After making headlines for all the wrong reasons, the chief executive of the National Empowerment Fund (NEF) will be hanging on to her post for now, despite an investigation under way probing allegations of fraud and corruption against her.
Acting on instructions by Trade and Industry Minister Rob Davies, the board of the NEF has appointed auditing firm Deloitte to "determine the veracity of the allegations" made against Philisiwe Mthethwa and two senior officials.
The accusations, made by an anonymous whistle-blower, reportedly implicate the organisation's most senior manager in fraud and corruption, although the chairperson of the NEF's board did not confirm this.
Although it was speculated that Mthethwa would be suspended or placed on special leave while the investigation was under way, the board sent out a statement on Wednesday afternoon saying that it had decided against this.
"After having taken independent legal advice, after a considered deliberation, and pending the results of Deloitte's report on the veracity of the allegations, the board of trustees decided not to suspend any of the individuals who are the subject of the allegations," it said.
"We are confident that no member of the NEF will do anything to compromise the integrity of the investigation, and have received commitments from the affected individuals to that effect."
Not a cent paid back
This comes less than a month after the Sunday Times revealed that the NEF had approved an R8.9-million loan to Mthethwa's brother, Nkanyiso Buthelezi.
Buthelezi is a director of Inala Shipping, which required start-up funding in 2010.
Three years later, only R243 000 of the loan had actually been advanced, but the newspaper said that not a cent had yet been paid back.
Hawks spokesperson Paul Ramaloko said that the directorate had not been notified of the matter.
However, it was normal procedure for them not to be brought in up front, he told the Mail & Guardian.
They might be called at a later stage pending the outcome of investigations by the auditing firm.
"That is one of the ways of doing it," he said.
Board to decide
The NEF board seems to be following suit.
"Based on the results of the [audit] report … the board will decide whether or not further work should be conducted or if the investigation should cease," it said.
The Deloitte probe will be the second investigation into the NEF spearheaded by Davies in the past few months.
At the end of July, he called for an inquiry into the organisation's granting of a R34.1-million loan to Luminance, a high-end Hyde Park boutique.
The store sells largely imported designer outfits and its major shareholders are media personality and businessperson Khanyi Dhlomo, her mother and Judy Dlamini, the wife of FirstRand chief executive Sizwe Nxasana.
While the NEF said the proposal went through several layers of approval and was reworked to meet requirements of black female- and rural empowerment, there was a vociferous public backlash to the funding decision.
New shareholder directive issued
Following the completion of the report, Davies issued a new shareholder directive to all the department of trade and industry's agencies, stating that government funds may not be used to import finished goods or services.
In its Wednesday statement, the NEF board defended its systems and policies.
"It's very important to understand that the NEF is an institution that abides by the law," it said.
"We conduct robust checks and balances involving internal risk … finance and … audit committees."
However, its 2012 financials reflect a certain ailment in the rising number of write-offs over the past two years.
The fund wrote off R290-million last year, which was more than double the R105-million it wrote off in 2011, Business Day reported recently.
Funding dries up
The NEF has turned about 750 would-be entrepreneurs away since May this year after funding dried up and it placed a moratorium on new loans.
The organisation is seeking recapitalisation through the trade and industry department and the treasury, but five months after it staged a media blitz in an effort to garner support, new funds have not been forthcoming.
This is despite assertions from all parties that the process was under way.
When questioned in May about whether the hold-up in funding had anything to do with the governance of the organisation, the treasury rubbished the notion.
The delay was due to "nothing of the sort," treasury spokesperson Jabulani Sikhakhane told the M&G.