Public Protector denounces “unconscionable” spending by the North West Department of Finance

Public Protector Adv. Thuli Madonsela on Thursday called for the recovery of all the funds spent unnecessarily by the North West Department of Finance in the procurement of legal services for disciplinary enquiries of three officials at the cost of R15 million in 2011.

She was handing over her report, following an investigation into allegations of maladministration, abuse of power and irregular expenditure in the appointment of Morake Inc. as a service provider for the department, to the North West Standing Committee on Public Accounts (NWSCOPA).

The Public Protector was one of several agencies, including the Public Service Commission, the Auditor-General and the South African Police Services, that were requested by the NWSCOPA to investigate different aspects of the matter.

Addressing members of NWSCOPA at Madibeng Council Chambers in Brits, the Public Protector said disciplinary action should be taken against all the officials that were involved in the procurement process.

She urged the Law Society of the Northern Provinces to check the billing by Morake Inc. and check if it was consistent with professional requirements, with a view to having all the overbilled moneys repaid. In addition, action should be taken against the attorney in question if misconduct is found on his part.

Allegations of whether a corrupt relationship existed between the former MEC, Louisa Mabe, who was in charge of the department at the time, and Morake Inc. have been referred to the Directorate for Priority Crime Investigation (the Hawks).

There seemed to be sufficient evidence that the appointment of Morake Inc. was pre-empted because the document indicated that Morake Inc. was to be appointed because the MEC preferred the company because the MEC and the owner came from Rustenburg, the Public Protector said.

She further urged the National Treasury to look at the possibility of not procuring services that are administrative from lawyers while the acting head of department was urged to take urgent and appropriate steps to prevent a recurrence.
In her investigation, the Public Protector found that R15 million was irregularly spent by the department to procure the legal services of Morake Inc. for disciplinary enquiries of three officials.

This effectively meant the department spent R5 million in respect of each of the three officials’ disciplinary hearing. In addition, R500 000 was spent just for drafting the charges against the officials. The Public Protector said the amounts charged in this regard were unconscionable.

The Public Protector also found that services that resulted in the expenditure were not procured properly. She said the procurement process was flawed, unlawful and in violation of the Constitution and the National Treasury Regulations issued in terms of the Public Finance Management Act.

“Morake Inc. were initially procured for half a million for drafting the charged, thereafter their services were expanded. That was irregular. Morake Inc. further double-charged the department on some of the invoices, particularly for travelling.

“We also dispute some of the charges like those for engaging Senior Counsel because Morake Inc. was not engaged as an attorney but on a consultancy basis for drafting the charges and chairing the proceedings. They should have charged for hearings and drafting of charges only,” the Public Protector said.

“The law society should check the billing by Morake Inc. and check if this was consistent with professional requirements and if any money was overbilled it should be repaid and if there was misconduct by the attorney in this regard it be dealt with because this was a junior attorney with four years’ experience.”

Condemning the conduct of the department, the Public Protector strongly denounced the use of external service providers for administrative duties while the department had the capacity to carry out the work internally.
She said the department had people that were employed to do the work in question but the people were being reduced to clerks. The Public Protector implored officials to be circumspect before procuring services by exhausting internal capacity first.

She said government could make a lot of savings that could be used to assist communities that lived in squalid conditions. One such community, the Public Protector said, is Steneng informal settlement outside Polokwane, which she visited on Wednesday at the invitation of Mayor Freddy Greaver.

Two small children recently burnt to death at the settlement after their shack caught fire. They were alone at home at the time of the incident.

Meanwhile the Public Protector on Thursday wrote to Premier Thandi Modise, requesting that she be furnished with all outstanding documents relating to the so called D-Account of the former Bophuthatswana regime within the next ten days.

She was speaking following her presentation to NWSCOPA’s public hearings on the account. The hearing, attended by the Chief of Bapo Ba Mogale and villagers, took place after the handover of the report.

The documents were promised several times last year but only a small portion of them have been received. The documents have been requested as part of the forensic investigation being conducted by experts procured and funded by the Public Protector. The experts have complained to the Public Protector that they have only received documents relating to Bapo funds and not the entire D-Account which includes peoples’ savings from various former Bophuthatswana communities and royalties paid by mines to communities with mineral deposits.

Forensic audits, the Public Protector said, show that the current balance in Bapo account was R16 million. The last amount paid from the account was R10 million and the transaction occurred in May 2013.
“This has led to me asking the Premier to freeze the account in so far as large capital amounts are concerned and pay only administrative costs like telephone accounts,” the Public Protector said.

The Public Protector further expressed shock on learning during the hearing that Premier Modise has recently commenced her own forensic investigation allegedly at the cost of R16 million.

Should she not get the documents within the prescribed period, the Public Protector said she will apply to a court for a search and seizure, requesting the SAPS to accompany her during a raid of all the departments involved in the D-Account to obtain the required documents.

“We will also, on our own, use our subpoena powers to get the banks to give us the necessary information on the accounts,” the Public Protector said.

The Public Protector’s investigation into the account initially involved allegations of a systematic looting of the collective resources of the community of Bapong and other traditional communities residing in mining areas in the province. This includes funds held under the account in question.

Chief Mogakolodi Masibi of Disaneng village in Mafikeng has since alerted the Public Protector to the fact that the account transcends the Bapong community as many communities of the former Bophuthatswana homeland contributed to the account. He urged the Public Protector to widen her investigation into the account.

For more information, contact:

Kgalalelo Masibi
Public Protector South Africa
012 366 7006
079 507 0399
0800 11 20 40

Published Date: 
Thursday, August 29, 2013