Johannesburg - Former Gauteng Department of Finance boss Stewart Lumka could face a lawsuit and criminal charges for allegedly defrauding the provincial government of more than R50 million.
On Tuesday, Premier David Makhura confirmed the termination of Lumka’s services as head of department after he was convicted during an internal hearing.
Auditing firm Ernst & Young conducted the probe.
Provincial government spokesman Thabo Masebe said Lumka was suspended in July last year - soon after Makhura was elected premier.
The Star understands that the alleged offences took place between 2008/2009 when the Gauteng Shared Service Centre was a provincial government agency. Its main role was to secure major procurement bids for the government and its employment-creating agency.
The alleged offences took place when the provincial government advertised a tender for the provision of IT software.
An Irish company, Novell, won the tender. However, the requirement was that it should partner with a BEE company.
The Star understands that Lumka’s troubles began when he allegedly made direct payments to Shimo IT Solutions without government authorisation.
He allegedly also appointed Shimo to do another job for the government, also without the necessary authorisation.
Masebe confirmed that the allegations had led to the dismissal.
“Mr Lumka’s financial misconduct relates to his authorisation of payments to Shimo IT Solutions while the government had no contract with the company and, therefore, no financial obligations.”
He said Lumka had faced charges of paying R48.8m to Shimo when the department had no legal obligation to do so.
Lumka was also charged with acknowledging liability in favour of Novell and Shimo when he was not authorised to do so and that the payments, which were not due, were irregular or fruitless and wasteful expenditure.
Masebe said the charges included that Shimo “incurred and/or caused the Gauteng Department of Finance (GDF) to incur irregular expenditure of R2.1 million when he signed the Shimo Project charter. Shimo was not procured in a fair, equitable, transparent, competitive and cost-effective manner and through an open tender process.
“He caused the GDF to incur fruitless expenditure when he paid Shimo a cancellation fee or R1 million,” Masebe said.
Lumka was found guilty on two charges amounting to more than R50m and was acquitted on the third charge.
Dismissal was found to be the only appropriate verdict.
“The evidence shows that Mr Lumka was derelict in an egregious manner in his conduct pertaining to the charges for which I found him guilty. He ignored not only legal advice, but went against a prior collective decision that there be no further payment to Novell,” Masebe said, quoting the presiding officer’s ruling.
He said the department had asked state attorneys for advice on whether to institute criminal and civil claims against Lumka.
Last night, Lumka said the allegations against him were false and that he reserved his right to take legal action against the department.
In 2011, Lumka was given a written warning for awarding a tender of R1m to a liquidated company, Wardle, Ndhlela & Mahlangu, to conduct a disciplinary hearing against a chief director, Alfred Khana, for allegations of fraud, sexual harassment and tender irregularities.
Lumka confirmed the previous ruling against him but said he was not responsible for that appointment.
“I just accepted that ruling against me because I was the head of department.”
The Star