Forensic reports into alleged abuse of R230m drought funds damn Amatola Water CEO

The suspended CEO of Amatola Water in the Eastern Cape, Vuyo Zitumane, allegedly awarded tenders at inflated prices. Picture: Ayanda Ndamane African News Agency (ANA)

The suspended CEO of Amatola Water in the Eastern Cape, Vuyo Zitumane, allegedly awarded tenders at inflated prices. Picture: Ayanda Ndamane African News Agency (ANA)

Published May 10, 2020


Cape Town - The suspended chief executive officer of Amatola Water in the Eastern Cape, Vuyo Zitumane, allegedly presided over an organisation that manipulated supply chain management processes and awarded tenders at inflated prices.

She also “irrationally” facilitated the retrospective reinstatement of fired South African Municipal Workers’ Union (Samwu) member Victor Totolo, leaked sensitive information to the media, and mobilised workers against her employer.

This is according to the preliminary findings of a damning forensic report compiled by Open Water Advanced Risk Solutions (Pty) Ltd (Open Water). The company was appointed by Human Settlements, Water and Sanitation Minister Lindiwe Sisulu in February this year to probe the alleged abuse of R230 million in drought relief funds by the Amatola Water Board.

It investigated the alleged procurement irregularities at Amatola Water and the abuse of millions set aside for projects to harvest rainwater, utilisation of water tankers and the drilling of boreholes, among others.

Zitumane on Friday dismissed the forensic report as a “smear campaign” designed to remove her from her position.

This came as another forensic report made adverse findings against Zitumane’s counterpart in Limpopo, Lepelle Northern Water (LNW) CEO Phineas Legodi. He has been accused of fraud, corruption and bribery in connection with a R40 million debt collector tender awarded to a service provider called Phembane.

According to the Amatola Water report, Zitumane awarded R60 million worth of drought relief contracts to 18 service providers at inflated rates. She approved a rate of R4310 per trip while municipalities like Buffalo City paid R3200 for the same service.

The report found Zitumane breached her fiduciary duties in that:

She provided, disseminated or caused to be disseminated sensitive information of Amatola Water to the media for publication to the detriment of the water utility’s repute;

Utilised the resources of Amatola Water to lobby, mobilise and incite the labour union against the board for personal gain disguised as genuine labour demands;

Authored a series of correspondence in aid of Samwu’s efforts to embark on a strike for historical demands in consequence of which she reprioritised the budget to make good on the promise made to the union;

Irrationally facilitated the retrospective reinstatement of Totola with full benefits despite internal and external legal forums upholding the decision to fire him;

The retrospective reappointment of Totolo with benefits is void of any legally plausible justification and may amount to unnecessary committal of Amatola Water’s funds.

The report added: “Ms Zitumane conceded that she provided the information to the union and drafted correspondence which the union utilised to make demands on the organisation, but that it was to create the guise with the union that she supported them while in fact, she held the interest of the organisation”.

On April 28, Zitumane also deposed an affidavit in which she maintained her innocence and blamed her woes on Sisulu’s advisor, Mphumzi Mdekazi and former Amatola Board chairperson Nokulunga Mnqeta.

She accused Mdekazi, who has been described by some as a “corruption buster and disruptor” in the department, of engineering her sacking because she had resisted his alleged attempt to direct tenders to his cronies.

“The purpose of the affidavit is to present facts to illustrate corruption and extortion perpetrated to me in order to advance the interests of Mr Mphumzi Mdekazi on specific projects which will be detailed herein this affidavit,” Zitumane’s affidavit said.

She claimed she had met Mdekazi on August 12, 2019, at a meeting arranged by Mnqeta to present Amatola Water’s status, and submit the board’s report “on the irregular expenditure which was incurred by the board”. Zitumane further claimed that Mdekazi allegedly promised to ensure funds for sand abstraction projects were released in exchange for R35 million.

Mdekazi on Saturday denied any wrongdoing, saying Zitumane was desperately trying to divert attention from the irregularities uncovered by the forensic report.

He said he had met Zitumane twice in his life: in a meeting she referred to and again at an airport in the Eastern Cape when he was travelling with his mother and wife.

“She came to greet my mother and wife and left. What I am sadly picking up from her desperation and diversionary tactics is that I am even responsible for both witchcraft and bad weather. The reason for that is because she forgot that, it is the board that employs and it is it that fires or suspends,” said Mdekazi.

Former Amatola Board chairperson Mnqeta also rejected Zitumane’s accusations in her own affidavit filed on May 7, 2020.

“Zitumane was placed on a precautionary measure pursuant to the commissioning of a forensic investigation by the Minister a week ago. I further became aware of a so-called deposed affidavit by Mrs Zitumane wherein she stated that she met Mr Mdekazi on August 12, 2019, at a meeting that was arranged by myself.

“This statement is incorrect and presented in a way that creates the impression that I was instrumental in creating or pursuing a network of patronage for fraudulent purposes,” Mnqeta said in her affidavit.

Compiled by chartered accountant Dr Len Konar, of the Outsourced Risk and Compliance Assessment (ORCA), the forensic report into allegations of irregularities at LNW in Limpopo painted a picture of a totalitarian management style by Legodi, management inertia, tender fraud and corruption, as well as collusion between the state-owned enterprise and service providers.

It found that contracts such as the Giyani Project (R2 billion), Gobela Consulting, CS Security and Falaaz Trading were awarded to service providers “not meeting minimum tender requirements, charging exorbitant prices supplemented by inadequate technical knowledge and skills has contributed significantly to LNW’s dire financial position”.

The report questioned the contract between LNW and Phembane, a “highly conflicted” firm, appointed to collect a R507 million debt from the Mopani District Municipality (MDM).

“The agreement appears never to have been presented to the Board for approval; consequently, the likelihood of fraud, corruption, bribery and kickbacks needs to be ascertained between Phambane, LNW’s Chief Executive, LWN’s legal adviser and a few others, including MDM manager”.

It recommended the “immediate suspension” of Legodi together with LNW’s financial officer and legal adviser respectively. It called for the appointment of an external interim CEO to run LNW while the trio's disciplinary hearings were processed.

Legodi yesterday said the ORCA report was a “draft” which was yet to incorporate his version of events.

“I am still busy responding to the issues raised. The deadline is on May 12. I am shocked that the report is in the hands of the media before it can incorporate my comments and be finalised. In other words, it's premature that I can be drawn into public engagements on the report that is still a draft. It wouldn't hurt to wait until it is finalised and reflective of my impressions,” Legodi said.

The report comes a few months after the Special Investigating Unit (SIU) raided LNW’s headquarters in Polokwane and left the premises with official documents and computer hard drives.

Sputnik Ratau, the spokesperson for the Department of Human Settlement, Water and Sanitation, said the Amatola and Lepelle forensic reports concluded the first phase of the investigations into allegations of maladministration announced by Sisulu during her budget vote.

“In addition, there are on-going investigations related to irregular expenditure, mismanagement and governance issues at the Amatola Water Board in the Eastern Cape, as well as Lepelle Northern Water Board in Limpopo Province. The CEO of Amatola is currently on precautionary suspension to allow the investigations to continue”, said Ratau.

The ANC Women's League (ANCWL) on Saturday defended Sisulu, saying she was a victim of a smear campaign for taking action against “management and governance issues” which plagued the affairs of Amatola Water and Lepelle Northern Water respectively.

“The tactics of tarnishing Minister Sisulu’s image by subjecting her to courts of public opinions is a cowardice approach. We challenge those who have evidence of Minister Sisulu acting unlawfully or involved in any fraud and corruption to approach law enforcement agencies,” said ANCWL secretary-general Meokgo Matuba.

Sunday Independent

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