Controversial businessman Roux Shabangu is one of the contractors the Department of Public Works is dragging to court. Photo: Thobile Mathonsi

Pretoria - Controversial businessman Roux Shabangu is one of the contractors the Department of Public Works is dragging to court, together with some former employees, to recover some of the R35 billion lost to fraud and wasteful expenditure.

The department has laid fraud charges against Shabangu and his former business partner Japie van Niekerk for allegedly benefiting from a fraudulent lease of the building at 114 Madiba Street.

The department has also filed an application with the Gauteng Division of the High Court sitting in Pretoria to nullify the lease deal, citing fraud and collusion. The civil matter will be heard in November.

At the time of the lease, Majestic Silver Trading 275 was owned by Shabangu and Van Niekerk. The pair have since fallen out. The department has accused Shabangu of fronting for Van Niekerk during the procurement process of the Madiba Street property.

The department wants to nullify the R137 million, 10-year lease with Shabangu. The amount Shabangu and Van Niekerk have to pay back would be determined once the fraud case has been concluded.

In the same matter, criminal charges have also been laid against former deputy director of property management Mokgaetji Bella Tlolane and former director Vusi Mashiyane. The two were found to have acted improperly in influencing the department to award a tender to Shabangu for more than nine years against the government’s BEE policy. The tender was for office space and parking bays for the Department of Human Settlements at 114 Madiba Street in Pretoria.

Tlolane was also found guilty of alerting Shabangu that the police wanted to lease his Middestad building.

On Monday, Public Works Minister Thulas Nxesi said the R34.98 billion losses were uncovered during the department’s review of about 1.3 million transactions of the Property Management Trading Entity (PMTE) dating back to 2001.

About R3.1bn was lost in 2012/13 and R60m in the last financial year. About R1.1bn was lost to fraudulent activities. The department will table its annual report in Parliament on Tuesday. Nxesi said transactions of bout R1.1bn have been referred to the Special Investigations Unit (SIU) and the department’s fraud investigations unit.

This year alone, 15 cases - including one related to the R240m upgrades to President Jacob Zuma’s Nkandla homestead - were referred to the SIU. Other cases include:

* An energy company paid R32m for services it did not render.

* 13 companies investigated for transgressions, ranging from procurement processes not being followed, to incorrect suppliers being appointed

* 23 other companies being investigated for defrauding the department. Of the 23, 15 are linked to procurement irregularities relating to Nkandla.

Other people the department is trying to recoup money from include former acting director general Solly Malebye. He was fired by former public works minister Geoff Doidge allegedly over border post tenders. Now, Nxesi wants R50m from him and service provider Virtual Buro. The case will be heard in the South Gauteng High Court in November.

Fraud charges have also been laid against former director of the prestige unit, Noloyiso Ntwana, for fraudulently paying contractors more than R63m to renovate houses for new government ministers in 2009. She was found guilty in a disciplinary hearing for breaching the government’s procurement policy and for appointing an unregistered quantity surveyor. She has been fired.

Another official, Keneilwe Motlhodi, faces charges in the Pretoria Commercial Crime Court for allegedly soliciting a R600 000 bribe from a service provider. She also has to undergo an internal disciplinary hearing.

Nxesi said going after the officials and contractors was not only about accountability but also promoting transparency in the department. “That transparency will help expose any irregularities. Accountability for all of us is the culture I am trying to inculcate at Public Works,” said Nxesi.

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