Action SA President and Former Jo’burg Mayor Herman Mashaba Found Wanting In The Public Protector’s Report

Brian Kazungu, 21/12/2020

Following a complaint by an anonymous entity to its offices, according to Report No. 21 of 2020/21 – (Anonymous v City of Johannesburg), there were some irregularities in the City of Johannesburg which after its own investigations, the Public Protector confirmed that many of the issues raised were substantive and warranting remedial action.

The report which was issued today highlighted that the complaint centered on irregular staff appointments, irregular salary increases, financial mismanagement and conflict of interest in the City of Johannesburg’s affairs.

It also touched on allegations of irregular staff appointments involving the appointments of the Executive Director of Housing, Group Head of Legal, Group Forensic Investigation Services Executive Head, Chief of Johannesburg Metro Police and the current City Manager.

Among some of the other irregularities which were also investigated by the Public protector according to the same report was the alleged ‘abuse of office’ by Action South Africa President, Herman Mashaba during his tenure as the Mayor for Johannesburg Metropolitan City.

The former Mayor was sucked in for allegations of complicit on the irregular salary increase for the Former Chief of Staff Mr. Michael Beaumont as well as for tenders involving a company belonging to his wife and a conflict of interest on the affairs of Setheo, a company contracted to the City of Johannesburg

His administration was also found wanting for incompetently failing to utilize a R736 million service delivery grant which had to be recalled back to the National Treasury

Part of the findings reads as follows: The former Executive Mayor of the City: Mr Herman Mashaba unlawfully and irregularly entered the procurement space and solicited free services from Lephatsi Financial Services and whether such amounted to a conflict of interests.

The former Executive Mayor of the City: Mr Herman Mashaba allegedly interfered or influenced the City to use funding allocation of youth drug rehabilitation and support programme to fund Field Band Foundation (FBF) which is a Non-Governmental Organisation (NGO).

Here-Under Is The Full Report by The Public Protector:

REPORT ON COJ DELIVERED BY PUBLIC PROTECTOR ADV. BUSISIWE MKHWEBANE AND ADV. KHOLEKA GCALEKA DURING A MEDIA BRIEFING HELD IN PRETORIA ON MONDAY, DECEMBER 21, 2020

Anonymous v City of Johannesburg (Report No. 21 of 2020/21)

The PP investigated an anonymous complaint, which covers four distinct themes”

•  namely irregular staff appointments,
•  irregular salary increases,
• financial mismanagement and
• Conflict of interest.

Allegations of irregular staff appointments involved the appointments of the Executive Director of Housing, Group Head of Legal, Group Forensic Investigation Services Executive Head, Chief of Johannesburg Metro Police and the current City Manager.

Salary increases – Former Chief of Staff Mr Michael Beaumont’s salary was irregularly increased allegedly with the full knowledge and consent of the former Executive Mayor.

Financial mismanagement,

• On financial mismanagement, the complainant alleged that the City returned nearly R736 million to National Treasury in funds that were allocated as conditional grants for the year ended in 30 June 2017. National Treasury allegedly served the City with a letter of demand in October 2017 to recover this money which was not spent by the City.

• It was alleged that the City, due to poor performance failed to spend the conditional grants in 2016/17. The money was allegedly meant for provision of basic services to the residents including water and sanitation, roads, housing, electricity and waste amongst others. This was, to the complainant, an indication of non-compliance, mismanagement and poor oversight by the Democratic Alliance-led administration.

• In addition, the City allegedly appointed KPMG to conduct investigations in various departments including the Revenue Unit in 2016. In 2017 the services of KPMG were allegedly retained to perform analysis of the customer accounts in the City’s database and develop strategies to improve the City’s revenue collection.

• These were allegedly different assignments which would require different expertise. Whilst the first appointment was made via a panel of forensic service providers, which KPMG belong to, the second allegedly did not fall under the expertise for which the panel was appointed.

• KPMG was allegedly appointed without advertising the tender as required by the Municipal Finance Management Act (MFMA) and Supply Chain Management regulations. The basis of this appointment was allegedly through unsolicited bid procedures.

• In terms of conflict of interest, the City allegedly awarded a multimillion tender for forensic investigations to Grant Thornton Capital. A company called Lephatsi Financial Services, which is allegedly owned by the former Executive Mayor’s wife, allegedly owns a 35% stake of Grant Thornton Capital. The former Executive Mayor is alleged to have unlawfully and irregularly solicited free services from Lephatsi Financial Services.

• The former Executive Mayor is also alleged to have had a breakdown with Setheo Engineering Company (Setheo) appointed by the City due to personal vendetta against them since Setheo is in the same business as CONCO which is a company allegedly associated with the Mayor.

• On 23 November 2018, the PPS office further received another complaint straight from the directors of Setheo alleging administrative irregularities in the termination of the NEC 3 contract, failure to respond to communication, bad publicity, abuse of power by the former Executive Mayor and maladministration around sub-contractors by City Power and/or the City.

• Following the lodging of a separate complaint by directors of Setheo, this issue was then separated from this investigation and it is being investigated by the PPs office on its own as a stand-alone matter.

• It was further alleged that the former Executive Mayor interfered in the funding allocation by the City of a youth drug rehabilitation and support programme to fund a Non-Governmental Organisation known as Field Band Foundation (FBF) which he claims as a personal project.

After analysing the complaint, the following 11 issues were identified for investigation:

1. Whether the City improperly or irregularly appointed Mr Moses Metileni to the position of Executive Director: Housing, without following due processes.
2. Whether the City improperly or irregularly appointed Mr Mafoane Mogashoa to the position of Group Head: Legal and Contracts without following due processes.
3. Whether the City improperly or irregularly appointed Dr Ndivhoniswani Lukhwareni to the position of City Manager without following due processes.
4. Whether the establishment of Group Forensic Investigation Services (GFIS) and the subsequent appointment of General Shadrack Sibiya as its Executive Head by the City were improper and irregular.
5. Whether the City improperly or irregularly appointed Mr David Tembe to the position of Chief of Johannesburg Metro Police (JMPD) without following due processes.
6. Whether the City irregularly increased the Chief of Staff: Mr Michael Beaumont’s salary and further allocated him the vehicle and Very Important Person (VIP) protection services without conducting security risk assessment.
7. Whether the City returned nearly R736 million to National Treasury that was allocated as conditional grants for the year ended in June 2017, which money was meant for the provision of basic services to the residents of the City including water and sanitation, roads, housing, electricity and waste amongst others and if so, whether this was an indication of non-compliance, mismanagement and poor oversight by the City.
8. Whether the City improperly or irregularly appointed KPMG to conduct investigations in various departments within the City for clearly different assignments which would require different expertise, without advertising the tender as required by the Municipal Finance Management Act (MFMA) and Supply Chain Management (SCM) regulations.
9. Whether the former Executive Mayor of the City: Mr Herman Mashaba unlawfully and irregularly entered the procurement space and solicited free services from Lephatsi Financial Services and whether such amounted to a conflict of interests.
10. Whether the former  Executive Mayor of the City: Mr Herman Mashaba allegedly interfered or influenced the City to use funding allocation of youth drug rehabilitation and support programme to fund Field Band Foundation (FBF) which is a Non-Governmental Organisation (NGO).
11. Whether the Complainant, the City or any other party suffered improper prejudice in the circumstances.

Following a rigorous investigation, the PP have make the following findings:

1. The City improperly or irregularly appointed Mr Moses Metileni to the position of Executive Director: Housing, without following due processes.
2. The City improperly or irregularly appointed Mr David Tembe to the position of Chief of Johannesburg Metro Police (JMPD) without following due processes.
3. The City improperly or irregularly appointed KPMG to conduct investigations in various departments within the City for clearly different assignments which would require different expertise, without advertising the tender as required by the Municipal Finance Management Act (MFMA) and Supply Chain Management (SCM) regulations.
4. The former Executive Mayor of the City: Mr Herman Mashaba unlawfully and irregularly entered the procurement space and solicited free services from Lephatsi Financial Services and whether such amounted to a conflict of interests.
5. The former Executive Mayor of the City: Mr Herman Mashaba allegedly interfered or influenced the City to use funding allocation of youth drug rehabilitation and support programme to fund Field Band Foundation (FBF) which is a Non-Governmental Organisation (NGO).
6. The rest of the allegations are not substantiated.
7. In the light of the allegation that are substantiated, the Complainant, the City or any other party suffered improper prejudice in the circumstances.

The appropriate remedial action that I am taking in pursuit of section 182(1)(c) of the Constitution is the following:

The City Manager must take appropriate steps to ensure that:

1. Within sixty working days from the date of this report, disclose all irregular expenditure incurred in connection with irregular appointments of Mr Metileni, Mr Tembe and irregular extension of a contract of KPMG to the Council and Treasury.
2. Directs the Chief Financial Officer (CFO) of CoJ to amend the closing balance of the current financial statements to accordingly include the irregular expenditure in the previous financial statements.
3. Within sixty working days of the issue of this report; all CoJ’s officials who are involved in the SCM and Recruitment processes, including all the senior management, attend a workshop on the SCM, Recruitment and Selection procedures and processes.
4. Within thirty working days from the date of this report, present this report to the current Executive Mayor of the City, for disciplinary action to be taken against all current City employees who are responsible for the flouting of Recruitment processes, SCM processes or any other form of maladministration or improper conduct highlighted in this report.

The Speaker of City Council must:

1. Within sixty working days from the date of this report, ensures that the Council develops a policy regulating the exercise of discretionary power delegated to the Executive Mayor in relation to Grants for Funding or Donations to institutions or organisations which promotes public health, social welfare, art, culture and education within the jurisdiction of the City as contemplated in Section 79(16)(a) of the Transvaal Local Government Ordinance 17 of 1939.
2. Within sixty working days of the issue of this report; all City councillors attend a workshop on Management of Conflict of Interests and on Policies related to mandatory Disclosure of Conflict of Interests.
3. Within thirty working days from the date of this report, present this report to the MEC for Cooperative Governance and Traditional Affairs in the Gauteng province for a decision to address all irregular expenditure incurred as a result of maladministration and improper conduct highlighted in this report.
4. The CEO of Road Traffic Management Corporation must take appropriate steps to ensure that within sixty working days from the date of this report, engage in the necessary process to nullify the Metropolitan/ Traffic Police Diploma issued to Mr Tembe by JMPD on 30 June 2007 and further disclose or communicate the outcome of the nullification process to the HoD for Gauteng Department of Roads and Transport.