Minister Thulas Nxesi on update on the turnaround of the Department of Public Works with special focus on disciplinary and legal processes
22 Aug 2012
This media statement arises out of an undertaking I made yesterday to the Parliamentary Portfolio Committee on Public Works to make available specific details of current disciplinary cases regarding fraud and corruption at the Department of Public Works (DPW).
Parliament, and the public, needs to be assured that public funds are properly safeguarded and utilised. Where there is corruption and mismanagement of public funds, they are entitled to a full and detailed report. That is part of what accountability means.
Negative reports from the Public Protector Thuli Madonsela and the Auditor-General Terence Nombembe in 2011 pointed to the depth and scope of corruption in the Department of Public Works, a situation made possible by lack of controls and persistent mismanagement.
At the same time the quiet, but relentless, work of the Special Investigating Unit (SIU), appointed through a Presidential proclamation to investigate claims of corruption in the department in 2010, has uncovered detailed evidence to allow us to proceed with disciplinary processes against certain officials within the department.
This is a slow process, one in which we dare not act in haste. On the one hand we are dealing with syndicates of corrupt officials working with corrupt business interests, who do not hesitate to destroy evidence in the form of public records. On the other hand, we work within a system of laws which, quite rightly, protects the rights of individuals facing disciplinary charges. You will see that this includes the right to request postponements of disciplinary hearings on medical grounds.
The onus is then on the employer to ensure that disciplinary cases against employees who have contravened policies are dealt with as speedily as possible. That is why I have found it necessary to bring in additional legal resources to facilitate the process. We are also greatly assisted by the thorough and professional forensic investigations carried out by the SIU. These investigations are still on-going.
Today my task is to provide an update on the progress with current investigations and disciplinary processes. Let me be specific:
1. Lease Agreement involving South African Police Service (SAPS) and Roux Property Fund
- Last year the DPW applied to the High Court for a declarator to declare the lease agreement invalid. The State Attorneys are handling this matter on behalf of the department. We are awaiting a date from the Registrar of the Court to set the matter down for hearing.
- In the meantime, Nedbank has made application to intervene in the case. This has been opposed by the department.
- An application by suspended official Mr Sam Vukela to amend his affidavit was rejected by the court with costs.
2. Suspension of the Director-General Mr Dongwana on special leave pending an investigation
- Our investigation, in consultation with the SIU and the Public Protector, found that reasons for Mr Dongwana’s suspension were frivolous. Therefore, all charges that were preferred against Mr Dongwana have been withdrawn.
- Mr Dongwana will however not be returning to the position in which he was appointed as Director-General. The department, after consultations with the Minister of Public Service and Administration, decided on the redetermination or termination of Mr Dongwana’s employment contract with effect from 15 August 2012, with the payment of a settlement.
3. Suspension of Mr Sam Vukela
- After the suspension of Mr Dongwana, Mr Vukela was appointed to act as Director-General. His subsequent suspension, before my appointment to Public Works, was also related to the lease agreement.
- Mr Vukela was served with charges relating to his role during the procurement of SAPS lease agreement. The disciplinary hearing was set for 29 June 2012.
- The hearing was postponed at Mr Vukela’s request until 13 August 2012.
- Proceedings were again postponed to 26-29 September 2012 after Mr Vukela’s attorney produced a medical certificate on his behalf.
4. Disciplinary proceedings against Mr Mashiyane
- Mr Mashiyane, Director: Property Management, at the Pretoria Regional office of the DPW, was served with charges relating to lease agreements entered into, in contravention of the supply chain management policy, failure to declare private dealings with or knowledge of the successful bidder, and fraud or forgery.
- Investigations by the SIU have been completed.
- The disciplinary hearing began on 23 April 2012 and was thereafter postponed on the basis of a medical certificate produced by Mr Mashiyane’s attorney on 23 July 2012.
- Criminal investigations in this case are still underway.
5. Disciplinary proceedings against Deputy Director-General Rachard Samuels
- Mr Samuels was charged with failure to declare private dealings with service providers and receiving payments from service providers (approximately R170 000, including for children’s university fees); as well as influencing the appointment of such service providers.
- The SIU investigation is complete.
- The disciplinary hearing is complete. We are awaiting the report of the chairperson of the Disciplinary Committee.
- Criminal investigations are complete and a case has been registered with the Special Commercial Crimes Unit.
6. Disciplinary proceedings against Mr Thabo Moagi and Mr Desmond Simamane of the Johannesburg regional office
- These officials were charged with acts of misconduct including having a corrupt relationship with a landlord, who leased properties to the department on behalf of client departments.
- The officials received motor vehicles as corrupt payments from the landlord. (In the case of Mr Moagi R285 000 for a Golf 5 GTI, in the case of Mr Simamane a Nissan double cab to the value of R566 250 and various payments to the value of R635 000).
- The said officials were acting as portfolio managers, as well as members of the Bid Specification and Evaluating Committee, where bids involving the companies they benefited from were considered. Many of these bids were not advertised. They negotiated with the said landlord owning ten companies and awarded 28 leases of which four were never occupied despite payments being made for three years in respect of these leases.
- The disciplinary hearing of Mr Moagi has been completed and we are awaiting the outcome from the chairperson.
- Mr Simamane resigned when disciplinary proceedings started.
- Criminal investigations have been completed and criminal cases of fraud and corruption against the two employees and the landlord have been registered.
7. Johannesburg Region lease agreements: Independent Police Investigative Directorate (IPID)/DPW
- The SIU has completed its review of leases in the Johannesburg Regional Office and recommended that the department approach the courts to invalidate the leases and sue for damages. The State Attorneys have been approached to assist DPW in this respect. Our legal team is in the process of filing papers with the High Court.
- A criminal case of fraud and fronting against the landlord and other people has been referred to the SAPS.
8. Chief Financial Officer (CFO)
In the light of the poor financial statements of the department resulting in two qualified reports and subsequently a disclaimer, I requested the CFO to resign, a request she accepted.
Currently a high proportion of senior managers are in temporary acting positions.The completion of disciplinary processes will allow the DPW to advertise to fill senior posts within the department on a permanent basis. The stabilisation of leadership is crucial to any successful turnaround of the department.
9. Disciplinary and legal procedures in relation to the Prestige Unit of DPW
- The SIU has finalised investigations into the Prestige Unit regarding irregularities in the appointment of contractors to renovate houses for Ministers and Deputy Ministers.
- The SIU has recommended disciplinary measures be taken against some officials in the department. Charges relate to the irregular appointment of contractors, inflated invoices and failure to report deviations to the Director-General and the Auditor-General.
- A criminal case has been referred to the SAPS against the external quantity surveyor for fraud.
- DPW will appoint an independent Quantity Surveyor to verify the exact inflated figures on the invoices paid by DPW.
10. Skilpadhek Border Post
- The SIU conducted a forensic investigation into the proposed construction of the Skilpadhek Border Post. The contract was cancelled after it transpired that the area was not suitable for construction. However, a settlement amount was irregularly paid to the contractor resulting in an overpayment of approximately R33 million.
- In a clear conflict of interest, an official received approximately one and a quarter million rand (R1.25 million) from the contractor through companies and close corporations in which he holds an interest.
- Civil actions will be instituted against the contractor for the loss suffered by the DPW.
- A criminal case of fraud has been reported to the SAPS against the contractor and the said official.
The Turnaround Strategy for the Department of Public Works
I have said before that the turnaround strategy at Public Works rests on two pillars:
- First, zero tolerance to corruption – and that this is a non-negotiable. In this regard SIU investigations are continuing and more individuals will be charged.
- The second pillar of the Turnaround is the improvement of the business practices of the Department.
In pursuing the second objective of the Turnaround 15 crucial stabilisation projects have been identified. At this stage I want to focus on those projects which have a direct bearing on issues of fraud and corruption:
A.The audit of leases
- The SIU has audited irregular leases in the Johannesburg Regional Office – leading to the actions listed above.
- The Auditor-General has conducted a sample audit of leases. We are awaiting receipt of the report.
- DPW is auditing the balance of the current leases. The review process will be intensified with the acquisition of more resources with the aim of recovering from all landlords who benefited from this corruption.
- The objectives of this exercise include:
- A forensic audit to establish lease irregularities
- A physical verification of the condition, extent, occupation and usage of leased properties to seek evidence of maladministration, fraud and corruption.
B.Immovable assets register
- The absence of a comprehensive and reliable register of the state’s immovable assets has provided scope for fraud and corruption.
- In May this year, the Department completed a desktop exercise to reconcile data with the Deeds Office.
- A physical verification of state assets is now being undertaken to verify the existence, condition and extent of the state’s immovable assets.
C. Clean Audit Project
As part of our response to the Auditor-General’s report, the department’s Internal Audit and Investigations Branch will carry out sample investigations into procurement and tender processes in the construction projects side of the DPW business. The need to focus on this has been highlighted by recent scandals including the failure to complete the Diepsloot Police Station.
I have said that the Turnaround of the Department of Public Works is a process not an event. Realistically we intend to stabilise the department over the next one to two years. Fundamental transformation and improvement of business processes will take longer.
We also need to remind ourselves that even as we strive to tackle systemic flaws, we still have a business to run as DPW. In this regard I can report positively as follows:
- During the financial year 2011/12 the department has completed over two hundred construction projects.
- Going forward into 2012/13 – 2015, the department is managing a building program consisting of over 2 500 projects at various stages from feasibility studies, design, tender through to construction.
But, all of this good work is endangered if we fail to combat fraud and corruption. At this point, this remains the number one priority of the department. With the help of the SIU and other agencies, I believe we are making progress in this regard.
To corrupt individuals, I want to leave you with the following thought: “You can run, but you can’t hide.” If you steal from the poor we are coming to get you.
Issued by: Department of Public Works
22 Aug 2012
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