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Prisons fire fraud busters

In a major setback for the fight against corruption, the correctional services department has terminated its contract with Willie Hofmeyr’s fraud-busting Special Investigating Unit (SIU).

This comes after Correctional Services Minister Nosiviwe Mapisa-Nqakula was lauded this week for her hardline stance on good governance when she suspended prisons boss Xoliswa Sibeko.

Sibeko and the department’s acting finance chief, Nandi Mareka, were suspended pending an investigation into the approval of expensive rental houses for Sibeko and Gauteng prisons boss Thozama Mqobi-Balfour.

The true commitment of Mapisa-Nqakula and her department to fighting graft is again called into question by the termination of the contract with the SIU. According to SIU spokesperson Trinesha Naidoo, the department did not renew its contract with the unit when it came to an end on March 31 this year.

The timing of the cancellation of the contract is curious for the following reasons:

  • On March 1, 30 days before the SIU was fired, the department spent thousands of rands on an eight-page supplement in Sunday newspapers flaunting the department’s relationship with the SIU.

    The supplement was headlined ‘Fraud busters” and had a large picture of former correctional services minister Ngconde Balfour on its front page, quoting him as saying: ‘We promote good governance, openness and accountability”;

  • In the supplement the department reported that its relationship with the SIU had prevented ‘fraudulent expenditure” of up to R3,5-billion and that about 500 departmental officials had been disciplined and dismissed;

  • The SIU’s correctional services team is finalising its biggest and most controversial investigation into tenders worth billions of rands awarded by the prisons department to the ANC-linked facilities management group Bosasa and its affiliates; and

  • The SIU was supposed to report back to Parliament’s correctional services committee this month about progress on major procurement investigations, including the Bosasa probe.

Department spokesperson Bheki Manzini said this week that Mapisa-Nqakula would ‘apply her mind” after receiving a report from the SIU on work done during the previous contract, from March 2006 to March 2009. He conceded that the contract with the unit had expired, but said that did not necessarily mean it would not be renewed after the unit had briefed the minister. The meeting is scheduled for next week.

Manzini denied that the future of the department’s relationship with the SIU depended on its report to Mapisa-Nqakula, but could not explain why the contract had not automatically been extended for another three years.

The SIU has been called government’s own forensic audit firm. Headed by Hofmeyr, also a deputy national director of public prosecutions and head of the assets forfeiture unit, it is contracted and funded by state departments to provide investigation services for specific periods of time.

This creates forensic capacity within government, which is often outsourced to private audit firms for exorbitant sums.

The prisons department first signed a contract with the SIU in 2002 after widespread corruption was uncovered by the Jali Commission. When the first contract expired in March 2006, it was renewed for a further three years.

Apart from correctional services, the SIU’s biggest successes so far have been in the social development and housing departments. Billions of rands have been saved by the detection of social grants fraud and government officials cooking state housing lists. Hundreds of officials have been prosecuted.

‘There will be an impact on the SIU’s financial position,” Naidoo conceded, ‘but the SIU is confident that it will be able to replace it with other projects.” She confirmed that the decision not to renew the contract would not have an effect on investigations initiated under the previous agreement.

This includes the unit’s probe of contracts awarded to Bosasa Operations and affiliated companies Sondolo IT and Phezulu Fencing.

The Bosasa group, headed by politically connected businessman Gavin Watson, has landed contracts worth more than R2-billion from the prisons department since 2004.

Earlier this year the M&G revealed the sleazy relationship between Bosasa and the department, showing with documentary evidence that the company received preferential treatment from senior department officials.

A preliminary SIU report to former prisons boss Vernie Petersen led to the suspension of the department’s former chief financial officer, Patrick Gillingham, who was also fingered by the Mail & Guardian as the department’s points-man in its dealings with Bosasa.

The bulk of Bosasa’s contracts with the prisons department were awarded during the tenure of Petersen’s predecessor, Linda Mti, who was exposed by Beeld in 2006 for having a business relationship with Bosasa’s company secretary, Tony Perry.

Mti was subsequently appointed head of security for the 2010 Fifa World Cup organising committee.
Naidoo also confirmed that the SIU’s deputy head, Faiek Davids, was placed on special leave pending an investigation into internal allegations against him.

Naidoo said the allegations did not relate to any SIU investigation or the mentioning of Davids’s name in the controversial ‘Zuma tapes” released in April, but to ‘internal SIU matters”.

An interim executive team has been put in place to assist with the management of SIU operations.

Corruption investigations have no ‘effect on tender awards’
Controversial security company Sondolo IT, under investigation for tender-rigging in the department of correctional services, has been awarded another major government contract — this time by the justice department.

The contract, for the safeguarding of courts countrywide with electronic security equipment for two years, with an additional three years of maintenance, is worth a cool R600-million.

Sondolo IT is part of the Bosasa group of companies that have been awarded contracts worth billions of rands by government institutions, including the correctional services, home affairs and transport departments.

In 2006 Beeld revealed a business relationship between former prisons boss Linda Mti and Bosasa and that Bosasa officials wrote part of a multimillion-rand prisons tender for access control systems that was later awarded to Sondolo IT.

In 2007 the Special Investigating Unit launched a massive probe into major procurements by the prisons department, including the Bosasa contracts.

Early this year the Mail & Guardian confirmed the sleazy relationship between Bosasa and the correctional services department by publishing email correspondence between Bosasa’s head of operations, Angelo Agrizzi, and the former finance chief of the department, Patrick Gillingham, in which they discuss unpublished tenders.

The SIU’s probe of the relationship was further confirmed by search and seizure operations at Bosasa’s premises and Gillingham’s house.

Despite these allegations, and the ongoing SIU probe, the justice department has awarded a R600-million security contract to Sondolo IT. When the contract was awarded in August last year, it was publicly known that the SIU is probing Sondolo’s contracts with correctional services.

Justice department spokesperson Zolile Nqayi said: ‘The department is aware through public reporting [of the allegations against Bosasa] and it had no effect on who would be awarded a tender.
‘Furthermore the department subscribes to the notion ‘everyone is innocent until proven guilty’.”

A total of R80-million was budgeted for the contract in this financial year, but it was likely that not all of it would be spent as the department and Sondolo are still concluding a service-level agreement.

‘Checks were conducted on the company with the national treasury and it was cleared at the time of the award. In any case, this tender is independent of developments elsewhere and there was therefore no legal basis to exclude Sondolo from the tender process,” said Nqayi.

A house fit for an ex-minister
Despite losing his seat in Cabinet, former correctional services minister Ngconde Balfour is still living in a luxurious house paid for with taxpayers’ money, writes Yolandi Groenewald.

The Mail & Guardian traced the up-market pad of Balfour and his wife, Gauteng prisons boss Thozama Mqobi-Balfour, in the luxury Woodhill Estate in Pretoria this week.

Balfour’s successor, Nosiviwe Mapisa-Nqakula, suspended national prisons commissioner Xoliswa Sibeko this week for renting expensive properties for her and Mqobi-Balfour when they had official houses. On the ‘wrong” side of town, their official residences stand empty.

Sibeko shares the same exclusive address with the Balfours, courtesy of the prisons department, which is forking out R30 000 and R35 000 a month respectively for the two residences.

On Sunday the party ended when Rapport revealed their lavish renting habits. Mapisa-Nqakula suspended Sibeko and acting chief financial officer Nandi Mareka immediately after reading media reports that exposed the lavish living of the prison officials. The Public Service Commission will investigate the alleged excessive spending.

But questions have been raised about why Mqobi-Balfour was glossed over, with the DA calling for a probe into the role of Balfour himself. On average a Woodhill property fetches about R8-million. The houses rented by Sibeko and Mqobi-Balfour would fetch about R6-million, said an estate agent.

At a press conference Mapisa-Nqakula refused to take political responsibility and hinted that Balfour had approved the housing.

But the department was quick to scotch media reports the next day that Balfour had approved his wife’s luxurious house, saying that he had only approved alternative housing to the cost of R60 000 a year for the officials.

A department spokesperson said Sibeko and Mareka would be given an opportunity to clarify why houses were rented at R30 000 a month.
An investigation will be completed soon.

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