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Gordhan's conduct improper in Ivan Pillay matter - Busisiwe Mkhwebane

PP recommends that President take appropriate disciplinary action against minister for violating Constitution

Address by the Public Protector, Adv. Busisiwe Mkhwebane, during a media briefing in Pretoria on Friday, May 24, 2019.

Programme Director, Mr. Oupa Segalwe;
Chief Executive Officer, Mr. Vussy Mahlangu;
Chief Operating Officer, Ms. Basani Baloyi;
Chief of Staff, Mr. Sibusiso Nyembe;
Executive Managers;
Members of the media;
Ladies and gentlemen;
Good afternoon!

I have called this media briefing today to reveal, to the public, my findings in respect of investigations that I have concluded since the last time we gathered here. The findings are carried in six (6) reports, which I hereby publish in compliance with section 182(5) of the Constitution read with section 8(1) of the Public Protector Act No. 23 of 1994.

The reports relate to:

a) Alleged maladministration and improper conduct in connection with a Memorandum of Understanding entered into between the Gauteng Provincial Government and the Gauteng Horseracing Industry in 1997, leading to the corporatisation of the horseracing industry in South Africa;

b) Alleged maladministration, improper conduct and irregular appointment of Senior Executives in the offices of the Executive Mayor and Council Speaker of the City of Tshwane Metropolitan Municipality;

c) Alleged maladministration, improper conduct and abuse of power by Mr. Gengenzi Mgidlana in his official capacity and during the course and scope of his employment as the Secretary to the Parliament of the Republic of South Africa;

d) Alleged irregular appointment of Carol Bouwer Productions to render event management services during the former President Nelson Mandela Memorial Service and the irregular payments to Carol Bouwer Productions;

e) Alleged maladministration and related improper conduct involving procurement irregularities, conflict of interest, nepotism and human resources mismanagement by the former Group Chief Executive Officer and other functionaries at the Passenger Rail Agency of South Africa (PRASA;

f) Alleged irregular procurement of official vehicles for the former Premier of Mpumalanga Province, Mr David Mabuza by the Mpumalanga Office of the Premier as well as allegations of a violation of the Executive Ethics Code by the former Premier with regard thereto; and

g) Alleged maladministration and impropriety in the approval of Mr Ivan Pillay’s retirement with full pension benefits and his subsequent retention by the South African Revenue Service (SARS).

Some of you may be aware that I have already released eleven (11) other reports through our online platforms in recent days and you may have reported on some of them. I will therefore not re-release them here but rather mention which matters those were just for the record. They were about:

a) Alleged improper conduct, maladministration and prejudice relating to failure by the Govan Mbeki Local Municipality to pay for services rendered by the Complainant’s company;

b) Alleged irregular appointment of Ms Suzan Malan to a position of Assistant Manager: Billing and Customer Care by the Polokwane Local Municipality in Limpopo;

c) Allegations of improper conduct and victimisation of the alleged whistle-blower, Mr Mpho Seero, by the City of Matlosana resulting in his unfair suspension;

d) Alleged malfeasance and maladministration during the delivery of the housing projects managed by Toro ya Africa (Pty) Ltd on behalf of the City of Matlosana in the North West;

e) Alleged undue delay and maladministration by the Compensation Fund with regard to the processing and payment of compensation benefits to the employees of Private Employers;

f) Alleged maladministration and undue delay by the Department of Military Veterans in the registration of Messrs ML Kolobe; BP Nevondo and TM Makhuga on its database;

g) Allegations of the irregular appointment of Mr Lucky Ntsangwane to the position of Senior Manager: Research by the South African Weather Service;

h) Allegations of maladministration, corruption and nepotism against the former Chief Executive Officer (CEO) of the Agricultural Sectoral Education Training Authority Mr Jerry Madiba;

i) Alleged financial mismanagement and irregular procurement against certain officials of the Independent Communications Authority of South Africa (ICASA);

j) Alleged improper prejudice suffered as a result of allegations of unfair suspension of the Vuk’uphile Contractor Development/Incubation Programme for Contractor/ Supervisor Development by the North West Department of Public Works and Roads; and

k) Alleged improper conduct and maladministration pertaining to the appointment of Ms R Stadhouer-Andrews as the Chief Executive Officer of the Northern Cape Liquor Board in August 2014 and the subsequent appointment of employees.

Before I delve into my findings on the various matters, I wish to remind all our stakeholders of the words of Chief Justice, Mogoeng Mogoeng on the occasion of the delivery of that landmark judgment in the case of the Economic Freedom Fighters and others v the Speaker of the National Assembly and others. Chief Justice Mogoeng said the following:

“[The Public Protector’s powers] are indeed very wide powers that leave no lever of government power above scrutiny, coincidental “embarrassment” and censure … Her investigative powers are not supposed to bow down to anybody, not even at the door of the highest chambers of raw State power.

“The predicament though is that mere allegations and investigation of improper or corrupt conduct against all, especially powerful public office-bearers, are generally bound to attract a very unfriendly response.

“An unfavourable finding of unethical or corrupt conduct coupled with remedial action, will probably be strongly resisted in an attempt to repair or soften the inescapable reputational damage. It is unlikely that unpleasant findings and a biting remedial action would be readily welcomed by those investigated.”

I quote these prophetic words from the highest court in the land with the hope that they will help stakeholders makes sense of events that have dogged this institution in the recent past. Having said that, let me express heartfelt words of gratitude to all the state functionaries we dealt with during the investigation of all the matters I’m reporting on today.

When my team and I wrote to the implicated parties in these matters, requesting their response to the allegations levelled against them, we got an all-round positive response. There was satisfactory cooperation and compliance.

They did not filibuster, with clear intentions to delay and eventually frustrate our investigations. They did not baselessly accuse me and my office of being influenced by politics or drag us into party-political factionalism with no shred of evidence to back up such wild claims.

They also did not leak confidential correspondence to the media, with a view to casting a shadow of doubt on the integrity of our investigations. They did not seek to paint us in a negative light in the eyes of the public while portraying themselves as victims.

They submitted themselves to scrutiny because they understood that this is a legitimate constitutional institution whose work is to investigate alleged or suspected improper or prejudicial conduct in state affairs, report on that conduct and take appropriate action.

They also understood that while they do not have to like the head of this institution, they have a constitutional duty to support the institution and to not interfere with its functioning.

I trust that all other state functionaries will emulate this conduct with the understanding that we are all equal before the law and that there are no holy cows. I hope that no one will see scrutiny by this institution as a source of irritation but a much needed effort to entrench a culture of good governance and accountability, and a pushback against impunity.

This is also a week during which judgment was handed down in the review application by the Democratic Alliance (DA) and the Council for the Advancement of the Constitution (CASAC), prompting some quarters of society to go on a frenzy – calling for my removal from office.

In the previous, ill-fated attempt by the DA to have Parliament kick-start a similar process, I made a comprehensive submission in which I pointed out that a finding by a court that I am wrong in law, in relation to an investigation I conducted, does not warrant removal from office. It does not even amount to incompetence.

That is why the decisions of superior courts such as the Supreme Court of Appeal and the Constitutional Court to set aside or overturn the decisions of lower courts are never grounds for the removal from the bench of the judges who would have written the overturned rulings or even to brand them incompetent.

Then you have some mischievous people going on platforms to distort my statements, saying I said – in carrying out my duties – I do not interpret the law when they understand exactly the point I was making. 
I apply the law as is. The court may choose not to apply the law as is when they are of the view that such law is unconstitutional. I do not have those powers. The courts, through interpretation, can make new law. I cannot. This is why sources of law include Case Law.

For instance, before March 2016, there was confusion about the powers of this office. We all interpreted it our own way until the Constitutional Court made it clear for all of us. Now it is law that my remedies are binding. This is how courts make law through interpretation and this is exactly the point I was making.

As I said in my media statement earlier, I will be appealing this judgment. We are still working out whether to go the normal route or apply for direct access to the Constitutional Court. That judgment is replete with a lot of eyebrow-raising conduct that cannot go unchallenged. We will deal with those extensively in court papers.

I now turn to the main business of the day but before I do that I wish to address the matter of the Minister of Rural Development and Land Reform, Hon. Gugile Nkwinti. I investigated and finalised a report on allegations of a violation of the Executive Ethics Code by Minister Nkwinti, which was lodged with my office in February 2017.
This complaint was initially lodged by Thomas Waters of the DA. Soon thereafter we received a follow up complaint from Minister Nkwinti himself.

On 02 May 2019, the report was dispatched to Minister Nkwinti and Hon. Walters, the complainants, and President Cyril Ramaphosa, with the effective date being 03 May 2019. My office received an acknowledgement of receipt of this report by the President shortly after 17H00 on 03 May 2019.

Later that afternoon the Minister approached the North Gauteng High Court, with a view to secure an interdict preventing me from releasing the report and also stopping the President from acting on the report.

In his court papers, Minister Nkwinti acknowledged receipt of the report, which was delivered to his office on 02 May 2019. Simultaneously with the delivery of the report, the Minister was favoured with a copy of a letter (to which the above stated acknowledgment relates) addressed to the President enclosing the report.

The urgent application by the Minister, for the granting of the interdict, was arranged to be heard at an urgent court from 18H00 or soon thereafter as parties may be heard. 
Despite the aforementioned factual exposition, the interim interdict was granted. As a result, I am precluded from publishing the report.

I must however here demystify the illusion that Mr. Nkwinti never was afforded an opportunity to respond to my section 7(9) notice. In terms of Rule 24(2) (d) of the Rules Relating to Investigations by the Public Protector and Matters Incidental Thereto, 2018 (Gazette No. 41903), Minister Nkwinti had 10 days within which to respond to my section 7(9) notice.

I had, however, in terms of my section 7(9) notice, afforded the Minister effectively 18 days to respond, which was eight days more than what the Rules provide for. The Minister received my section 7(9) notice on 02 April 2019, with 20 April 2019 as the deadline for him to respond.

On 16 April 2019, some 14 days thereafter, the Minister requested an extension of the deadline owing to the party-political commitments relating to the elections. Later on, the Minister sent another extension request citing too many forthcoming holidays as the basis.

Both these requests did not persuade me as sound reasons upon which the extension could be granted. It was curious to me that it took the Minister 14 days to ask for an extension based on such reasons, more so when I considered I had afforded the Minister a period that far exceeds what is provided for in the Rules.

Again, as said above, I am constrained by the interdict to reveal my findings in the matter and this is as far as I can take this matter. However, I must indicate that it is a concern to me to have a judgment of that nature. I will be appealing it as it could set a very bad precedent. 
Let me now deal with the findings I am free to reveal to the public. I will start with the case of Kema and others v the Gauteng Provincial Government.

I received three (3) complaints in which maladministration and improper conduct were alleged in connection with a Memorandum of Understanding (MoU) entered into between the Gauteng Provincial Government and the Gauteng Horseracing Industry in 1997, which subsequently led to the corporatisation of the horseracing industry in South Africa.

The first complaint was lodged by Ms Phindiwe Kema on 22 January 2012, who at material times hereto and in lodging the complaint was representing a company named and styled Africa Race Group (Pty) Limited that was involved in race horses breeding.

The second complaint was lodged by Mr Chophelikhaya Simoto on16 April 2012, who was at all material times hereto and in lodging the complaint duly representing over four thousand (4000) members affiliated with the South African Grooms Association.

The third complaint was lodged Mr Hanif Manjoo, a former member of the Gauteng Gambling Board’s Horseracing Committee on 21 January 2013.

I found that the allegation that Mr Jabulani Moleketi did not have the requisite authority from the Gauteng Provincial Government to enter into discussions and negotiations for the corporatisation of the horseracing industry in Gauteng, which resulted in the conclusion of the impugned June 1997 MoU is not substantiated.

I also found that the allegation that the Gauteng Provincial Government, duly represented by Mr Moleketi, improperly failed to invite public participation and/or follow parliamentary processes when corporatising the Gauteng Horseracing Industry is not substantiated.

I further found that public funds were allocated from the Horseracing Development Fund during the corporatisation process for the upgrading of stabling facilities and for the construction of single and married quarters for the benefit of the grooms at the Newmarket Racecourse.

In addition, I found that the allegation that the land on which the Arlington and Bloemfontein Racecourses are located, were owned by municipalities and/or government at the time of the transfer to Phumelela is not substantiated.

Regarding remedial action, I have made the following directives:

The President, His Excellency, President Cyril Ramaphosa to take urgent and appropriate steps to take note of the report and constitute a Ministerial Committee under the stewardship of the Minister responsible for Trade and Industry that will be tasked with a duty to establish a statutory and independent body that will serve as a Regulator for Thoroughbred Horseracing in the Republic.

The president must also consider that the committee be constituted of the Ministers responsible for, Labour, Agriculture Forestry and Fisheries, Human Settlements as well as Sport and Recreation.

The Minister of Trade and Industry must take urgent and appropriate steps to lead the process of establishment of a statutory and independent body that will serve as a Regulator for Thoroughbred Horseracing in the Republic.

The Minister must also take urgent and appropriate steps to establish a Secretariat to the Ministerial Committee that will be composed of legally qualified officials, Accountants and people who are knowledgeable about Thoroughbred Horseracing in the Republic.

The Minister must embark on a consultation process with all industry players and stakeholders involved in Thoroughbred Horseracing in the Republic with a view to making a determination on how they prefer that horseracing be managed going forward so that the sport could be taken back to its initial custodians, the people; and;

Should a need arise, the Ministerial Committee appointed by the President to embark on a benchmarking exercise to learn best practises in as far as horseracing is concerned.

The Minister of Sport and Recreation must take urgent and appropriate steps to take cognisance of the report and ensure that the transformation of Thoroughbred Horseracing in the Republic is expedited and ensure that the sporting side of the Thoroughbred Horseracing in the Republic is properly regulated.

The Premier of the Gauteng Provincial Government and all other Provincial Premiers must take cognisance of the report and ensure that the Ministerial Committee appointed by the President is provided with the necessary support to enable it to achieve its objectives.

They must ensure that the statutory body that is appointed as the Regulator of Thoroughbred Horseracing in the Republic is capacitated to enable it to perform its functions independently and without fear, favour or prejudice.

The Premiers must ensure that the 50% bookmakers levy which is paid to Phumelela Gaming and Leisure (Pty) Ltd is withdrawn and transferred to the new entity that will serve as a Regulator for Thoroughbred Horseracing in the Republic for its operations as well as the development and transformation of the horseracing industry and also assist in looking into a new beneficial funding model.

With the assistance of the SIU, the Premiers whose Provinces were affected by the corporatisation of the Thoroughbred Horseracing in the Republic, must request the President to issue a Proclamation in terms of section 2(1) of the Special Investigating Units and Special Tribunals Act, 1996 to investigate the:

a) Unlawful appropriation or expenditure of public money or property;
b) Unlawful, irregular or unapproved acquisitive acts, transactions, measures or practices; and 
c) Intentional or negligent loss of public money by organs of state referred to in this report, with a view to institute civil action for the recovery of the loss of public money by organs of state in the corporatisation of the Thoroughbred Horseracing in the Republic.

The Gauteng Premier must extend an apology to the complainants for the inconvenience and frustrations they experienced as a consequence of the corporatisation of Thoroughbred Horseracing as well as consider compensating them for any losses they incurred in trying to bring to the attention of the Gauteng Provincial Government the injustices occasioned by the corporatisation of the Thoroughbred Horseracing in the province.

The CEO and the Board of Directors of the Gauteng Gambling Board to take urgent steps to take cognisance of the report and in consultation with the newly appointed Regulator for Thoroughbred Horseracing in the Republic, conduct an audit of all state-owned assets which were transferred to Phumelela Gaming and Leisure (Pty) Ltd for a song with a view to establishing their origin, value on transfer and ownership prior to transfer, as well as to establish whether they were utilised for the benefit of the horseracing industry and citizens who are affectionate about the sport of horseracing.

They must also ensure that the 50% bookmakers levy which is paid to Phumelela Gaming and Leisure (Pty) Ltd by the Gauteng Gambling Board is withdrawn and transferred to the new entity that will serve as a Regulator for Thoroughbred Horseracing in the Republic for its operations as well as the development and transformation of the horseracing industry and also assist in looking into a new beneficial funding model;

Lastly, they must recover from Phumelela Gaming and Leisure (Pty) Ltd the balance of the funds which were earmarked for the erection of single and married quarters for the benefit of the grooms in the Gauteng Province and ensure that a Trust is established for the grooms and other low-skilled employees in the horseracing industry.
Matsena v City of Tshwane

The Caucus Leader of the opposition party in the Municipal Council, Cllr. Mapiti Matsena of the African National Congress (ANC), alleged maladministration, abuse of power, fraud, irregular appointment and corruption by the Democratic Alliance-led Municipality and Executive Mayor Msimanga.

He stated that in a brief period of two months, the City lied to the residents and committed various acts maladministration, the consequence of which was fraud and corruption. The complainant also alleged that some officials were irregularly appointed in violation of the Staffing Policy of the City of Tshwane Metropolitan Municipality.

The officials who were alleged to have been irregularly appointed are the following:

a) Ms Marietha Aucamp, Chief of Staff in the Office of the Executive Mayor;
b) Mr Samkelo Mgobozi, Executive Head and Mayoral Spokesperson;
c) Mr Stefan de Villiers, Executive Head: Office of the Executive Mayor;
d) Mr Mathew Gerstner, Acting Mayoral Spokesperson, Office of the Executive Mayor, and;
e) Mr Tiyiselani Babane - Strategic Executive Head: Office of the Speaker.

The specific allegations against the Executive Mayor, Cllr. Tshepiso Solly Msimanga were inter alia that he:

a) Issued a public announcement banning the use of blue lights with sirens in and around the jurisdictional area of the City of Tshwane despite the fact that he had no authority in law to issue such a directive and thus acted ultra vires;

b) Deliberately and wilfully misled the public regarding the constitution and the subsequent reconstitution of the Mayoral Committee;

c) Misled the public by stating that the previous Mayoral Committee had taken a decision to purchase a new fleet of BMW’s for its members; and;

d) Announced that he will acquire a cheaper official vehicle than that of the former Executive Mayor and failed to acknowledge that the vehicle he used was a donation from BMW South Africa.

Having studied the complaint, I decided to investigate whether there were any irregularities in the appointments of senior executives in the offices of the Executive Mayor and Council Speaker of the City and whether the former Executive Mayor misled the public by making pronouncements banning the use of blue lights in the City, the reconstitution of the Mayoral Committee and the utilization of the fleet of BMWs by the Members of Mayoral Committee.

I have thus made the following finding:

a) There were any irregularities in the appointments of senior executives in the offices of the Executive Mayor and Council Speaker of the City. The appointments of Marietha Aucamp, Samkelo Mgobozi, and Stephane Adriaan de Villiers were irregular as they did not meet the minimum requirements for the positions in which they were appointed and the City also failed to conduct security vetting on them as required.

b) Although Mr Tiyiselani Babane is suitably qualified and met the minimum requirements for the position, the City failed to conduct security vetting on him before his appointment.

c) The Staffing Policy makes no provision for the appointment of staff at senior management level on a six (6) months temporary appointment. I further found that the City failed to implement adequate record keeping controls as some recruitment documents went missing from the personnel files of the interviewed candidates.

d) The former acting City Manager, Ms Lindiwe Kwele, as the Accounting officer, failed to act in the best interest of the City in appointing of Ms Marietha Aucamp, Mr Samkelo Mgobozi, Mr Stefan de Villiers as they did not meet the minimum requirements for the positions and further failed to provide guidance and advice on compliance with the staffing policy. She further failed to heed the advice of legal services in all these appointments.

e) Mr Shingange, the Group Head: Human Resources Management, failed to provide proper guidance and advise to the City regarding the suitability and appointment of Ms Marietha Aucamp, Mr Samkelo Mgobozi, Mr Stefan de Villiers who were appointed on six months (6 months) short temporal contracts and later five (5) year fixed term contracts.’

f) All members of interview and selection panels who participated in the recruitment of Executive Head and Mayoral Spokesperson, Mayoral Public Affairs Department in the Office of the Executive Mayor, Executive Head in the Office of the Executive Mayor, failed to act in the best interest of the CoT by not applying their minds to the suitability of candidates regarding their qualifications and experience for the respective positions

g) The former Executive Mayor did not apply his mind in the appointment of Ms Aucamp because he should have reasonably known that she does not have a post matric qualification. He should have obtained legal advice from his officials on the appropriate way to appoint staff in his office. Instead he allowed the officials to follow the normal recruitment and selection process including placing educational requirements and experience that Ms Aucamp did not possess, therefore prejudicing other candidates who were best qualified for the position.

h) I have taken note that the City has taken steps to reverse the irregular appointment of the Executive Head and Mayoral Spokesperson, Mayoral Public Affairs Department in the Office of the Executive Mayor as well as the Executive Head in the Office of the Executive Mayor.

i) The allegation that the former Executive Mayor misled the public by making pronouncements banning the use of blue lights in the City, the reconstitution of the Mayoral Committee and the utilization of the fleet of BMWs by the Members of Mayoral Committee is unsubstantiated in that though public statements were made regarding the use of blue lights in the City, no legislative process was undertaken to amend the by- laws to officially prohibit the use of blue lights.

j) The allegation that the former Executive Mayor misled the public on the reconstitution of the Mayoral Committee is also not substantiated.

k) As regards misleading members of the public regarding the fleet of BMW vehicles, I have noted the various media statements that were made by the various parties on this matter but did not come across any evidence that in the discharge of his duties as the former Executive Mayor, Cllr Solly Msimanga violated the law and misled members of the public about the affairs of the City.

As part of remedial action, I direct the City Manager of Tshwane to:

a) Within sixty (60) working days of the issuing of this report, ensure that a policy is developed to regulate the appointment of staff in the private offices of the Executive Mayor and Speaker which will make provision for urgent and/or short term appointments should a need arise. The said policy should also address the job profiles including requirements for these positions, deviation procedures and delegations of authority;

b) Within sixty (60) working days of the issuing of this report, ensure that disciplinary steps are taken against implicated officials of the City who flouted, subverted or violated the City’s Staffing Policy in this matter; and

c) Within sixty (60) working days of the issuing of this report, develop a document management system that will introduce controls and systems to safeguard the security of documents.

Mokgatla and another v Mgidlana

I received two complaints against Mr. Gengezi Mgidlana in his capacity as Secretary of Parliament. The first complaint was lodged with my office on 18 July 2016 by the former Deputy Head of Parliamentary Protection Services (PPS), Mr. S.A. Mokgatla. The second complaint was from Mr. D.K. Mocumi, the Deputy Chairperson of the National Education, Health and Allied Workers Union (NEHAWU) on 20 July 2016. The two complaints were factually similar in nature.

Mr. Mocumi alleged that Mr. Mgidlana utilised public funds to pay for the travel costs of his spouse to official functions, did not have Top Secret Security Clearance nor possess the qualifications that he claimed to have, irregularly allowed a junior official to authorise and approve for officials of Parliament to attend a benchmarking study tour to Europe, irregularly paid himself an ex-gratia payment of R71 000 (seventy one thousand rand) and irregularly procured the services of Expert Consultant, Mr. Mahlangu.
Mr. Mokgatla on the other hand alleged that Mr. Mgidlana misused and abused state vehicles, unlawfully suspended the Mr. Mokgatla, and irregularly appointed new South African Police Service (SAPS) officials to the Parliamentary Protection Services without following due processes.

On analysis of the complaint, I decided to investigate whether Mr. Mgidlana abused his power in the performance of his duties and functions and if so, whether such conduct constitute maladministration, dishonesty or improper dealing with respect to public money as well as improper enrichment.

I also looked into whether Mr. Mgidlana allowed a junior official, Acting Executive Manager: Strategic Management and Governance, Ms. Sandisiwe Schalk, to authorise and approve a benchmarking study tour to England, Scotland, Turkey and Switzerland without the proper delegation authority.

I found that Mr. Mgidlana utilised public funds to pay for the travel costs of his spouse to official functions, which was not regarded as necessary in the interest of Parliament as provided in the Travel Policy.

The allegation that he did not possess a Top Secret Security Clearance is not substantiated. Mr. Mgidlana confirmed his Top Secret Security Clearance under Clearance No. 1254428. However, it should be noted that the process of acquiring a Security Clearance is dependent on the State Security Agency.

Also not substantiated was the allegation that Mr. Mgidlana paid himself an ex-gratia payment of R71 000 as the authorisation and approval was granted by the Executive Authority.

The allegation that the services of Expert Consultant, Mr Mahlangu, was procured without following Supply Chain Management processes is not substantiated and the allegation that it was paid for without rendering the service is unfounded.

I also found that Mr. Mgidlana did misuse and abuse PPS vehicles. By using the services of PPS for transportation when performing official duties in and around the Western Cape Province, he was in violation with the provisions of paragraph 8.1 of the Reviewed Policy on Travel, Accommodation and Subsistence and Travel Allowance, 2009.

However, I found the allegation that he made use of blue lights and sirens and used PPS to transport his family members to be unsubstantiated on the basis that the Protection Officers distanced themselves from such allegations.

My finding on whether the appointment of SAPS officials to PPS was irregular, is withheld on the basis that the matter is pending before the Labour Court and that the Court’s pronouncement in this regard will prevail.

Lastly, I found that Mr. Mgidlana allowed a junior official, Ms Schalk, to authorise and approve a benchmarking study tour to England, Scotland, Turkey and Switzerland without the proper authority. By allowing Ms. Schalk to incur irregular expenditure, Mr. Mgidlana’s actions were an act of financial misconduct contrary to section 67(1) of the FMPPLA.

By tacitly condoning her conduct and allowing Ms. Schalk to exceed her delegated authority, Mr. Mgidlana failed to comply with section 68(2) of the FMPPLA, which compels him to investigate possible financial misconduct against an official and take disciplinary action should the investigation warrants such a step.

In light of the above adverse findings against Mr. Mgidlana and Ms. Schalk, any remedial action I may decide to take against them may not serve any judicious purpose on account of both undergoing disciplinary hearings for findings made against hem by the Audit Committee of Parliament on the same allegations.

I direct that the Reviewed Policy on Travel, Accommodation and Subsistence and travel Allowance, 2009 must be reviewed to include, among other things, the travelling of the Secretary of Parliament, nationally and/or internationally accompanied by his /her spouse or companion at the expense of Parliament.

The policy must contain the proper definition of terms, with limitations of the use of the words “occasion” and “official business”, and regulate authorisation and approval on all international travel including the Secretary to Parliament. 
I also direct that a policy provision which regulates the mandatory acquisition of a Top Secret Security Clearance for the Secretary of Parliament and all executive level employees within the first three months of employment. I also direct that there be a moratorium on ex-gratia payments.

The Executive Authority of Parliament must within 30 days of receipt of this report provide me with an action plan, indicating timelines, in respect of the abovementioned recommendations.

Nkambule v Mpumalanga Office of the Premier

I received a complaint from Ms. B Nkambule who alleged that a service provider known as Carol Bouwer Productions was irregularly appointed to organize and facilitate the memorial service of the late former President Nelson Mandela. The complaint was based on a newspaper article published in the City Press dated 16 March 2014.

Ms. Nkambule alleged that the newspaper article stated that the Mpumalanga Office of the Premier had spent R70million of which R39.8 million was paid to Carol Bouwer Productions without following proper procurement procedures.

She also alleged that Carol Bouwer Productions did not meet the required criteria to be appointed as a service provider for the event and therefore their appointment was unjustified.

Ms. Nkambule further stated that after payment was effected to Carol Bouwer Productions, the Mpumalanga Office of the Premier had to shift funds from various Provincial Departments’ service delivery budgets to cover government employee salaries and this conduct amounts to maladministration.

Having analysed the complaint, I decided to investigate whether the Mpumalanga Office of the Premier irregularly appointed Carol Bouwer Productions to render event management services during the Nelson Mandela Memorial Service.

I also looked into whether the Mpumalanga Office of the Premier irregularly spent R70 million during the Nelson Mandela Memorial Service and whether funds were shifted from compensation of employees budget to pay for the event.

I found that the Mpumalanga Office of the Premier irregularly appointed Carol Bouwer Productions to manage former President Nelson Mandela Memorial Service.

Dr Nonhlanhla Mkhize, as the then accounting officer, failed to report the deviation process in the appointment of Carol Bouwer Productions and the amount involved to the Provincial Treasury and the Auditor-General.

Her failure to report is in violation of section 25(4) of the PFMA, read with paragraphs 3.1 and 3.2 Practice Note 6 of 2007/08, paragraph 3.1.3 of Practice Note 8 of 2007/08 and paragraph 7.2.2.5 of the Supply Chain Management Policy of the Premier’s Office.

Dr Mkhize’s failure to report in terms of paragraph 6.1.3 above, renders the appointment of Carol Bouwer Productions irregular and should have been reported or disclosed to the Auditor General.

Dr Mkhize only approved the deviation memorandum on 10 December 2013 when Carol Bouwer Productions had already commenced with her work on the Mandela Memorial service event on 06 December 2013. This means that compliance with Treasury Regulation 16A 6.4 in appointing Carol Bouwer Productions by the Office of the Premier was also irregular.

The conduct of the Office of the Premier of Mpumalanga, particularly Dr Mkhize, constitutes improper conduct as envisaged in section 182(1) of the Constitution and maladministration as envisaged in section 6(4)(a)(i) of the Public Protector Act.

I also found that the Mpumalanga Office of the Premier irregularly spent R70 018 000.00 (seventy million rand) during the Nelson Mandela Memorial Service. 
The total amount paid to other service providers besides Carol Bouwer Productions could not be determined as the records I was furnished with were not accurate.

The Office of the Premier did not have Supply Chain Committees in place. This resulted in the whole amount of R70 018 000.00 (seventy million rand) to be an irregular expenditure. In terms of section 25(4) the approved budget should have been reported to the Provincial Treasury and the Auditor-General within fourteen (14) days after being authorized by the MEC for Finance.

In addition, Dr Mkhize contravened section 38(1)(g) of the PFMA in that on discovery or on being alerted of the irregular expenditure, she did not immediately report in writing the particulars of the expenditure to the Provincial Treasury. She basically failed to report or disclose the R70 018 000.00 (seventy million rand) as an irregular expenditure.

Dr Mkhize approved payments of suppliers to be made directly by the bank without going through the normal LOGIS and BAS systems that are used to record expenditures and keep records. She also failed to report to the Provincial Treasury and Auditor-General the goods and services procured in terms of the Treasury Regulation 16A6.4.

Dr Mkhize’s conduct was in violation of clauses 3.1 and 3.2 of Practice Note 6 of 2007/08, and sections 25(4) and 38(1) of the PFMA.

Such conduct also constitutes improper conduct as envisaged in section 182(1) of the Constitution and maladministration as envisaged in section 6(4)(a)(i) of the Public Protector Act.

The second part of the allegation that the Mpumalanga Office of the Premier shifted funds from the compensation of employees’ budget to pay for the event is not substantiated. No evidence was found to substantiate the allegation.

As part of remedial action, I direct the Premier of Mpumalanga to inform the Premier of the KwaZulu-Natal of the outcome of my investigation and request him to take appropriate action against Dr. Mkhize within fourteen (14) working days from the date of this report.

I also direct the Director of Priority Crime Investigation (DPCI) to investigate any alleged criminal conduct against implicated parties for financial mismanagement in violation of the PFMA, specifically the incurring of R4.5 million additional expenses not supported by detailed documentation.

The Director-General of Mpumalanga Provincial Government must ensure that the officials responsible for procurement of goods and services in the Office of the Mpumalanga Premier must, at least once annually, attend refresher training and/or workshops on Supply Chain Management, particularly relating to the deviations.

The DG must also, within 90 working days from the date of this report, conduct an investigation in order to determine the total amount paid out to the other service providers.

SATAWU (and later NTM) v PRASA

I investigated complaints initially lodged by the South African Transport and Allied Workers Union (SATAWU) in 2012 and later pursued by the National Transport Movement (NTM), in connection with alleged maladministration and related improper conduct involving procurement irregularities, conflict of interest, nepotism and human resources mismanagement by the former Group Chief Executive Officer (erstwhile GCEO) and other functionaries at the Passenger Rail Agency of South Africa (PRASA).

The complaints and issues being reported on in this report were deferred in the first report of the Public Protector, issued on 24 August 2015, titled “Derailed” and hereafter referred to as Volume 1 Report.

The issue regarding the alleged conflict of interest regarding the complaint levelled against Mr Sfiso Buthelezi, was specifically referred to in paragraph 8.26.3 of Volume 1 Report. The issue also raised widespread media attention and queries.

It was alleged:

a) That PRASA improperly procured Umjantshi House from Transnet in 2009 without following proper procurement processes and without proper budget approval;

b) That there was improper payment of salaries made to PRASA’s former Executive Corporate Affairs Manager during 2008/2009 after his resignation which resulted in fruitless and wasteful expenditure, and that the erstwhile GCEO misled the EXCO and PRASA Board in that regard;

c) That PRASA made an improper upfront payment to a developer for the construction of an underground train station on the Bridge City Project;

d) That PRASA improperly awarded CCTV cameras tender to Mr Vusi Twala;

e) That there was an improper engagement of various construction companies in respect of the 2010 Soccer World Cup Project;

f) That the Chairperson of the PRASA Board failed to disclose and manage a conflict of interest arising from his interest in Makana, a company that was alleged to have been associated to Cadiz, a company which was alleged to be providing advisory service to PRASA on the Rolling Stock and Recapitalisation Project.

g) That Ms Shiela Boshielo was improperly appointed by PRASA as General Manager of Autopax;

h) That the erstwhile GCEO improperly undertook a Blue Train trip to Cape Town with ten (10) female companions during 24 to 27 September 2009 and return by SAA flight at an estimated cost R170 000.00 which resulted in fruitless and wasteful expenditure to PRASA; and

i) That Mr Ngobeni is the erstwhile GCEO’s cousin and that he transferred him without taking disciplinary action against him for the alleged appointment of a training contractor.

I found that PRASA improperly procured Umjantshi House from Transnet in 2009 without following proper procurement processes and without proper budget approval.

PRASA’s erstwhile GCEO represented PRASA in the signing of the Agreement of Sale with Transnet on 28 September 2009, that was then signed by Transnet representative on 13 January 2010 for the sum of R129 500 000.00, (one hundred and twenty nine million five hundred thousand rands, including VAT), which purported to have retrospective effect from 27 March 2009, which conduct is found to be improper.

The contract amount was above the maximum value delegated to the erstwhile GCEO in terms of the PRASA Board’s Delegation of Authority and the process followed is found to be flawed and therefore constitutes improper conduct.

No approval of the Minister regarding the procurement of Umjantshi House, as required in terms of Paragraph 1.1 of the PRASA’s Delegation of Authority, was provided by PRASA and in the absence thereof, the procurement process followed by PRASA is found to be flawed and therefore improper.

The initial Payment of R21 500 000.00 (twenty one million five hundred thousand rands) made on 27 March 2009, prior to the signing of the agreement by the erstwhile GCEO on 28 September 2009 and a representative of Transnet on 13 January 2010 constitutes advance payment in contravention of paragraph 31.1.2(b) and (c) of the Treasury Regulations and is therefore improper.

On the basis of the evidence before me, I found that the rest of the allegations in this matter were not substantiated.

For appropriate remedial action, I direct the Minister of Transport to take cognisance of the findings regarding the improper conduct and maladministration by PRASA relating to the irregularities mentioned in the report.
The Minister must also include in his oversight role as a government shareholder representative with regard to PRASA monitor the implementation of remedial action taken in pursuit of the findings in terms of powers conferred under section 182(1)(c) of the Constitution.

The Chairperson of PRASA Board must ensure that the PRASA Board takes cognisance of the findings of maladministration and improper conduct referred to in this report and evaluates the effectiveness of its internal controls and systems on the Minimum Information Security Standards (MISS) with a view to take corrective action to prevent a recurrence of the improprieties referred to in this report.

The Chairperson must also ensure that all acquisition and disposal of significant assets by PRASA complies with the provisions of paragraph 1.1 (b) of the Delegation of Authority and section 54(2)(d) of the PFMA and that the PRASA Delegation of Authority is reviewed to provide for the requirement of the PRASA Board’s prior approval of the agreement and payment for the acquisition or disposal of immovable property within the level of delegation of the GCEO, which is up to a R100 million (One hundred million rands).

The GCEO of PRASA must evaluate the effectiveness of its internal controls and systems on the MISS with a view to take corrective action to prevent a recurrence of the improprieties referred to in this report.

The GCEO must also ensure that all staff members responsible for information security, regarding the need for proper management and care of PRASA’s records are trained for the entity to comply with the provisions of the National Archives Act, 43 of 1996.

The GCEO must further ensure that the acquisition and disposal of significant assets by PRASA complies with the provisions of paragraph 1.1 (b) of the Delegation of Authority and section 54(2) (d) of the PFMA.
In addition, the GCEO must ensure that he assists the PRASA Board in reviewing the Delegation of Authority to provide for the requirement for the PRASA Board’s prior approval of the agreement and payment for the acquisition or disposal of immovable property within the level of delegation of the GCEO, which is up to a R100 million (One hundred million rands).

The Offices of the Chief Procurement Officer of the National Treasury and Auditor-General must take cognisance of the findings on the irregularities and remedial action mentioned in the report.

Tshabalala v Mabuza

I investigated allegations of irregular procurement of official vehicles for the former Premier of Mpumalanga Province, Mr David Mabuza (the former Premier), by the Mpumalanga Office of the Premier as well as allegations of a violation of the Executive Ethics Code (the Code) by the former Premier with regard thereto.
The complaint was lodged with my office on 23 January 2014 by the Provincial Convener of the Economic Freedom Fighters (EFF) in Mpumalanga, Ms Amanda Tshabalala.

She alleged that on 09 January 2014, the media reported that the Office of the Premier of Mpumalanga Province procured three (3) luxury vehicles worth R5 million for use by the former Premier, one of which was allegedly acquired a few weeks after the former Minister of Finance, Mr Pravin Gordhan, had presented a budget speech about austerity measures in government.

According to Ms. Tshabalala, the three (3) vehicles comprised of an Audi A8 (the Audi), a BMW X5 (the BMW) and a Range Rover Vogue (the Range Rover). In addition, a Lexus was also purchased to replace an earlier model that was used by the former Premier. The Range Rover cost in the region of R1.9 million, excluding extras, with the Audi, BMW and Lexus costing approximately R1 million each;

The purchase of these vehicles was inconsistent with the provisions of clauses 1.2.4 and 1.2.5 of the Ministerial Handbook in that the amount spent thereon exceeded 70% of the inclusive remuneration package of the former Premier at the time.

On the same day, the former Premier’s spokesperson, Mr Zibonele Mncwango, issued a media statement admitting the procurement of the vehicles. In the statement, Mr Mncwango explained that the vehicles had to be procured due to the former Premier’s official vehicles encountering mechanical faults thus hindering him from discharging his responsibilities. 
He also explained that the additional vehicles had to be purchased as back-up vehicles in the event that the former Premier’s main official vehicle encountered mechanical faults or was booked in for service.

Mr Mncwango emphasised that the procurement processes and procedures were followed in the acquisition of the vehicles in accordance with the applicable rules, regulations and Privileges and Entitlements pertinent to the former Premier and as envisaged in the Ministerial Handbook.

On analysis of the complaint, I investigated whether the Office of the Mpumalanga Premier irregularly procured the official vehicles, a BMW X5, Audi A8, Lexus and a Range Rover Vogue, for the former Premier of Mpumalanga Province, Mr David Mabuza; and whether the former Premier of Mpumalanga Province, Mr David Mabuza was involved in the procurement of his official vehicles comprising of the BMW X5, Audi A8, Lexus and a Range Rover Vogue by the Office of the Premier and if so, whether such conduct constitutes a violation of the Executive Ethics Code.

I found that the Mpumalanga Office of the Premier irregularly procured the official vehicles, a BMW X5, Audi A8, Lexus and a Range Rover Vogue, for the former Premier of Mpumalanga Province, Mr David Mabuza.

The Office of the Premier was precluded from purchasing the BMW X5 in terms of the Ministerial Handbook as it was not an official vehicle of the Premier. The Office of the Premier therefore violated paragraph 1.1.3 of Chapter 5 of the Ministerial Handbook. It also failed to procure the BMW X5 in terms of paragraph 3.4.1 and 3.4.2 of the National Treasury Practice Note No. 8 of 2007/08.

Although the Audi A8 was purchased through the Ministerial Handbook, the Office of the Premier acted contrary to paragraph 1.2.6 of the Handbook which required it to procure vehicles in accordance with the PFMA and its prescripts. As found by the Auditor-General, the Office of the Premier failed to comply with section 16.A6.5 of the Treasury Regulations in the procurement of the Audi A8 as it had opted for the RT57 contract, but procured the vehicle outside the said contract.

The Office of the Premier purchased the Range Rover Vogue through a deviation from the normal procurement processes, but failed to record reasons for deviation from inviting competitive bids which is in violation of paragraph 3.4.3 of the Practice Note No. 8 of 2007/08 read with TR16.A6.4.

The Auditor-General also found in this regard that the purchase of this vehicle was non-compliant with RT16.A6.5 as it was not done according to the RT57 contract. The Auditor-General further indicated that the deviation should have been approved by the National Treasury. The Auditor-General concluded that the expenditure of the vehicles amounted to an unauthorised and irregular expenditure.

Based on the above information, Dr Mkhize, as the accounting officer in the Office of the Premier, committed financial misconduct in terms of section 81(1)(b) of the PFMA during the procurement of the vehicles as the expenditure amounted to an unauthorised and irregular expenditure.

The conduct of the Office of the Premier, particularly Dr Mkhize, constitutes improper conduct as envisaged in section 182(1) of the Constitution and maladministration as envisaged in section 6(4)(a)(i) of the Public Protector Act.

The allegation that the former Premier was involved in the procurement of his official vehicles is not substantiated. The media statements, nature of the Complainant’s complaint and documentary evidence received by my office indicate that the allegation of irregular procurement of the former Premier’s vehicles was against the Office of the Premier and not the former Premier in his personal capacity. No evidence could be produced to indicate that the former Premier was involved in the procurement process of the vehicles. There was therefore no violation of the Code by the former Premier in the procurement of the vehicles in this matter.

Regarding remedial action, I direct the Premier of the Mpumalanga Provincial Government to inform the Premier of the Kwazulu-Natal of the outcome of my investigation and request him to take appropriate action against Dr Mkhize within 15 days of issuing this report.

The Premier must further directs the Head of the Mpumalanga Provincial Treasury to further investigate the irregular and unauthorised expenditure in compliance with the Treasury Regulations within fourteen (1) working days of issuing this report.

The Head of Department of the Mpumalanga Provincial Treasury must, within 60 working days from the date of this report, ensure that an investigation is conducted into the financial misconduct committed by Dr Mkhize referred to in this report in compliance with paragraph 4.1.3 of the Treasury Regulations.

The HOD must also within 60 working days conduct a workshop with the Heads of Departments, Chief Financial Officers and Chiefs of staff on the provisions of the Ministerial Handbook, Treasury Regulations on the procurement of official vehicles to prevent recurrence of these matters and monitor throughout government.

The Director General of Mpumalanga Provincial Government must ensure that the officials responsible for procurement of goods and services in the Office of the Mpumalanga Premier must, at least once annually, attend refresher training and/or workshops on Supply Chain Management, particularly relating to procurement of the Premier’s official vehicles including their replacement and disposal.

Anonymous vs Gordhan, Magashule

I investigated allegations of maladministration and impropriety in the approval of Mr Ivan Pillay’s early retirement with full pension benefits and subsequent retention by the South African Revenue Service (SARS) 

The complaint was lodged anonymously on 18 November 2016 alleging that Minister Gordhan approved, in his capacity as the then Minister of Finance and on the recommendation of Mr Magashula: -

Mr Pillay’s application for early retirement and payment of his retirement package;

The further payment by SARS of a penalty in the amount of R1, 141 178, 11, which was levied on Mr Pillay’s pension benefits by the Government Employees Pension Fund (the GEPF), which would allow him to enjoy full pension benefits as though he had retired at a statutory age; and

Mr Pillay’s subsequent retention as the Deputy Commissioner of SARS on a fixed-term contract basis, following the approval of his early retirement

It is the Complainant’s contention that Messrs Pillay and Magashula as well as Minister Gordhan’s conduct amounted to maladministration in that they failed to prevent SARS from incurring irregular, fruitless and wasteful expenditure, and in so doing, violated section 86 read with sections 1, 38 and 39 of the Public Finance Management Act 1 of 1999.

The Complainant also contends that Mr Magashula and Minister Gordhan in essence acted dishonestly with regard to their dealings with public funds which resulted in Mr Pillay receiving an improper advantage or being unjustifiably enriched at the expense of the taxpayer.

The Complainant further contends that the penalty levied by the GEPF and subsequently paid by SARS, in the amount of R1, 141 178, 11 should be recovered from Messrs Pillay and Magashula as well as Minister Gordhan jointly and severally.

On analysis of the complaint, the following issue was identified and investigated: -

(a) Whether Minister Gordhan irregularly approved the early retirement of Mr Ivan Pillay with full pension benefits and his subsequent retention at SARS in the same position;

The investigation was conducted by way of correspondence and interviews, an analysis of relevant documentation as well as the consideration and application of relevant laws, related prescripts and case law.

Key laws and policies taken into account to determine if there is any irregularity in the approval of Mr Ivan Pillay’s early retirement with full pension benefits were the following: -

a) The relevant provision of the South African revenue Service Act, 1997 which in essence deems a person employed by SARS to be a person forming part of public service for the purpose of pension and retirement benefits,

b) Relevant provisions of the Public Service Act, 1994 which governs the pension rights of employees in public service;

c) Relevant provisions of the Government Employees Pension Law, 1996 and Rules which make provision for the payment of pensions and certain benefits to persons in the employment of Government, certain bodies and institutions;

(i) Having considered the evidence uncovered during the investigation against the relevant regulatory framework, I now make the following findings:

(a) Regarding whether Minister Gordhan irregularly approved the early retirement of Mr Ivan Pillay with full pension benefits and his subsequent retention at SARS in the same position: -

The allegation that Minister Gordhan irregularly approved the early retirement of Mr Ivan Pillay with full retirement benefits and his subsequent retention at SARS is substantiated.

Since neither Mr Pillay’s request for early retirement nor Mr Magashula’s recommendation to Minister Gordhan contemplated retirement, there was no retirement in fact and in law. If there was no retirement in fact and in law, it can be concluded that Mr Pillay was not entitled to early retirement with full pension benefits under any statutory provision.

Even if retirement had been contemplated and there was in fact a retirement, Minister Gordhan was not authorised by section 16(2A) of the PSA to approve Mr Pillay’s early retirement request with full pension benefits as this section does not confer any power on the Minister to approve early retirement with full pension benefits.

Mr Pillay was not entitled to early retirement with full pension benefits under section 16(2A) of the PSA because the section makes no provision for such full retirement benefits. Section 16(2A) of the PSA only confers a right on an employee to retire from public service upon reaching the age of 55 years. In terms of that section, no ministerial approval need be sought.

Even if the request by Mr Pillay for early retirement had been sought in terms of section 16(6) of the PSA, Minister Gordhan would also not have been authorised by section 16(6)(a) read with subsection (b) of the PSA to approve Mr Pillay’s full pension benefits because the benefits to which an employee is entitled to on early retirement are regulated by section 16(6)(b) of the PSA and occur by operation of law. No ministerial approval is required in such instances.

Minister Gordhan’s conduct therefore amounts to improper conduct as envisaged by section 6(4) (a)(ii) of the Public Protector Act.

When Mr Magashula’s made the recommendation to Minister Gordhan for the approval of Mr Pillay’s early retirement without downscaling of his retirement/pension benefits, SARS, through Mr Magashula, took the “action” contemplated in section 17(4) of the GEPF Law and thereby triggering the additional liability to the GEPF.

Payment of the additional liability by SARS amounted to irregular expenditure as envisaged by section 38(c)(ii) of the PFMA and maladministration as contemplated by section 6(4)(a) of the Public Protector Act.

Minister Gordhan also acted ultra vires in approving the retention of Mr Pillay as Minister Gordhan was not authorised by law to do so.

The appropriate remedial action I am taking in pursuit of section 182(1)(c), with the view of placing the Complainant as close as possible to where they would have been had improper conduct or maladministration not occurred, is the following:

The President of the Republic of South Africa:

To take note of the findings in this report in so far as they related to the erstwhile Minister of Finance, Mr Gordhan and to take appropriate disciplinary action against him for violating the Constitution.

The Commissioner of SARS:

To set in motion steps to recover the money paid as actuarial deficit or penalty on behalf of Mr Pillay by SARS to GEPF from the erstwhile Commissioner of SARS, Mr Magashula; and

To ensure that SARS introduces as part of their recruitment processes, regulations, policies and practices which are clear and unambiguous relating to early retirement and staff retention.

I look forward to the full implementation of the remedial action in all these matters. Once again, aggrieved parties who wish to approach the courts for recourse must be reminded that they will need to secure a court interdict staying the implementation of remedial action pending review proceedings.

Thank you.

Issued by Adv. Busisiwe Mkhwebane, Public Protector of South Africa, 24 May 2019