Mystery R10m lands in NPO’s account
THE battle between a West Rand nonprofit and the Gauteng Department of Social Development (DSD) rages on at the South Gauteng High Court five months after a mysterious R10 million deposit turned the NPO into whistle-blowers.
Staff at A re Ageng, which operates shelters for victims of domestic abuse, claim the provincial DSD has harassed them ever since the money landed in the NPO’s bank account last year.
The department claimed the money was meant to be transferred to the Life Recovery Centre, an NPO opening a new substance abuse treatment centre.
A re Ageng had previously transferred R13m to the centre at the provincial DSD’s request, but the department could not prove the source of the second payment, leaving it in limbo.
R5m vanished from A re Ageng’s account and ended up with a fuel wholesaler in Pretoria, Kish Gas, where it was used to buy diesel headed for Zambia. A re Ageng claimed its accounts had been hacked, and a court case ensued.
The premier’s of fice recently launched an investigation into the money flowing to Gauteng NPOs.
Gauteng spokesperson Thabo Masebe said the provincial Treasury was preparing another investigation into the use of three specific NPOs as conduits to transfer the provincial DSD’s money.
A re Ageng’s staff have not been paid since January because the DSD froze payments to the NPO.
The DSD moved the beneficiaries from one of A re Ageng’s two shelters to another organisation in December. The following day, many beneficiaries returned, but the department argued on Tuesday that there was no need to pay A re Ageng because it was not serving any beneficiaries.
Life Recovery Centre’s service level agreement with the DSD was exposed in court on Tuesday and showed miscalculations in payment owed.
For example, detoxification and treatment for patients were listed as costing nearly R19m even though the cost per beneficiary, multiplied by the number of beneficiaries listed, came to just more than R2m.
Court documents also unveiled an internal memo from the Gauteng DSD, which was sent from the director of NPO financing, Themba Msimanga, to other department staff, including the head of department and a deputy director-general.
The memo described efforts to adapt facilities belonging to Life Esidimeni, a controversial NPO related to Life Recovery Centre, for another use.
The memo stated: “The department did an assessment to determine the suitability of the facility to be converted into a substance abuse in-patient treatment centre and halfway house in the month of May 2016.”
However, a separate NPO called Sanca Horizon had already transferred R14m to Life Esidimeni at the request of the department a month before the assessment and this is now part of the investigation.
In January, A re Ageng’s attorneys checked the R10m payment with a financial analyst at the office of the accountant-general to locate its source.
“We’ve checked the cash book data for (a) matching amount but no records could be found,” the analyst replied in an e-mail.
In court this week, it emerged that the mysterious payment came from the provincial Treasury, although the State’s counsel argued it belonged to the provincial DSD’s budget.
Judge Brian Spilg then invited National Treasury to provide further clarity in future court dates on the rightful owner of the money. Observers said a pattern was starting to emerge in the department’s use of NPOs to act as conduits channelling money.
The Gauteng DSD memo said A re Ageng was chosen specifically because it was long-established and had “good financial and accounting management systems”.
An administrative fee of R50 000 was paid to A re Ageng to cover bank costs. The excess went to the NPOs general operating budget, although allegations abound over the size of such fees paid to other NPOs used as conduits.
The third NPO under investigation, 20ptp in Mohlakeng, allegedly received funding inappropriately sent to it through a related NPO.
Adriana Randall, the DA’s MEC spokesperson on finance in Gauteng, said she was not allowed to give a statement on the matter in legislature on Tuesday.
“This is a big can of worms that was opened by A re Ageng. This is just the tip of the iceberg.”
The next court date is set for March 27.