Explosive report exposes corruption, incompetence – and bad taste – in refurbishment of capital’s municipal HQ.
An explosive report fingering former Tshwane mayor Sputla Ramokgopa’s Chief of Staff for fraud and corruption was shelved a year ago by the city’s previous municipal manager, Jason Ngobeni. Ngobeni resigned when the DA took over the administration of the capital after the August local government elections.
The forensic report is one of several that have been retrieved from oblivion by the DA administration. Compiled by Fundudzi Forensic Services, the 247-page document recommended that criminal charges be laid against Ernest Shozi and other high-ranking former officials, as well as the companies they appointed to refurbish the mayor’s official residence and the Pretoria City Hall. The then ANC-controlled council ignored the recommendation.
The City Hall project escalated from R12 million to R138m in less than a year and by the time the contractors were kicked off the site last year, R90m had already been paid out on the ill-conceived project. Left behind is a mess of rubble, and walls covered in psychedelic wallpaper and op-art tiles, “suitable only for a rent-by-the-hour hotel or a dominatrix torture room”.
It was not an upgrade it was a downgrade, says Councillor Randall Williams, the MMC for Economic Development and Spatial Planning in Tshwane. “I think it is an absolute national disgrace that something so dear to the city could be destroyed because of greed.”
Pieter de Necker, who has since been tasked to oversee the project, says he was totally shocked when he first walked into the building. Antique furniture was randomly left outside and exposed to the elements, handmade leadglass lampshades ripped from the walls and 70% of the brass fittings were missing, presumed stolen. “There was total disregard just for the awesomeness of this building.”
A year later most of the priceless Rhodesian teak floors are still covered with modern laminated floorboard and high-gloss tiles. Some of the original murals have been painted over or covered with what looks like glitter-infused wallpaper, invoiced at R4,000/m2.
The City Hall has protection under Section 30 of the National Heritage Resources Act (25 of 1999) but none of the heritage guidelines were followed and approval for the renovations was never obtained.
Since De Necker took over, the council spent R20m to fix the roof, repair 200 windows and get some of the toilets working. A further R60m will be needed to restore the interior to its former grandeur.
Many of the 6,000 organ pipes – the 80-year old organ is the biggest in the southern hemisphere – were damaged when the contractors dropped scaffolding against them when they painted the ceiling. And while work was done on the roof, water also leaked into the organ chambers, damaging its mechanism. This will cost another R18m to repair because some of the components are no longer available and new ones need to be made.
The forensic report does not beat about the bush, stating that the city’s ANC administration failed to keep tabs on the City Hall project and recklessly paid out money without even checking whether the work had been done. It says some officials may have illegally benefited from the project, as the amounts paid to the contractors could not be justified against the actual services rendered. In addition it recommends that, apart from Ernest Shozi, the Chief of Staff and self-appointed project manager, Tswelopele Maabane, the former Executive Director of Supply Chain Management should also be criminally charged.
The disastrous chain of fraud and corruption started in 2011 when Tshwane embarked on a process to identify suitable office space for the Executive Mayor. The forensic report says that the original plan was to accommodate him at the metro’s new headquarters, once the R1.2-billion complex was completed.
Temporary accommodation would have been at Isivuno House in the Pretoria CBD but Shozi cancelled the plans, raising security concerns. By then, R6m had already been spent on the refurbishment of the 22nd floor at Isivuno House.
Shozi then instructed De Necker, who is Ramokgopa’s former spokesperson, to evaluate the office space at the City Hall. The feedback was positive.
In October 2012 the appointment of a panel of contractors for the Metro’s Housing and Human Settlements department was approved. Chairing the meeting was Lindiwe Kwele who was the acting City Manager at the time. Less than a month later Kwele signed Ntshadi Consortium’s letter of appointment to the panel.
The consortium, comprising four companies: Bahlaphing, Mogage Mothusi Construction CC, Ntshadi Holdings CC, and TCT Civils and Construction CC, was then asked for a proposal to restore the City Hall and create office space for the mayor. The restoration was labelled an urgent turnkey project, allowing it to bypass National Treasury’s tender requirements.
Ntshadi was formally appointed for the City Hall Project on 10 October 2013 but the process was flawed from the start. The report found that two of the companies in the consortium, Bahlaphing and Mogage Mothusi Construction, did not submit their respective Construction Industry Development Board (CIDB) grading as was required and therefore should have been disqualified.
Instead of the city, which was the client, the consortium itself prepared the specifications for the project. Had the city performed the due diligence, it would have found that one of the sub-contractors, Silver Horns Consulting and its two directors, Thabo Munyai and Julia Munyai, were under criminal investigation for inflating invoices and failing to complete projects prior to 2010 when they were contracted by Johannesburg City Parks.
The Munyais had already provided Shozi in August 2013 with the specifications document for the project – before Ntshadi was appointed. Shozi in turn provided project manager Maabane with the document, and the same document was again used to prepare the proposal. Julia Munyai even prepared the appointment letter and provided it to Maabane – once again, based on the specification document.
Ntshadi Consortium’s proposed bud-get for the project was R138,144,954 but was never approved. The report found that Shozi had merely signed acknowledgement of the budget and confirmed that an amount of R102,700,000 was allocated over three years. But that amount was also never approved.
In fact, Shozi presented various budgets to the then-CFO, Andile Dyakala, who considered them to be inconsistent and baseless.
The budget included provision for a proper heritage study to be performed by the consortium but the CFO said the renovation should not cost more than R70 million, as the CSIR had already compiled a heritage study. Despite the CFO’s objections, Shozi bulldozed on.
It is doubtful if a heritage assessment or a study of the building’s history was ever done by the consortium. De Necker says they had no experts involved in the process and had
bizarre ideas of what colours the walls should be painted.
But less than two months after Ntshadi was appointed, the first invoice, billing the council for R4,980,614, was delivered, prepared by Julia Munyai. It was issued in the name of Bahlaphing and paid without question into the company’s bank account, as Ntshadi Consortium was not registered as a vendor on the Tshwane system.
The forensic report says that, taking into account the complexity of the study to be done and the time within which the invoice was issued, it is improbable that the services to which the invoice related had already been performed.
R1.7m of the R4,980,614 was paid to some of the consultants but each of the four member companies in the consortium received R100,000 “profit sharing”, although the project had hardly started.
Bahlaphing could not account for what happened to the balance of R2.3m and failed to provide the investigators with documentation as to how the money was utilised.
Subsequent invoices were similarly paid without being verified by Tshwane officials and an amount of R33,875,244 was transferred to Ntshadi Consortium on the strength of the verification done by a quantity surveyor appointed by Ntshadi Consortium, itself.
So, clearly the contractors pocketed the money and, apart from doing as little as possible, they did as much damage as possible, says Management Committee member Randall Williams.
According to the report, confirmation was received that Maabane and Shozi were paid substantial backhanders by the service providers on the project. One of the subcontractors also gave employment to Shozi’s wife, Nokuthula. Another indicated that Shozi had asked him to assess the security needs at his private residence after his company was appointed.
The assessment never took place but he accepted a favour from a company associated with the project to arrange flights and accommodation for him and his associates.
Shozi listed as one of his assets on various loan applications a property to the value of R3.5m that is situated in Ndwedwe Village in KZN. The property was acquired in 2011 and the bond settled in 2014 but the report found that it was not registered in Shozi’s name.
Shozi also paid off two short-term loans with Capitec and African Bank in 2014. He processed various financial transactions showing he had access to cash from sources other than his salary. This includes a payment of at least R315,000 for transfer fees and a deposit on a property in Kosmosdal in Gauteng. At the same time R400,000 was invested in Coalgistics and R201,493 with Allan Gray. It was also discovered that Shozi holds various shareholdings and directorships, which were not declared to his employer as required in terms of his employment contract.
The amounts paid to Shozi and Maabane easily exceed R1m. In response to the report, new mayor Solly Msimanga has recently laid charges against the two. The case has been handed over to the office for serious economic offences, within the Hawks.
More charges could follow, says councillor Randall Williams.
“There was total carelessness on the part of the previous administration. They can’t claim ignorance because they commissioned the forensic investigation. So the previous mayor should take full responsibility, and I think he should be sued in his personal capacity for the damages caused.”
Lindiwe Kwele, twice publicly decried by the DA for serious financial incompetence, is now up for appointment as Tshwane’s city manager.
Lindiwe Kwele, who was Tshwane’s acting city manager in 2012 when the controversial contract for the renovation of the Pretoria City Hall was signed, is once again acting City Manager after Jason Ngobeni upped and ran when the DA took control of the city in August 2016.
Kwele is also believed to be the favourite candidate (Noseweek sources say she is the only one) for permanent appointment to the position, despite the DA – her new bosses – having accused her as recently as 2014 of gross mismanagement. But then 2014 is a very long time ago in politics.
Two years ago Kwele, with the now-departed Ngobeni and former mayor Sputla Ramokgopa, presided over the city’s bungled Dinokeng Tribe One music festival that was cancelled – allegedly because Tshwane had not met the infrastructure deadlines for the open air event. That mess cost the ratepayers a whopping R65 million. (R10m of it went to US singer Nicki Minaj as a [non] appearance fee.)
Marietha Aucamp – at the time, the opposition DA’s Chief Whip in council, and now chief of staff for Mayor Solly Msimanga – was quoted in the Pretoria News saying: “We hold mayor Ramokgopa and his friends – Ngobeni and Kwele – accountable for all losses incurred on account of the gross mismanagement of the festival. The three should not hold the positions they do.”
The DA claimed the trio messed up in Tshwane – as they had done in Johannesburg where they organised the 2008 and 2009 Miss World beauty pageants that cost the city as much as R120m to stage.
As then-chief executive of the Johannesburg Tourism Company (JTC), Kwele entered into a contract to host the pageants but the cash-strapped Johannesburg Metro finally ended up having to foot the bill, as its tourism company was insolvent. Credit rating agency, Moody’s had just downgraded Johannesburg’s long-term credit rating as a result of its deteriorating liquidity position, forcing the city to cut its budget by more than R1 billion, raising concerns about its ability to deliver essential services.
Despite an investigation by the Johannesburg council having found no evidence of corruption, in 2012 the municipality asked the Public Protector to investigate. It is not clear whether that happened but by then Kwele and Ngobeni had already departed from Johannesburg to Pretoria to fill the two most senior positions in the then ANC-run Tshwane Metro, with Kwele as deputy city manager.
With this history of mismanagement of public funds in mind, the DA opposition brought a PAIA application, asking the (then-still-ANC-controlled) Tshwane administration for all documents that show compliance with the Municipal Finance Management Act, the Municipal Systems Act and the city’s by-laws with regards to the Dinokeng Festival. The city refused, claiming the information was sub-judice as court action and arbitration were underway.
The DA’s PAIA application also requested details of Kwele’s academic qualifications, which the party obviously had its doubts about. The then ANC controlled municipality said that was private information, not to be disclosed, but Noseweek did a bit of scratching and found a few twists and turns that might explain the secrecy.
Kwele’s profile on LinkedIn says she holds a Master of Business Administration from the University of Wales, which she claims to have obtained through the former Natal Technikon, now the Durban University of Technology. The University of Wales “validated” many degrees at more than 100 colleges in over 30 countries, making validation a big money-spinner. In 2008 alone more than 20,000 students were registered for validation courses, generating overseas earnings of over £2m.
But the scheme came to a grinding halt after the BBC exposed a number of controversies involving the university’s overseas affiliated colleges. The University of Wales was eventually closed in 2011 when the British Quality Assurance Agency found that it had not run the necessary checks and balances at the colleges whose courses it validated.
South African Qualifications Authority CEO Joe Samuels says the University of Wales (Prifysgol Cymru) is listed on the local database of recognised institutions, but no local institution is listed as an affiliate of the university.
A special sitting of the Tshwane Council was convened to announce the appointment of the new city manager. Instead, Mayor Solly Msimanga asked for a 60-day extension of Kwele’s appointment as acting city manager.
He requested more time to nominate the best possible candidate, saying that the council was “duty-bound to satisfy ourselves beyond a shadow of a doubt that all candidates, their CVs, interviews, and experience are properly interrogated and considered.”
Watch this space.
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