The Free State Shanduka cover-up
Leaked document reveals irregularities in R500m tender to refurbish schools in province
THE Star is in possession of a leaked document sent to MA Sesing, the Free State provincial accountant-general, requesting a condonation of the irregular expenditure incurred in for the Kagiso Shanduka Trust tender.
The letter, which was meant to be secret, also asks MNG Mahlatsi, the chief executive of the Free State Treasury to condone the tender.
According to a forensic investigation by audit firm PwC, the Kagiso Shanduka Foundation was part of a R500-million tender to refurbish Free State schools, but came short of good workmanship.
Also, the tender was not appropriately advertised and didn’t follow due process.
Condonation is a process where the Treasury would disregard an earlier investigation or finding assuring that its merits had no legal recourse in the future. In previous examples in the province a report into irregular expenditure that had been condoned meant that the report be set aside.
On April 14, The Star published an investigation exposing links between President Cyril Ramaphosa, Kagiso Shanduka Trust, a foundation Ramaphosa was the chairperson of, and the Free State Department of Education.
Although Ramaphosa denied all accusations, The Star has learnt that Free State Education MEC Tate Makgoe was a member of the Shanduka Trust board at the same time when Ramaphosa was a chairperson. The department has since been unable to provide proof of the advertisement of the tender.
On October 21, 2019, the PwC wrote to the education department’s accounting officer, advocate TH Malakoane, informing him that PWC had been appointed by the Free State treasury to assist the department with the finalisation of irregular expenditure cases. As a finding, the report states that “the project met the definition of irregular expenditure”.
According to the condonation letter, “87% of the work done by the Shanduka Trust is value for money and only four projects were identified as value for money”, but concedes that there have been “gross adverse findings against the department by PwC”.
A source within the department has revealed to that the department acted swiftly to conceal the scandal by requesting a condonation of the findings of irregular expenditure shortly after The Star published the story.
According to the source, some in the department felt that the PwC report left a dark cloud over the MEC and the department and opened the path to attack from a rival faction believed to be associated with Ace Magashule, who was premier and ANC provincial chairperson when the scandal occurred.
Free State Education Department spokesperson Howard Ndaba said the relationship it had with Shanduka had always been a non-profit partnership.
“Nobody, Kagiso Shanduka or Kagiso Trust did not get a tender to build the school. We formed a partnership and made sure that we deliver quality education in those schools, and we are happy with that.
“We still believe as the Free State Department of Education, there was no irregular expenditure in this project. And we want to put on record that we are prepared to even go to court for a declaratory order for the court to determine whether this partnership was irregular or not,” Ndaba said.
The scandal isn’t a first for Shanduka and Ramaphosa. In November 2017, the company was indicted in the Paradise Papers, an investigation into companies that hid money in foreign countries. The suspicions came after an energy deal brokered in Mozambique saw billions sent to Mauritius. Ramaphosa also denied wrongdoing as pertaining to the Paradise papers.