that at all. It is an historic reality — the nature of where we come from — that people in business and government have a long association.

What matters for me is to abide by the ethics and tender processes that are out there.

I have not violated any law or any tender procedure or any code of ethics as a person and a businessperson.

Percy Mthimkhulu, spokesperson for Paul Mashatile
Based on your line of questioning (and previous articles that you have published on the Gauteng MEC for Finance and Economic Affairs), it appears that the Mail & Guardian is embarking on frivolous attempts to attach innuendo against the MEC.

This article and recent others before it raise suspicions that the M&G is hell-bent on seducing the public [by] sometimes using sterile news and peddling unfounded allegations aimed at generating negative sentiment towards the MEC.

We wish to remind the M&G that the issue of Business Connexion (BCX) and its affiliate companies was investigated by the Gauteng Provincial Legislature Integrity Commissioner, a retired judge, who found that there was no conflict of interest arising from MEC Mashatile’s alleged involvement in BCX.

Elementary research could have revealed that the issue of BCX and its affiliate companies was long clarified by the Integrity Commissioner. In our view the matter is closed and does not warrant a story to be carried by a respected publication such as the M&G, unless of course certain hidden agendas are being pursued.

Your line of questioning suggests, rather strangely, that anybody who knows the MEC, including some of your journalists, cannot provide services to the Gauteng provincial government and its agencies at any point in their lives.

Mashatile was not born an MEC. He has served this country and the Gauteng provincial government in different capacities for many years. Common sense should then dictate that he has developed relations and is ‘personally close” to many people.

It would be sad if these South African citizens can be banned from doing business with the Gauteng provincial government purely on the basis that they know the MEC.

We wish to reiterate once more that MECs do not get involved in the process of awarding tenders and government contracts. Departments have accounting officers who handle the awarding of contracts, within the prescripts of the law.

The MEC therefore is not ordinarily privy to whom contracts get awarded in departments, much less in agencies.

Your continuous insinuation that MEC Mashatile is involved in the awarding of government contracts amounts, in our view, to a witch-hunt.

On the issue of the conditions of employment of Palesa, MEC Mashatile’s daughter, we suggest that the M&G contacts her employer. However, we find it insulting to Palesa to suggest that her conditions of employment are linked to government tenders awarded to BCX.

For the record, Palesa is a qualified professional in her own right and free to work for any company of her choice.

We confirm that Cordless Security Company [sic] performed work at the MEC’s house. This was when he was still the MEC for Housing. The company was paid by the MEC as per the invoice submitted.

Once again we wish to draw the attention of the M&G to the government supply chain management regulations, which state that accounting officers (and not MECs) are responsible for the procurement of goods and services and awarding of tenders.

In principle, we welcome the existence of a critical media that seeks to hold public representatives accountable. However, we need to distinguish between being critical and being on a witch-hunt.

We are convinced that the persistent negative reporting by the M&G is an attempt to tarnish MEC Mashatile’s name and we can only speculate on the reasons.

We wish to place on record that if there is anybody who has information of any wrong-doing by MEC Mashatile, they should hand that information over to the premier and stop running around making insinuations about the MEC to the media.