ANC spokesperson Pule Mabe has been implicated in an extraordinary multimillion-rand tender awarded last year by a subsidiary of the North West government.
Mabe, who was an ANC member of Parliament at the time a R49-million tender was awarded to Mvest Trust by the North West Development Corporation (NWDC), was allegedly intimately involved in the deal. MPs are prohibited from receiving any benefit from a tender with an organ of state.
He and his business associate insist that he had no position in the trust that was awarded the tender.
But the trust holds Mabe’s patent rights for the development of an app and lists the former MP’s business associates as trustees.
The R49-million payment was made in June last year.
Mvest Trust was registered in March last year and entered into a service-level agreement with NWDC on April 4 2017. The trust submitted an invoice on June 14 2017 and was allegedly paid within two days.
“That money was paid within 48 hours even though procurement processes were not followed,” one insider told the Mail & Guardian on condition of anonymity. “The board decided to hold Pule accountable and wrote a letter to him about this transaction.”
The insider further alleged that the payment was never approved by the board and was signed off by the then acting chief executive of NWDC, Mike Mthimunye.
“Mthimunye just disbursed the funds even though he doesn’t have the authority to sign off over R49-million. He was told by the [provincial] DG [director general] that he must follow NWDC’s internal procurement processes and he didn’t,” said the insider.
Provincial spokesperson Brian Setswambung said the payment was not approved by director general Lydia Sebego because the NWDC was responsible for the implementation of the entire project, including the procurement of goods and services.
He said the tender was to establish dry cleaning and laundry services as well as environmental projects in the province as part of the YEC initiative, which is described as “an innovative enterprise development platform anchored behind valid intellectual properties (IP) rolled out by the Mvest Trust”.
According to the NWDC’s executive, Mvest Trust was paid for marketing, branding, recruitment, training as well as infrastructure and logistical arrangements under YEC.
Mabe confirmed that he had indeed appeared before the NWDC board with the trustees of Mvest Trust at its invitation to assist in explaining the enterprise development model and the patent rights.
Mvest Trust documents describes it as a business that was “established to manage and distribute business opportunities aimed at job creation and enterprise development”.
The fallout from the tender being awarded to the Mabe-associated trust includes an outcry from the NWDC board. “Some of us have made it clear in the board that we will not be associated with this payment. We were still waiting to go through a proper process of [the] appointment of a service provider to do the project [but] then a payment was made,” an insider said.
“In terms of delegation of authority, that amount should have gone through the board. The acting CEO [chief executive] had no authority to sign off on an amount over R5-million,” said another source familiar with the inner workings of the NWDC.
The board, it is claimed, has also resolved to take action against those involved in the transaction.
One source inside the NWDC said even the chairperson, Dali Duma, had discovered after the fact that Mvest Trust had been paid without procurement processes being followed.
When contacted for comment and clarity on the transaction, Duma referred the M&G to the office of NWDC’s chief executive, Tshepo Phetla, who was appointed later in 2017.
Phetla’s office could not provide a board resolution that had approved the appointment and payment of Mvest Trust without going through a tender process.
Instead, the NWDC produced a board approval of the concept of YEC.
“A close-up report has been finalised and reviewed by the management of the NWDC. It will be presented to the board during its next meeting ,” Phetla’s office said.
Mabe’s involvement first raised eyebrows when his business associates, Tinyiko Mahuntsi and Eulender Rakoma, were allegedly handpicked after making a presentation in Premier Supra Mahumapelo’s office in January last year prior to the registration of Mvest Trust.
Mahuntsi and Rakoma were also co-directors in another entity called Enviro Mobi, from which Mabe resigned only in January this year.
Records further indicate that Mahuntsi had previously worked at Mabe’s KG Media, the company that the public protector found had been improperly awarded a contract by the Passenger Rail Agency of South Africa (Prasa) to produce Hambanathi magazine. The contract was unlawfully extended.
Last year Mabe was fined 15 days of his salary and reprimanded by Parliament for flouting the members’ code of conduct.
The code of MPs prohibits parliamentarians from “receiving any benefit including but not limited to a tender or a contract with an organ of state”. They are also required to declare their directorships.
The patent, his close business association with the trustees and his appearance before the board of directors suggest he was intimately involved in the R49-million deal.
But Mahuntsi insists Mabe had no role in the Mvest Trust.
“Mr Mabe has got no role unless in instances wherein the use or modifications of patents is required for a specific enterprise development assignment,” he said.
Mabe said his involvement was only as a “patent holder” because Mvest Trust uses the licence rights of Mvest Pty Ltd, his own company.
“I have never been on record as saying I am not involved. It will be irresponsible of me to create innovations and renege from my own ideas, which are meant to facilitate economic development. I have worked with the trustees of the Mvest Trust and it is the bonds of trust and confidence that made me believe that they would be capable of delivering. They also worked on these things in the past and this was part of empowering them to be able to take an enterprise development initiative on their own,” said Mabe.
He denied claims that he used his political influence to ensure that his business associates were appointed by the NWDC because of his proximity to Mahumapelo.
“I have not gone out myself to impose myself or those entities that are licensed to distribute these opportunities to any public sector institutions. I did declare my interests in the patents as a member of Parliament.
“I don’t hide myself just because there is something about ‘Supra must go’ and then pretend as if that everything done under him was not qualified … I am earning an incentive as a developer,” said Mabe.
North West’s damning audit paints a picture of an unstoppable slide
The state of North West province’s public finances is on a “downward spiral”, and its government has shown a lack of accountability and commitment to clean administration.
This is the summary given in the auditor general’s latest report on the national and provincial audit outcomes for 2016-2017, which details systemic noncompliance, wasteful expenditure, a collapse in governance and serious weaknesses in leadership in the province.
The North West provincial government’s audit outcomes have regressed over the past four years. Only 32% of the departments and public entities audited obtained financially clean audits in 2016-2017 compared with 46% in 2015-2016 and 62% in 2014-15 and 2013-2014. No public entity achieved a financially clean opinion in 2016-2017.
The report states that the office of Premier Supra Mahumapelo, as a key monitoring and oversight department, was an area of “specific concern” because it had maintained a qualified audit outcome for the past two years with increasing irregular expenditure.
Instead of working to address the weak control environment at the departments that were audited, the provincial leadership’s response was to “contest the audit conclusions”.
Most (91%) audited departments and entities had findings against them relating to irregular expenditure and nonadherence to procurement and contract management prescripts. This resulted in irregular expenditure rising from R3‑billion in 2015 to R3.6‑billion in 2016.
“As a result of this year-on-year increase and due to irregular expenditure not being investigated, the total unresolved balance for the province was R16.5‑billion,” said the report.
Three departments were to blame for close to 60% of the irregular expenditure, with community safety and transport management accounting for R880‑million. Health’s portion amounted to R714‑million, and public works and roads had a share of R550‑million.
In 2016, the province received R7.1‑million of conditional grant funding for 16 projects. Although 95% of the allocation was spent during the year, the auditor general said it identified instances where “targets of key projects were not achieved or where work was not completed at the desired quality”.
An example of this is a local government and human settlements housing project that was delayed for more than 20 months, incurring fruitless and wasteful expenditure. Poor project management and monitoring resulted in 503 housing units being demolished and rebuilt because of quality defects, even though the contractor had been paid in full.
The report says interventions did not have much effect on curbing the lack of accountability and consequence management. Its downward slide was inevitable “until such time as the pillars of accountability and good governance are put in place”. — Tebogo Tshwane