Free State government spent R600m with nothing to show for it

The Free State department of human settlements paid R600m to companies for houses that were never built.

The payments took place during 2010 and 2011 for what was a R1bn project to build low-cost houses in the province. At the time, Mosebenzi Zwane was human settlements MEC and Ace Magashule was premier.

More than 100 suppliers and contractors benefited from the advance payments — with no work done, the Free State human settlements head of department (HoD) Nthimotse Mokhesi told the state capture inquiry on Monday.

Mokhesi was not the HoD when the prepayments were processed. He was, however, made familiar with the controversies around the matter upon assuming the position of accounting officer of the department, and took the view that the whole thing was fraudulent. According to him, the reasons that were advanced for paying companies before they had done any work was the provincial government’s fear at the time that failure to spend the cash would result in the national treasury channelling it to “better-performing provinces”.

In October 2010, Free State human settlements, along with three other provinces, was warned by its national counterpart that it was moving at snail’s pace in spending the allocation. Seven months into the financial year, only 10% of the funds had been spent.

The warning opened the floodgates of alleged procurement irregularities, with more than R500m spent in just three months — January, February and March 2011 — in a rush to beat the financial year-end cutoff.