A report has found that a loan granted to Deputy President Paul Mashatile’s son-in-law Nceba Nonkwelo’s company Nonkwelo Investments was possibly reckless.
MEC for Human Settlements and Infrastructure Development Lebogang Maile yesterday released an investigation report into the loans issued by the Gauteng Partnership Fund (GPF).
Maile said the purpose of the media briefing was to provide the public with the final report on the outcome of the investigation into allegations of corruption and maladministration in the awarding of funding and loans to Nonkwelo Investments by the GPF as alleged in a News24 article in July this year.
He said noting the absence of transformation within the sector and projects funded by the GPF, on July 27, 2010, the GPF board approved the Entrepreneur Empowerment Property Fund Programme (EEPF Programme).
The objective of the EEPF Programme was to encourage entities owned by historically disadvantaged individuals (HDI) to participate in the affordable housing rental market, through ownership of residential rental portfolios.
The board authorised the investment committee (IC) to approve a maximum of R7.5 million loans per project for the acquisition of land and/or building and an additional R7.5m for development costs. Therefore, in line with the delegations of authority (DoA) the IC had authority to approve funding of EEPF projects up to R15 million per project.
Following the publication of a series of articles by a media company alleging that Nonkwelo had unduly benefited from loans and funding by the GPF, an entity of the Gauteng provincial government that is under the Gauteng Department of Human Settlements, the GPF board of trustees instituted an independent investigation to probe these allegations.
As a result of the serious allegation, Maile said, they deemed it appropriate as the Gauteng provincial government and the executive authority of the GPF, in line with their constitutional obligations, to give a directive to the GPF board of trustees to launch an independent investigation into the veracity or otherwise of these serious allegations.
“On my instruction as the executive authority, the GPF board of trustees sought expert investigation services related to the GPF’s approval of the developer’s funding application and subsequent loans awarded in relation thereto.
“The investigation related to Nonkwelo Investments (Pty) Ltd being the developer herein (“Nonkwelo Investments”). The GPF board of trustees exercised due diligence by following the procurement processes in compliance with the applicable financial prescripts for the appointment of a law firm with the requisite skills and capacity to investigate the allegations,” he said.
Maile further said the procurement process of appointing a law firm took longer than anticipated given the required specialised skills, complexity of the issues involved and the long history of this matter.
Maile said Gildenhuys Malatji Incorporated (GMI), an incorporated firm of attorneys, was appointed to render the services in line with a service level agreement concluded with the GPF.
He said GMI was expected to investigate the approval of the loan/s provided to Nonkwelo Investments and any matter connected thereto in accordance with the approved scope of work and terms of reference as encapsulated in the introductory part of the final investigation report..
“When we took this conscious decision to launch a full investigation, we were mindful of our inherent constitutional and legislative responsibilities as provided in section 133 of the Constitution of the country and section 63, 64 and 65 of the Public Finance Management Act, 1999 (the PFMA) as amended to ensure the GPF board of trustees exercises its fiduciary duties impartially, undeterred and without any perceived interference whilst as the executive authority, I remained accountable and transparent to the public about the process as it unfolded,” said Maile.
He said GMI issued the final investigation report on October 25 despite delays which were beyond their control, hence they released the report yesterday for public consumption and scrutiny.
Maile said as at the time of this investigation report, investigators were not in a position to make findings as to whether the approval of the developer in the participation of the EEPF Programme had been done in accordance with applicable laws or applicable procedures due to not being provided with all the relevant information and/or documentation to enable the investigation team to make a finding.
However, GMI noted that if these documents never existed, the approval which was granted for participation in the EEPF Programme would have been irregular. Alternatively, if the documents did exist, but were inadequate and/or or did not meet the necessary requirements, the approval would also have been irregular.
“We have taken full cognisance of the findings in the investigation report, including the financial and legal implications as well as institutional integrity of the GPF as an important entity of the department. We are now in a better position to put necessary measures in place to strengthen governance and internal systems of the GPF in compliance with the applicable laws and prescripts to avoid or mitigate against future recurrence.
“Whilst the findings are clear about the governance pitfalls, we are, however, of the view that the recommendations are not conclusive. Accordingly, we have asked the board to institute a process of reviewing them with an intention of strengthening the areas of weakness,” Maile said
The Star