‘Outrageous’ handshake for Ithala boss

Quit with R2m: Sipho Shabalala.

Quit with R2m: Sipho Shabalala.

Published Aug 7, 2011


Sipho Shabalala, the man police say facilitated a R1 million “donation” for the ANC from a businessman who got a huge state tender, has been given an almost R2 million golden handshake to leave his government job.

The Sunday Independent this week saw documents which show that Shabalala, who headed state-funded development entity Ithala, was given the severance package on the eve of his court appearance on money laundering, corruption and racketeering charges.

Opposition political parties in the provincial legislature have expressed outrage at Ithala’s payment to Shabalala of R1 900 041, in cash, on July 31.

According to a 10-page document titled Settlement Agreement and Mutual Release, the payment represents R696 572 in respect of his salary that would have been paid during the unexpired period of employment. Then there is payment of R374 650 for leave that would have accrued, plus an R870 715 ex gratia payment.

Shabalala is key among the 25 accused in the Intaka case, along with the Speaker of Parliament Peggy Nkonyeni, Economic Development MEC Mike Mabuyakhulu and Gaston Savoi, owner of Intaka, a company that won a R42 million tender from the government and in the same month paid a R1m “donation” to the ANC in KZN, via Shabalala.

Shabalala’s contract with Ithala was due to end on October 31.

Last August he was suspended when he was charged, almost a year after our sister paper, the Sunday Tribune, exposed how he solicited the R1m from Savoi and allegedly had it paid into the trust account of Durban lawyer Sandile Khuboni, also charged.

IFP MPL and the party’s KZN shadow minister of finance, Roman Liptak, said: “The real test for those politicians who have shielded Shabalala for so long and smoothed his way from one plush government job to the next is whether he will be allowed to walk into another top management position within our civil service.”

The DA’s Johann Krog said the move was aimed at buying Shabalala’s silence. He said Shabalala had been rapped over the knuckles by co-accused Mabuyakhulu for a questionable R280m school project, which merited more serious sanction.

“The DA has consistently called on Scopa and the finance committee for disciplinary action on advice of all the law-enforcing agencies. The province could have saved his salary of more than R100 000 a month for the past year, and the R2m payout,” he said.

Krog insisted that had Ithala waited for his contract to expire in October, the cost to taxpayers to end the relationship would have been much less than a “shocking” R2 million.

ACDP MPL Jo-Anne Downs said: “It’s outrageous. If they wanted to get rid of him they could have instituted internal disciplinary action, but no, they had to pay him to leave,” said Downs.

Shabalala was this week furious that details of his package were leaked to the media.

He said, “I will not be surprised to learn that the intention of those who leaked this agreement to you is to vilify me in the court of public opinion as a greedy fat cat who ‘blackmailed’ the government to give me one final ride on the proverbial gravy train before setting off to enjoy his ‘ill-gotten gains’.”

He said he had signed a two-year contract with the Ithala board in October 2009 (this was after he had hastily been moved from Treasury to Ithala in January 2009). He said there was an understanding that he would have to apply for a full-term contract when the Ithala leadership position was eventually advertised, which happened two weeks ago and for which he was asked not to apply.

“Then came the suspension by the Ithala board in August 2010 with (MEC) Mabuyakhulu an- nouncing an intention to set up a task team that would monitor the developments relating to the criminal investigations and advise the board on the impact, if any, this had on his employment relationship with Ithala,” he said.

Shabalala said he hadn’t heard anything from Ithala or Mabuyakhulu about this matter until just a few weeks before we reported that Mabuyakhulu himself was set to join Shabalala as an accused in the Intaka matter.

He said the message from Ithala, at that time, was that the company wanted to summarily terminate his employment contract, pay him out for the remainder of his contract and obtain an assurance from him that he would not apply for the job of Ithala boss.

The Sunday Independent can reveal that Ithala agreed terms with Shabalala that they “fully and forever release each other from, and agree not to sue concerning any and all claims relating or arising from Shabalala’s employment relationship with Ithala and the termination of that relationship”.

Shabalala said he told them to “go fly a kite”.

“Then came the ‘sweetened’ offer of the agreement that has now been leaked to you. My initial decision was still that I would see out the rest of my contract and retain my right to apply for a job for which I received an excellent performance review at the time of my last employment assessment.”

Asked why he had acceded and accepted the board’s offer, Shabalala said his back was against the wall and he gave an array of reasons for this. He said following the attachment and freezing of all his assets it became impossible to successfully run his businesses.

By last week, he said, the bank had frozen his personal account with his Ithala salary in and was preparing to foreclose on his entire business portfolio to recover monies owed by his RJ’s restaurant in Hillcrest that went under at the beginning of this year.

He said his children were being threatened with expulsion from school because of unpaid fees.

Shabalala said the Ithala offer that he had so disdainfully spurned happened to be exactly what his bank was demanding to hold off from auctioning all of his assets, including his home.

“I decided to accept the revised offer,” he said.

Ithala board chairman Mandla Gantsho said an amicable agreement had been reached with Shabalala. - Nathi Olifant

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