Mashaba’s Ghosts Haunt Johannesburg’s City Power and Exposes SAPS

Brian Kazungu, 19/04/2021

In July 2017, Johannesburg High Court dismissed an urgent application by Setheo Engineering to interdict the then Johannesburg Executive Mayor and current President of Action SA, Mr. Herman Mashaba from tweeting about its contract with City Power.

Setheo, a construction and engineering company had sought to interdict Mashaba, the City of Johannesburg and any of its employees from tweeting or issuing media statements about the alleged corrupt contract until investigation by the Hawks were finalised.

The then City Power Director of Finance, Mr Daniels deposed to an affidavit in relation to criminal complaint that was directly opened by the Hawks in this R143-million contract which was awarded to Setheo in March 2015.

He stated as true and fact that R65 million was paid in contravention of City Power regulations governing payments to service providers which state that work done must first pass muster and be assessed by officials before payment can be effected.

Former Hawks employee, General Sibiya, who was ‘hired’ by Mashaba to head City of Johannesburg’s Group Forensic and Investigation Services (GFIS) unit confirmed as factually true that about R65-million had been paid to Setheo.

The money was said to be for the building of a new electrical substation in Eldorado Park‚ south of Johannesburg.

Consequently, a docket was opened directly by the Hawks under Case Number CAS 399/05/2017 and two City Power officials‚ both project managers‚ were arrested for the alleged irregularities regarding the contract.

City of Johannesburg Spokesperson at that time, Luyando Mfeka said that further payments requested by Setheo were intentionally withheld at the instigation of Mashaba.

During the same period, Mashaba tweeted twice about the alleged corruption surrounding the contract — the first during a visit to the site saying “very little” of the work paid for had been done.

Four days later‚ he tweeted again‚ attaching a picture of a signboard on which Setheo’s name appeared. It was Setheo’s argument that the tweets‚ when read together‚ were defamatory and had led to business partners questioning whether Mashaba’s statements were about them.

Setheo opined that Mashaba, who had no direct legal nexus with City Power, which is a juristic entity, had unilaterally and arbitrarily declared this turnkey contract as tainted by corruption.

Mr. Mfeka, the former Joburg Spokesperson, highlighted that: “A founding affidavit has been submitted to the Hawks on the matter. The investigation is ongoing. Last week‚ the Mayor requested the Hawks to provide feedback on the investigation which we are awaiting.

With respect to suspected corruption in relation to the Eldorado Substation‚ two City Power senior officials who were project managers‚ have been suspended to date. Further to this‚ payments requested by the contractor are currently being withheld by the power utility.

The contractor in question has a number of other maintenance contracts with City Power‚ the most significant of which is the restoration contract for the Hopefield substation.”

Setheo responded by saying “Engineering projects differ in terms of proportions of work onsite and offsite. On the Eldorado case‚ 80% of the work is off site with a huge component being imported equipment.

The consultant appointed by City Power to oversee the project had drafted a letter confirming that the work done so far‚ on and off site‚ “in fact exceeds the R65-million paid by City Power”.

All payments made to Setheo Engineering by City Power were in line with the NEC contract governing the engagement between the two. Whilst we will deal with specific payments in detail‚ take note that transformers that are on site in Eldorado are worth over R40 million.

We have equipment that we have ordered and not yet delivered on site but proof from the suppliers that it has either been fully paid for or partially paid.

All payments made to contractors by City Power are verified by an independent consultant appointed by City Power to ensure that all claims being made by the contractors are in line with their policy. It is therefore quite surprising to us to be learning through social media that we are corrupt‚ inept and untrustworthy.” Setheo explained.

City Power stopped payments to Setheo prior to the matter being referred to the Hawks who openly admitted that the complaint was a criminal and not a civil matter.

Mashaba had boldly asserted that Setheo had refused, failed and neglected to pay sub-contractors notwithstanding the fact that it was City of Johannesburg who had induced City Power to stop paying Setheo since October 2016 outside the provisions of the contract.

 “The last payments were made by City Power directly to the sub-contractors with our consent. It is correct that work on the project has stalled due to non-payment of our invoices by City Power since October 2016. We have thus this far carried the project using our own resources.” Setheo stated.

While commenting on the matter, legal consultant and member of the Connections2Communites (C2C), Mr. Frederick Kyle said: “The facts of this matter confirm that Mashaba, the creator of GFIS, whose legal status is obscure to say the least, was the driving force behind the criminalization of what would ordinarily be a civil matter.

The mere fact that the case was opened directly by the Hawks is troubling.

I am also concerned that it was Mashaba who through social media broke the news that Setheo was under investigation for fraud by the Hawks without the Hawks affording Setheo an opportunity to be heard.”

The criminal complaint was prosecuted by the NPA and after 12 appearances, the National Prosecuting Authority withdrew the charges.

However, after Mashaba’s exit as Mayor, the same charges were reinstated resulting in the arrest of Mr. Brighton Chifamba, a former employee of Setheo, on 12 October 2020 on the same charges of 2017.

The charges against the two (2) Setheo directors were also reinstated in December 2020 as were the charges against the former City Power employees.

In 2017, Setheo stated that: “Our main challenge is the non-payment of our invoices by City Power and the domino effect it has had in our value chain of suppliers‚ employees and clients.”

In an article published by City Press on 11 April 2021, it was reported that SAPS had withdrawn a criminal case of theft against CP for an alleged hostile takeover of the disputed machinery that was purchased and delivered by Setheo.

Gauteng Police Spokesperson, Mathapelo Peter, confirmed that a case of theft was opened on Wednesday and was registered at the Sandton Police Station and that this case was then closed after ‘alleged’ preliminary investigations had confirmed that it was a civil matter.

C2C-BOAF Director of Public Engagements and Outreach, Mr. JJ Singh said: “We have been following this dispute closely.

I was part of the community delegation that met with City of Johannesburg’s MMC responsible for City Power affairs, Councillor Mpho Moerane, to raise our concern that it was disingenuous for City Power and City of Johannesburg to prosecute a contractual dispute as a criminal offence

This constituted a bad precedent especially in relation to the affairs of public institutions.

It may not be apparent that one of our members Mr. Brighton Chifamba was arrested on 12 October 2020 by the Hawks on the allegation that as a former employee of Setheo he was party to a fraud involving an unjust enrichment to the tune of R66 million.

He has been in remand prison since October 2020. Against this backdrop, we expected that the SAPS would act in the interests of justice by investigating the veracity of the allegation that public funds were stolen by Setheo and City Power was a competent complainant.

City Power officials blame the former Mayor for causing the problems, yet the deeds of the former Mayor seem to be affirmed by the current administration.

It is troubling that Brigadier Peters would on the one hand assert that the decision by Sandton Police Station to close an investigation whose purpose is to assist the promotion and protection of justice is rational and in the interests of justice.

We intend to request the Sandton Police Station to provide reasons why the same facts would produce two contradictory outcomes i.e. one criminal prosecution and another refusal to investigate, from the SAPS.” Singh said.