Public Works in illicit lease wrangle

2014-04-27 15:00

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The public works department has uncovered 2?717 allegedly dodgy lease agreements after a forensic investigation revealed that its own officials might be working in cahoots with private landlords to fleece government.

The report, which was conducted by auditing firm Deloitte, a copy of which City Press has seen, reveals that:

.?In 578 cases, no documents existed to prove lease agreements – but money was being paid anyway;

.?The department was paying rent on offices that stood empty;

.?Some landlords appeared to be double-leasing their buildings – and when officials went to check, they found chain stores operating from buildings for which the department was paying rent; and

.?In some cases, even when leases expired, the department continued to pay rent.

Public works is currently reviewing its asset register because it’s not actually sure how many leases it is paying.

An official in the department, who spoke on condition of anonymity, said: “When investigators checked whether the SA Police Service was occupying that building [the Santam Middestad building], they found the Post Office renting that same space.

“Sometimes they go there and it’s meant to be a government department but you’ll find it empty. When you ask the government department why they are not there, they will tell you that building was once an option but they were unhappy with it and they have another building which the department is also paying for.

“In most of them, the department doesn’t have copies of lease agreements or what terms are in there or when it started and when it will end,” said the official.

The nationwide probe was prompted by a similar investigation into lease agreements involving businessman Sayed Hoosen Mia in the department’s Joburg region.

The department is suing Mia and two of its own administrators, Thabo Moagi and Desmond Simamane, for R8?million.

It claims that Moagi and Simamane secured government tenders for Mia valued at R40?million.

The report also reveals more than 90% of all lease agreements nationwide were directly “negotiated” with landlords instead of being put out to tender.

In its report, Deloitte recommends the Special Investigating Unit (SIU) probe all officials and landlords who might be involved in questionable deals.

But SIU spokesperson Boy Ndala said: “The SIU can investigate a matter only if it authorised to do so by a proclamation.

There is no proclamation relating to the leases mentioned based on the report referred to.”

Public works Minister Thulas Nxesi’s legal adviser, Phillip Masilo, said the minister would publish the findings of the audit “soon”.

Masilo declined to comment further, saying only: “The audit shows that Minister Nxesi has inherited a rotten department.”

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