Sisulu’s derelict housing agency
The leadership turbulence at the Housing Development Agency over several years requires human settlements, water and sanitation minister Lindiwe Sisulu to explain what is going on in the organisation that is under her watch.
Being a small state-owned entity, the constant upheaval at the agency has largely taken place under the radar. Sisulu’s choice of leadership has left a lot to be desired, and over the past three years, the agency has been placed under administration three or four times. It had six or seven CEOs or acting CEOs, and several interim boards, in this time.
No organisation can be run properly with such a high turnover at the top and this was apparent in the qualified audit report the Housing Development Agency received for its 2019/2020 financial statements, a regression from already poor reports before.
The agency, which was supposed to play an important role in the temporary residential unit programme aimed at deintensifying informal settlements during the Covid-19 pandemic to promote social distancing, is also responsible for acquiring land and for project-managing housing developments at national, provincial and local level. It derives most of its funding from the fiscus.
Sisulu admitted that the agency’s performance in the deintensification project, which is costing several hundred million rand, has been less than satisfactory, and provincial MECs have also complained. Few of the planned units have been delivered.
The extent of the agency’s financial malaise is made apparent by the external auditor deeming R132m in expenditure of its total revenue of R352m in 2019/2020 irregular, fruitless and wasteful. Meanwhile, the salary bill amounted to R191m with the CEO, until January 2020, earning R6.6m. During that year the agency only achieved 56% of its target.
In the 2019/2020 report, the auditor was obliged under the Auditing Profession Act to report an irregularity to the Independent Regulatory Board for Auditors. This involved a reduction in the amount of a contract entered into without approval of the bid adjudication committee, and the nondelivery of the full number of houses required.
The irregularity had to do with the reduction in the scope of work to construct 63 housing units from R40m to R10m for the same number of units due to duplicate or overpayments made on a previous project. The supplier received payments covering the reduced contract amount but only 12 houses were delivered.
The audit report noted that the Housing Development Agency lacks adequate systems for identifying and recording irregular, fruitless and wasteful expenditure. Effective steps were not taken to prevent irregular expenditure as required by the Public Finance Management Act.
The audit report also noted that the agency had raised a provision for bad debts of R59m against project receivables in which work was done without agreements with the provincial departments and municipalities involved in place. Expenditure was also incurred without an approved budget.
In the latest twist, and as a further example of the minister’s interference in the affairs of the agency, Sisulu made acting CEO Mikki Xayiya chair for a few weeks until the end of the term of the interim board at the end of January and appointed COO Nkululeko Poya — who has a cloud over his head from his time as CEO of the railway safety regulator — as acting CEO.
Sisulu also dismissed CFO Brian Mosehla a few months ahead of the expiry of his contract. The board reinstated him on February 3 but, in late February, Sisulu dismissed the interim board and placed the agency under administration until a new board is appointed by the cabinet.
It is this persistent ministerial interference that Sisulu needs to justify to parliament’s human settlements, water and sanitation committee. Unless the Housing Development Agency can be established on a sound, durable and stable footing to fulfil its mandate, it might be better to close it down.
NO ORGANISATION CAN BE RUN PROPERLY WITH SUCH A HIGH TURNOVER OF LEADERSHIP