The oversight role of business figure and political analyst Moeletsi Mbeki during the 2010 collapse of the Open Learning System Education Trust (Olset), a non-governmental organisation, is set to come under new scrutiny at an insolvency hearing scheduled for August this year.
As much as R7-million is thought to have disappeared by the time the Dutch government terminated its funding of Olset amid suspicions of large-scale misappropriation. Mbeki chaired the three-person board, which allegedly failed to meet for five years.
In November 2009 the Dutch embassy officially stopped funding Olset, intimating that it would take civil action against Olset's management and, in particular, chief executive Gordon Naidoo.
Asked last week about progress in recovering the funds, the embassy, through Geyser Attorneys, said the South Gauteng High Court had appointed trustees who applied for an insolvency inquiry. This was set down for November 22 2011, and Naidoo was subpoenaed to attend.
However, he did not appear at the hearing, despite knowing his presence was required. The contact details he had given the trustees were no longer valid, and he could not be located for service of a subpoena for a second hearing.
The lawyers said that when he was traced to a new address in Durban Naidoo had gone abroad on an extended trip without a fixed address. The inquiry was postponed until August 6 this year.
Asked whether Mbeki's role as board chairperson was also under scrutiny, the attorneys said that if the inquiry revealed that "any other party could assist in this matter, our client reserves the right to pursue this avenue".
The Mail & Guardian put detailed questions about Olset to Mbeki last week, but he refused to answer. Later, he instructed his lawyers to say that he would not respond because he is suing the M&G over another article.
The lawyers added: "Kindly take further note that our client not responding to your questions must not be construed as an admission of the correctness thereof, but rather a denial."
Naidoo could also not be reached.
In an application to the Labour Court in 2010, former Olset deputy director Farhana Chand said that during Mbeki's five-year tenure no board meetings were held and the trust had one signatory for its cheque account – Naidoo, Mbeki's friend and struggle comrade.
Documents in the possession of the M&G show that Naidoo earned an annual salary of R940 000. Despite this, he allegedly awarded himself loans of R1.2-million from Olset's funds, as well as "huge" amounts of foreign currency as per diem expenses for overseas travel, including £8 000 and €2 000 for a week's visit to the UK in September 2008. Olset also paid for his children's school fees and family holidays, she says.
The documents also show that Naidoo opened a mysterious offshore bank account in Mauritius to which only he and a Mauritian, Amedee Darga, had signing rights. When contacted this week, Darga refused to answer questions about his relationship with Naidoo or Olset. Darga is recognised as an expert in democracy by the South African Institute of International Affairs, which Mbeki chairs and which has also received Dutch funding.
Chand told the M&G this week that she had held several meetings with Mbeki at his offices between July 2008 and April 2009 "in which I expressed my disquiet about the way in which donor funds were being spent, but this was disregarded".
Uninterrupted and continuous
She claimed that Mbeki was "fully cognisant of Naidoo's uninterrupted and continuous use of Olset's structure and its accounts for personal use".
At her insistence, the only board meeting was convened in April 2009, during which she queried Naidoo's spending and discrepancies in financial line items. But Mbeki responded that the meeting was not the correct forum in which to raise such issues.
At the same meeting Mbeki sanctioned Naidoo's expenses using a memorandum of 1998 indicating that the chief executive was entitled to a 2% commission on funds he had raised.
He went on to sign a letter, typed during the meeting, indicating that Naidoo's loan was written off, Chand says. When she indicated that she wished to resign, Mbeki responded: "You are emotional, go home and take some time to reconsider the resignation."
While on leave, Chand was charged with insubordination, and Mbeki ordered her suspension on the day before she was due back at work. A subsequent disciplinary hearing cleared her of all wrongdoing and she was reinstated.
The Dutch embassy's review in 2009 of Olset's management and finances revealed questionable governance practices. The NGO was subsequently closed down and staff were released without pay.
Tardy and disrespectful
Chand maintained that both Naidoo and Mbeki had a responsibility to staff members and that "the tardy and disrespectful manner in which Olset dismissed staff without pay was unacceptable".
Olset functioned as a teaching and learning NGO over 18 years. In 2006, the Dutch embassy pledged R40-million for its learning programmes, with strict instructions that the money should not be used to pay salaries or commissions. About R20-million was drawn down before the funding was stopped.
The organisation developed radio programmes for children and supported teacher development and the teaching of English in under-resourced classrooms across South Africa. The NGO also trained more than 40 000 teachers to use English lessons developed for rural communities, and more than 1.2-million children benefited.
Olset also received R55-million from the British government and earned millions of dollars from partnerships with the Southern Sudanese education ministry, the Nigerian Commission for Nomadic Education and other national and international organisations in the developing world.
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