Sev­eral com­pa­nies were paid ad­vances worth mil­lions to build houses, roads and schools in the Eastern Cape, but they de­liv­ered noth­ing

CityPress - - Front Page - SIPHO MASONDO and ABRAM MASHEGO sipho.masondo@city­

They bought a top-of-the-range Chevro­let Trail­blazer, suits from exclusive bou­tiques and wined and dined in some of South Africa’s finest restau­rants. That’s what some of the R1.6 bil­lion looted from one of South Africa’s poor­est prov­inces was spent on. A se­ries of re­ports Trea­sury com­piled de­tail how a string of com­pa­nies, in­di­vid­u­als and na­tional govern­ment agen­cies – in­clud­ing the In­de­pen­dent De­vel­op­ment Trust (IDT), SA Na­tional Roads Agency Lim­ited (San­ral) and the Coega De­vel­op­ment Cor­po­ra­tion (CDC) – al­legedly helped them­selves to more than R1.6 bil­lion which was meant to build roads, schools and houses in the Eastern Cape.

The de­tails are con­tained in three re­ports com­piled by Trea­sury’s spe­cial au­dit ser­vices be­tween 2011 and 2017 on the pro­vi­sion of mo­bile class­rooms, roads and so­cial hous­ing in the prov­ince.

Ac­cord­ing to the re­ports, which City Press ob­tained, the So­cial Hous­ing Reg­u­la­tory Au­thor­ity (SHRA), which falls un­der the na­tional depart­ment of hu­man set­tle­ments, was paid R341 mil­lion for hous­ing projects for the poor. But not a sin­gle home was built.

Three com­pa­nies were ad­vanced more than R260 mil­lion to pro­vide mo­bile class­rooms, in defiance of Trea­sury reg­u­la­tions. One of them was paid R10 mil­lion for mo­bile class­rooms for four schools, but de­liv­ered none. A fur­ther R38 mil­lion was given to the same com­pany without any doc­u­men­ta­tion or ev­i­dence of work done. An­other mo­bile class­room com­pany ac­knowl­edged a debt of R24 mil­lion, but hasn’t paid it yet. The same com­pany was paid an­other R8.6 mil­lion, but de­liv­ered noth­ing. De­spite this, it was paid an­other R17 mil­lion without any sup­port­ing doc­u­men­ta­tion or ev­i­dence of work done. Of the R380 mil­lion given to those three com­pa­nies, R280 mil­lion was awarded without any ten­ders.

The then Eastern Cape roads and pub­lic works depart­ment paid a com­pany called Aqua Trans­port R4 mil­lion for two road projects. The IDT had paid other com­pa­nies R8.2 mil­lion for the same roads, and San­ral was paid R2.3 mil­lion for one of those two roads.

The IDT did not ac­count for R21.7 mil­lion of the R173 mil­lion it was paid. The IDT was fur­ther paid about R3.8 mil­lion for projects which were ei­ther can­celled or ter­mi­nated.

The CDC spent an “ex­ces­sive” R101 mil­lion on stones for 23km of road.


Trea­sury’s re­port into the sup­ply of so­cial hous­ing shows that around 2012, the na­tional hu­man set­tle­ments depart­ment trans­ferred R341 mil­lion to its Eastern Cape coun­ter­part to build low-cost and sub­sidised hous­ing.

Eastern Cape of­fi­cials then ir­reg­u­larly trans­ferred the money to the SHRA, in­stead of to com­pa­nies di­rectly in­volved in build­ing the hous­ing, ac­cord­ing to the re­port.

Of the R341 mil­lion, the SHRA paid R61 mil­lion to one con­struc­tion com­pany to build houses in East Lon­don. Noth­ing was built. “The R61 mil­lion was paid to a com­pany to be used to pay ser­vice providers dur­ing the con­struc­tion of so­cial hous­ing units in Con­nemara, East Lon­don. Only a va­cant plot re­mains where the so­cial hous­ing units should have been erected,” the re­port reads.

The SHRA claimed to have paid R80 mil­lion for a so­cial hous­ing project in Phoenix, Dur­ban, and a fur­ther R85 mil­lion for an­other so­cial hous­ing de­vel­op­ment in North West. Again, noth­ing was built.

About R115 mil­lion is un­ac­counted for.

This week, hous­ing author­i­ties in KwaZulu-Natal and of­fi­cials in North West re­futed the SHRA’s claims that it sent money to their prov­inces.

North West hu­man set­tle­ments spokesper­son Ben Bole said: “The depart­ment did not re­ceive R85 mil­lion from SHRA. We need to go on record and say that the mat­ter is un­der in­ves­ti­ga­tion by law en­force­ment agen­cies.”

KwaZulu-Natal hous­ing spokesper­son Mbulelo Baloyi said: “We do not re­ceive monies from the SHRA. They pay monies di­rectly to so­cial hous­ing in­sti­tutes.” Baloyi said he knew noth­ing of any so­cial hous­ing project in Phoenix.


Ac­cord­ing to the re­port, R4.8 mil­lion of the R61 mil­lion meant to build houses in East Lon­don was il­le­gally trans­ferred to 11 per­sonal bank ac­counts. Some of it was used to buy the Trail­blazer. The money was spent on suits worth R10 000 from House of Monatic and a Cape Town bou­tique and R1 800 was spent at Grazia fine din­ing restau­rant in East Lon­don.

The ac­count into which the R61 mil­lion was trans­ferred has been frozen. The Eastern Cape hu­man set­tle­ments depart­ment did not re­spond to ques­tions.


The re­port, pre­pared by Trea­sury, was about the con­struc­tion of a num­ber of roads in the Eastern Cape, which the then depart­ment of roads and pub­lic works com­mis­sioned.

Trea­sury found the depart­ment was in chaos and had a poor project man­age­ment sys­tem.

In ad­di­tion, the depart­ment awarded a large chunk of road con­struc­tion projects worth R914 mil­lion to the IDT, San­ral and the CDC – all at the same time.

In some cases, du­pli­cate pay­ments were made. In one case, the depart­ment paid Aqua R4 mil­lion for two road projects which had been al­lo­cated to the IDT.

The IDT paid R8.2 mil­lion to other ser­vice providers to build the same roads. The depart­ment paid R2.3 mil­lion to San­ral for the same road. Of an­other case, Trea­sury in­ves­ti­ga­tors said: “We have iden­ti­fied two projects where the de­scrip­tion is in­di­cated as quar­ry­ing of ma­te­rial for lengths of 12.3km and 11.1km, re­spec­tively.

“The con­tract value is in­di­cated as

R57.1 mil­lion and R44.3 mil­lion. These amounts seem to be ex­ces­sive for sup­ply­ing road stone ma­te­rial for the above-men­tioned lengths.”

About du­pli­cate pay­ments to Aqua, the re­port’s au­thors said that “three projects pos­si­bly in­clude du­pli­cate pay­ments. The to­tal pay­ments re­lat­ing to these projects is R74.3 mil­lion.”

In­ves­ti­ga­tors dis­cov­ered that the depart­ment paid Aqua about R139 mil­lion for 10 projects, which had also been awarded to Coega.

Fur­ther­more, the depart­ment paid Aqua about R49.6 mil­lion, but doc­u­ments show a third party got the money. The depart­ment paid R320 mil­lion to Aqua and other com­pa­nies for 10 projects which had also been awarded to the CDC. The depart­ment paid other com­pa­nies – ex­clud­ing Aqua, the IDT and San­ral – about R304 mil­lion for the same roads the CDC was asked to build.

Yet an­other com­pany was paid R35 mil­lion for a project bud­geted at R20 mil­lion.


San­ral’s south­ern re­gional man­ager, Mbulelo Peter­son, said the depart­ment con­tracted San­ral to resur­face 807km of pro­vin­cial roads.

“San­ral can there­fore only spec­u­late that the iden­ti­fi­ca­tion of du­pli­ca­tion of work by San­ral, and other im­ple­ment­ing agents was ei­ther done in er­ror, or refers to dif­fer­ent types of work done on the same road, or dif­fer­ent sec­tions of the same road,” he said.

“For ex­am­ple, a San­ral-ap­pointed ser­vice provider may well have im­ple­mented a fog spray on pro­vin­cial roads that were also un­der­go­ing rou­tine main­te­nance or hav­ing other work done by an­other ser­vice provider ap­pointed by the depart­ment, or an­other im­ple­ment­ing agent.”

Aqua de­clined to comment, but said the re­port was flawed and in­ac­cu­rate. The com­pany threat­ened to take le­gal ac­tion against City Press should it pub­lish its find­ings.

The IDT did not re­spond to ques­tions sent on Thurs­day. Spokesper­son Thabisile Dhlomo said: “The IDT is not in pos­ses­sion of the in­ves­ti­ga­tion re­port pro­duced by spe­cial au­dit ser­vices and there­fore is un­able to pro­vide a full re­sponse.”

CDC spokesper­son Ayanda Vi­lakazi did not re­spond to de­tailed ques­tions, but said the depart­ment con­tracted Coega to build roads for three years in six pro­vin­cial dis­tricts.

He said Coega handed all its files to the depart­ment af­ter it de­cided to take over the project.

The SHRA could not be reached for comment.

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