Millions slip through NGO and Gauteng

The Gauteng provincial government has admitted to bypassing its own financial controls, probably illegally, by using a nongovernmental organisation (NGO) as a “conduit” to pay other service providers.

In the process, money has gone missing.

Over three days in November, R5-million meant to help in the rehabilitation of nyaope addicts was used to buy diesel, which then disappeared, possibly being taken across the border and on to Zambia.

The complex web of payments is being laid bare in a court battle between the province and the NGO, A Re Ageng, but the details are emerging slowly, and not to the satisfaction of everyone involved.

“There seem to be a lot of hands in this,” said Johannesburg high court Judge Brian Spilg this week. “There doesn’t seem to be one person.”

At least 14 people were directly involved in spiriting away the diesel: one “Morney Williams”, who apparently made sure the R5-million was paid before the trucks arrived; an unnamed accomplice who helped “Williams” appears to be a legitimate businessperson; and the drivers of 12 unmarked tankers with foreign number plates, who each collected 40 000 litres of diesel from a private depot outside Pretoria.

But the hands Spilg was particularly interested in were those of the provincial officials, who knowingly used “conduits” to bypass their own internal systems and transfer tens of millions of rands out of government coffers in a way that the provincial government’s advocate admitted breached the law.

“There are so many improbabilities,” said Dawie Joubert, advocate for the Gauteng premier. “The conduct of the [province] screams for an explanation … clearly it was not in compliance with corporate governance.”

Last year, the Gauteng department of health moved psychiatric patients from Life Esidimeni centres to small, community-based NGOs, with now well-known tragic consequences — more than 100 deaths.

But even before the health department’s transfer started, it was clear that Life Esidimeni would be left with specialist facilities it would no longer need.

So the company approached the Gauteng department of social development with the idea of turning its Life Esidimeni Witpoort Care Centre in Ekurhuleni into a drug and alcohol rehabilitation centre.

The department was not only amenable to the proposal but went to extraordinary lengths to make sure money made its way to Life Esidimeni for the centre.

In April 2016, for instance, papers in the matter before Spilg show, the social development department paid R14-million to Sanca Horizon, a rehabilitation centre in Boksburg established more than 50 years ago. The centre, in turn, paid the money over to the Witpoort centre, because it had not yet been properly registered on the payment system of the Gauteng treasury, so it could not be paid directly.

The centre is still not properly registered as a supplier, the court heard this week, which is why another R23-million was similarly “channelled” through an unrelated, long-established NGO, A Re Ageng. It is not clear why Sanca Horizon was not used again.

“Esidimeni was only registered with the department of health, a different division, and they [social development] couldn’t pay money into their account,” Joubert told the court. “It is a logistical nightmare to get somebody [registered] by the treasury.”

Why could the social development department not channel the money through the department of health? Why did at least two government officials approve what is clearly a violation of standard policies? Nobody knows, yet, but Spilg has his suspicions. The effect of the mechanism used to transfer the money, he told Joubert, would be the appearance that the province had paid two established non-profits.

Even auditors, he said, would not notice the “conduit” nature of the arrangement, because they would not check them.

A Re Ageng paid an initial R13-million on to Esidimeni, papers show, but when another R10-million showed up, which appeared to be a foreign-exchange transaction, it balked at doing it.

It wanted to be sure that it was not involved in anything illegal, the organisation says.

Now the Gauteng government wants its money back, Joubert said.

But things got considerably more complicated when, on November 10, R5-million of that money was transferred into the bank account of a small Pretoria trader in liquid fuels, Kish Gas.

The company’s owner, Kishan Jawaharlal, told the court in an affidavit that, a few days before, a man had walked into his office and said he wanted to buy diesel for R10-million for export to Zambia.

Jawaharlal, who claims an annual turnover of R20-million a year, said he thought this was in order, but insisted the transaction be broken up into two R5-million tranches to reduce his risk.

Days later, Jawaharlal said, he watched as 12 trucks carted away nearly half a million litres of diesel, supposedly destined for a (nonexistent) company in Zambia.

Spilg was flabbergasted by the “many anomalies” in this account. Why would anyone simply accept that a client wanted to pay a one-third premium on diesel to be able to export it? Why had Jawaharlal accepted an emailed proof of payment for R5-million without checking it? Who accepts a proof-of-payment addressed to “Dear A Re Ageng Social Services” as being from a large foreign company?

“I could only speculate,” advocate Melt Louw told Spilg on behalf of Kish Gas.

Although the Gauteng government wants its money back from A Re Ageng, it is not yet clear whether it will seek to recover any money from Kish Gas, which, according to one interpretation, had received stolen money and was therefore not entitled to argue that it was not at fault, Joubert said.

A final complication is how the money ended up with Kish Gas, opening the possibility that all three parties appearing before Spilg are complicit in some way.

A Re Ageng has told the court it believes it was the victim of identity theft, which compromised its bank account, allowing another party to transfer the R5-million out of it.

But that does not hang together, Joubert told the court. The organisation had arranged new credentials for online banking two weeks before, had been notified of the transfer, and nothing had indicated fraud.

A Re Ageng is expected to respond to that allegation when the matter resumes later in March.

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Phillip De Wet
Guest Author

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