Minister of Public Works and Infrastructure Patricia de Lille has decided to dissolve the Independent Development Trust (IDT) because of poor project management and performance, among other factors.
The IDT is an entity of the public works department and is mandated to support government infrastructure programmes such as the building of schools and health facilities. It has, over the past five years, built 97 new schools and health facilities, the most recent being the delivery of six new schools to communities in the Eastern Cape — for which the trust paid R165-million.
The IDT and its shareholder have been at loggerheads over the challenges faced by the trust, including its ailing financial position, the increasing litigation against it and its high vacancy rate.
A stalemate between the department and the IDT has seen the latter accusing the department of displaying a “heartless attitude” towards the challenges faced by the public entity.
In a memorandum of demands, sent to Parliament’s portfolio committee for public works on last Wednesday, a group of employees at the IDT accused the department of being determined to collapse the entity “at whatever cost”.
“We are warning Parliament that the situation at IDT is going to have dire service-delivery and audit implications, if not addressed decisively and immediately,” the letter reads.
On Monday, De Lille notified interim board chairperson, Tlhotse Motswaledi, about her decision to dissolve the trust.
Similar to other struggling state-owned entities, the IDT has over the years received bailouts from the government but has failed to generate revenue. According to the letter sent by De Lille,which has seen by the Mail & Guardian, the department of public works has already granted the trust R500-million in bailouts over the past five years.
The funding, however, has done little to get the entity out of the woods as the IDT board once again requested a capital injection from the department earlier this month.
To justify the need for more funding, Motswaledi cited, among other factors, the need to implement the organisation’s restructuring plan that was approved in 2017 and avoid the entity’s imminent collapse as a result of its financial position.
The minister, however, was unconvinced by these reasons.
“I find it difficult to justify yet another bailout to the IDT to support its turnaround strategy … the fiscal constraints the country is facing and the government’s posture towards non-performing state-owned enterprises cannot be ignored as well,” De Lille said.
In addition to the staff threatening to down tools, about 32%, or 70, of the IDT employees, including the trust’s chief executive Coceko Pakade and chief financial officer Moitswadi Mofokeng, stand to be unemployed by the end of this month when their contracts expire, according to the memorandum.
The company’s latest financial records also show that the IDT is owed R62-million from various government departments, including the department of public works.
The nonpayment from the IDT’s clients has a domino effect on the entity’s ability to pay its service providers on time, which negatively affects its cash flow.
IDT spokesperson Phasha Makgolane said the trust had requested a capital injection of R160-million from the department of public works to fund its turnaround strategy beyond March, but this has not materialised. “The only challenge is funding for overheads budget, such as [the] salary bill and payment of leases,” he said.
For the 2018-19 financial year, the auditor general was unable to give the trust a clean audit. The auditor general found that the IDT had flouted supply-chain management legislation and regulations. The chapter nine institution was also unable to find audit evidence for the IDT’s assets and liabilities, which were both stated at nearly R2-billion.
In 2018-19 the IDT had a net balance of R12.3-million, which is significantly lower than the R18-million that was in its bank account at the end of the previous year. For the past year, the entity has had to resort to a monthly scramble to pay salaries and honour other commitments, Mofokeng told Parliament last year.
De Lille said she plans to dissolve the IDT within the next financial year. “This process will start immediately, with the tabling of a memorandum to Cabinet to consider approval for a dissolution,” she said.
Thando Maeko is an Adamela Trust business reporter at the Mail & Guardian
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