Roof caves in on hous­ing agency

Ex­ec­u­tives sus­pended, re­in­stated, sus­pended; the board’s chair re­moved; cor­rup­tion; sex-for-jobs claims – and there’s that R11-bil­lion deficit

Mail & Guardian - - News - Paddy Harper & Than­dux­olo Jika

The gov­ern­ment agency whose job it is to build houses for the poor has al­legedly been looted to such an ex­tent that it has an R11-mil­lion deficit and may be un­able to pay salaries.

The Hous­ing De­vel­op­ment Agency (HDA), which works with lo­cal and pro­vin­cial gov­ern­ments to pro­vide state hous­ing for the poor, has been or­dered to pay back more than R2.3-bil­lion to the trea­sury be­cause of al­leged fi­nan­cial mis­man­age­ment by its top man­age­ment.

HDA chief ex­ec­u­tive of­fi­cer (CEO) Pas­cal Moloi and four ex­ec­u­tives were sus­pended by the agency’s board last week be­cause of the ir­reg­u­lar­i­ties and be­cause of al­le­ga­tions of a sex-for-jobs racket in the en­tity.

The oth­ers sus­pended are strat­egy and per­for­mance man­age­ment ex­ec­u­tive Mcezi Mnisi, de­vel­op­ment man­age­ment ex­ec­u­tive Mandla Ge­orge, head of built en­vi­ron­ment Mooketsi Mphahlele and a project man­ager, Lungisa Ma­puma.

But, in an amaz­ing about-turn on Tues­day night, Hu­man Set­tle­ments Min­is­ter No­main­dia Mfeketo in­stead fired HDA board chair Mavuso Msi­mang, who, along with the board, had pushed for the sus­pen­sion of Moloi and his col­leagues. Xolani Xundu, Mfeketo’s spokesper­son, said Msi­mang had served the max­i­mum two con­sec­u­tive terms as board chair­per­son.

De­spite nu­mer­ous ap­proaches, Msi­mang would not com­ment.

Mfeketo or­dered the re­in­state­ment of Moloi and then re­moved board mem­ber Thoza­mile Botha, who had been ap­pointed as act­ing chief ex­ec­u­tive, while two in­ves­ti­ga­tions into the al­le­ga­tions of fi­nan­cial and sex­ual mis­con­duct are car­ried out. Botha re­mains a mem­ber of the board.

On Wed­nes­day Mfeketo again changed her de­ci­sion, re­mov­ing Moloi and re­plac­ing him with fel­low HDA

night, ex­ec­u­tive Johan Min­nie.

Xundu said Mfeketo had asked the HDA and the di­rec­tor gen­eral of hu­man set­tle­ments to “ur­gently ad­dress” the issue with trea­sury.

Xundu said Mfeketo “has not been in­formed of any liq­uid­ity cri­sis” at the HDA, but she had been made aware of the sus­pen­sions and he con­firmed that Min­nie had been ap­pointed as act­ing chief ex­ec­u­tive.

He added that the min­is­ter has de­cided to place the hous­ing agency un­der ad­min­is­tra­tion.

Ac­cord­ing to two in­de­pen­dent sources and doc­u­ments the Mail & Guardian has seen, the HDA now has an R11-mil­lion deficit and may not be able to pay its more than 220 staff mem­bers’ salaries this month.

Trea­sury said it was un­able to an­swer spe­cific ques­tions and that, in terms of the Pub­lic Fi­nance Man­age­ment Act and trea­sury reg­u­la­tions, it was up to the HDA board and the hu­man set­tle­ments de­part­ment to deal with ir­reg­u­lar­i­ties.

Botha con­firmed that an in­ves­ti­ga­tion was tak­ing place.

“These de­ci­sions were based on al­le­ga­tions made against cer­tain ex­ec­u­tives and those de­ci­sions [to sus­pend] … were based on al­le­ga­tions of sex­ual ha­rass­ment, [and] ir­reg­u­lar­i­ties in the sup­ply chain man­age­ment. The board had to in­ves­ti­gate these fi­nan­cial ir­reg­u­lar­i­ties to es­tab­lish their ve­rac­ity. They re­main al­le­ga­tions un­til proven oth­er­wise,” said Botha.

It is not clear why Mfeketo, who took over from Lindiwe Sisulu in Fe­bru­ary, som­er­saulted so dra­mat­i­cally over the board’s de­ci­sion to sus­pend Moloi. It is also not clear whether she has acted be­yond her pow­ers. In terms of the HDA’S con­sti­tu­tion, the chief ex­ec­u­tive and the chief fi­nan­cial of­fi­cer are ac­count­able to the board and not to the min­is­ter.

The cri­sis in the HDA was pre­cip­i­tated by an in­ves­ti­ga­tion by former chief fi­nan­cial of­fi­cer Bryan Chap­log af­ter he re­ceived com­plaints from staff mem­bers.

Chap­log was sec­onded to the HDA by Sisulu last year, but was re­placed at the end of Septem­ber by Mmemeng Tsehla af­ter a fall­ing-out with his fel­low ex­ec­u­tives.

In a pre­sen­ta­tion to the board in Oc­to­ber, Chap­log said that, in the cur­rent fi­nan­cial year, the au­di­tor gen­eral’s of­fice had found that 18 contracts with a value of al­most R1-bil­lion were awarded with­out invit­ing com­pet­i­tive bids.

Botha told the M&G that the fi­nan­cial ir­reg­u­lar­i­ties had crip­pled the agency to such an ex­tent that there is a pos­si­bil­ity it will be un­able to pay salaries.

“If the agency doesn’t get paid by some of the state en­ti­ties that owe it money as we speak, it will be un­able to pay salaries. There is an R11-mil­lion deficit be­cause there was some kind of reck­less run­ning of the agency. It is on that ba­sis that we said the min­is­ter should have

been cir­cum­spect in tak­ing the de­ci­sion that is now go­ing to frus­trate the process the board had al­ready started,” said Botha. He also re­vealed that the agency had man­aged to re­pay trea­sury R1.55-bil­lion af­ter ne­go­ti­a­tions last week. “We had no choice but to pay back the money be­cause the prov­inces had paid the money to the agency with­out fol­low­ing PFMA [Pub­lic Fi­nance Man­age­ment Act] and other reg­u­la­tions. But trea­sury was fair enough to say those monies that were al­ready com­mit­ted and paid out to con­trac­tors should be recorded as such and then the bal­ance be re­turned,” said Botha.

Chap­log said pan­els of con­struc­tion com­pa­nies had been used ir­reg­u­larly by the HDA, which had failed to com­ply with the terms of the Act.

He also said the chief ex­ec­u­tive and the HDA lead­er­ship had been made aware of “sex­ual mis­con­duct at ex­ec­u­tive com­mit­tee level”, in­clud­ing the “ver­ti­cal move­ment of at least two fe­male staff mem­bers af­ter they par­tic­i­pated in sex­ual acts in­volv­ing ex­ec­u­tive com­mit­tee mem­bers”.

Staff mem­bers had made “pro­tected dis­clo­sures” to the head of cor­po­rate ser­vices, he said. “The full exco [ex­ec­u­tive com­mit­tee] has been made aware and the CEO also in­di­cated that he was made aware.’’

An ex­ter­nal in­ves­ti­ga­tor should deal with the probe be­cause “the exco mem­bers that are cur­rently im­pli­cated are too close to the CEO and the process will lack cred­i­bil­ity be­cause of that”.

Af­ter Chap­log’s pre­sen­ta­tion, the board is un­der­stood to have met and given Moloi and the oth­ers no­tice of its in­ten­tion to sus­pend them. A res­o­lu­tion taken on Novem­ber 24 found that com­plaints from staff and Chap­log’s sub­mis­sion pro­vided prima fa­cie ev­i­dence of “cor­rup­tion and mal­ad­min­is­tra­tion” at the en­tity.

“In view of the al­leged in­volve­ment of the CEO and se­nior ex­ec­u­tives in cor­rup­tion and mal­ad­min­is­tra­tion, the board con­sid­ered it pru­dent to in­sti­tute an in­ves­ti­ga­tion. Hav­ing in­formed the min­is­ter of the board’s de­ci­sion on this mat­ter, the chair­man is man­dated to give ef­fect to the board’s de­ci­sion, namely to place the CEO and other ex­ec­u­tives or se­nior man­agers on pre­cau­tion­ary sus­pen­sion,’’ the res­o­lu­tion said.

Moloi de­clined to com­ment, say­ing: “It would be best if you were to speak to the com­pany sec­re­tary.”

Com­pany sec­re­tary Eliz­a­beth Africa said the HDA had placed some staff on pre­cau­tion­ary sus­pen­sion be­cause of al­le­ga­tions of cor­rup­tion, fraud, mis­con­duct and sex­ual ha­rass­ment.

“The names of the in­di­vid­u­als on sus­pen­sion can­not be named at this stage. The de­tails of the in­ves­ti­ga­tion also can­not be shared as the in­ves­ti­ga­tion is on­go­ing,” she said

Africa also con­firmed that the HDA had re­turned trea­sury R1.55-bil­lion to trea­sury in un­used funds and that Msi­mang had been re­moved as board chair­per­son.

She said the HDA was still liq­uid. “The HDA is not in a deficit. The HDA is liq­uid. Salaries and other ex­penses will be paid as nor­mal.”

The HDA had paid con­trac­tors in terms of fund­ing agree­ments with the prov­inces, who would then pay back the

HDA, she said.

Back to the board: Thoza­mile Botha (left) is no longer act­ing chief ex­ec­u­tive. Pas­cal Moloi (right) was sus­pended by his board, re­in­stated by his min­is­ter, then fired again

In­ter­fer­ing? No­main­dia Mfeketo may place the Hous­ing De­vel­op­ment Agency un­der ad­min­is­tra­tion. Photo: Moeletsi Mabe/times/gallo Im­ages

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