Johannesburg - The ministry of Labour awarded a R1.9 billion tender to a company at which a director is related to Labour Minister Mildred Oliphant.
Now Public Protector Thuli Madonsela has launched an investigation into conflict of interest allegations against yet another member of President Jacob Zuma’s cabinet.
The probe follows claims by United Democratic Movement (UDM) leader Bantu Holomisa that Oliphant failed to disclose that she was related to a director of the South African division of one of the world’s leading management consulting, technology and outsourcing services companies, Accenture.
In his complaint to Madonsela, Holomisa said the director was Oliphant’s close relative and that “as a result of this apparent corrupt relationship, Accenture SA was procured to a closed tender and the minister did not declare her relationship to Accenture”.
Madonsela, through her spokesman Oupa Segalwe, confirmed that following this week’s assessment of Holomisa’s complaint, she would inform Oliphant that she intended to investigate the allegations.
By April last year, Accenture had been paid more than R33.5 million.
Accenture was appointed after the department’s R1.9bn public-private partnership with Siemens Business Services to improve its IT capability, leverage expertise and specialist knowledge failed.
Accenture’s appointment was through a deviation from procurement processes and excluded competitive bidding processes, Holomisa said.
Holomisa’s complaint includes that the Compensation Fund has paid R546m to companies in advance without any invoices to reconcile the payments.
In his 2012/13 audit of the fund, the auditor-general noted that its management did not promote a culture of protecting and enhancing the best interest of the entity, which was evident from the significant backlogs in processing of claims, making significant advance payments to service providers without validation processes being performed. According to the AG, the advances were paid to medical service providers.
Due to incidents where claims went unpaid, and in order to mitigate against the litigation, the fund opted for making advance payments to the medical services providers.
Holomisa said the Compensation Fund appointed a debt collector, New Integrated Credit Solutions (Nics), which had been paid about R160m since 2010 when the fund’s debtors’ book stood at R3.3bn.
The debtors’ book stood at R8.9bn last year, which Holomisa said was evidence that the debt-collecting firm was not effective.
The fund had set itself an ambitious target of eliminating its debt book by 2016 and boasted that it was in a sound financial position by March 31 last year, but received a disclaimer of opinion – the worst possible audit outcome – from the AG.
In its 2012/13 annual report, the Compensation Fund says it intensified debt-collection procedures resulting in improved collection of revenue of R5.8bn compared to R3.7bn in the previous financial year.
The collections company is said to charge a 10 percent fee on recovered amounts.
“The contract was deliberately manipulated and changed by Compensation Fund commissioner Shadrack Mkhonto to deviate from the initial tender specification whereby Nics was supposed to collect on older debts beyond 180 days. Nics collects on simpler cases to make quick cash while internal staff (are) also pursuing the same cases,” reads Holomisa’s complaint.
Holomisa said the commissioner flatly refused legal advice by senior counsel that the contract should have been terminated on grounds of poor performance.
Some of Nics’s other clients include the Unemployment Insurance Fund, Absa, African Bank, Avbob and Bonitas, according to the Tshwane-based firm.
Mkhonto said he was aware of Holomisa’s allegations as they had received a copy of the complaint.
However, Mkhonto declined to comment further, saying the matter was sub judice as Madonsela was now investigating.
“We’ll await the outcome of the investigation,” he said.
In November, The Sunday Independent reported that Oliphant instructed then-labour director-general Nkosinathi Nhleko to withdraw a forensic investigation into the fund and Mkhonto’s suspension.
Nhleko was then ousted and seconded to the Public Service and Administration Department but has made a spectacular comeback as Oliphant’s cabinet colleague.
At the time, Oliphant told the National Assembly’s standing committee on public accounts that the auditor-general’s report and the department’s own internal audit of the fund had referred the matter to the Special Investigating Unit (SIU), which was the reason for her stopping the forensic investigation Nhleko was pursuing.
But the SIU told The Sunday Independent that no proclamation to investigate the matter had been issued and that there was no request from the department, which is required to make a formal request for any probe.
Accenture’s Zweli Mnisi said when the claims against the firm’s director were first made in April this year, the company looked into this matter and found that it had complied with all relevant procurement, disclosure and declaration of interest rules with the Ministry of Labour.
“We are not aware of any additional review or investigation but will co-operate with the authorities on this matter as appropriate,” Mnisi said.
Nics claimed it was not under probe by the public protector and had not received any enquiry or notice of intention to investigate from Madonsela.
In a statement, the company said the allegations of deliberate contractual manipulation and deviations from the initial tender specifications were totally without foundation. It said suggestions of nepotism were incorrect and irresponsible while the statement that the debtor’s book increased from R3.3bn in 2010 to R8.9bn last year needed to be placed in the proper context.
* Two senior Department of Labour officials would not comment on Madonsela’s probe, saying Oliphant was yet to appoint a new spokesperson following the departure of Musa Zondi to the police ministry.