Water board ‘open to graft’

2017-07-02 06:00
Nomvula Mokonyane

Nomvula Mokonyane

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Water and Sanitation Minister Nomvula Mokonyane’s seizure of power at Umgeni Water and the suspension of its chief executive has raised fears that doors have been opened for lucrative contracts to be awarded to those who are politically connected.

This week, Mokonyane informed board members, whose four-year term ended on Friday, that she would not extend their contracts. Two weeks ago, the board suspended the entity’s head, Cyril Gamede, following allegations of tender corruption contained in an anonymous letter.

However, internal emails and letters obtained by City Press reveal that Mokonyane did not want Gamede to continue as Umgeni’s chief executive and that the anonymous letter implicating him in corruption may have been manufactured.

The same documents show that, in September, Umgeni Water’s board extended Gamede’s contract by two years. Last month, Mokonyane wrote to the board, informing it that Gamede’s contract should not be extended. She also reminded the board that, according to the National Water Act, she had the power to appoint and axe the heads of water boards.

In the letter, Mokonyane wrote: “It should be noted that, in terms of the draft handbook for the appointment of persons to boards and chief executives of state controlled institutions, I, as an executive authority, have the final discretion to decide and approve … In light of the above, I decided not to renew the contract of Mr Gamede as the chief executive of Umgeni Water.”

However, the board sought a legal opinion, which advised that “every water board must appoint a suitable person as chief executive of the water board for a renewable period”.

A board member said: “It was on this basis that we appointed Gamede for a further two years.”

A confidential letter written by Gamede last month to former board chairperson Andile Mahlalutye, which City Press has obtained, indicates that one of Umgeni’s board members told Gamede that if he didn’t pay a certain service provider, somebody would write to Mokonyane and complain about him.

In the letter, Gamede writes: “I was very concerned that I was threatened by a letter to be written to the minister, and now there is a hotline to the minister. This cannot be a coincidence.”

A senior government official close to Mokonyane said Gamede was regarded as a “stumbling block” who had “constantly refused to talk to service providers about tenders”.

Sources close to Gamede said that, since the beginning of the year, he had been inundated with calls from politically connected businesspeople who knew what contracts were coming up for tender at Umgeni well before they were advertised.

The board member said: “There is a lot of money at Umgeni. But for politicians to capture it, they have to get rid of Cyril and Mahlalutye.”

"Serious risk"

Last year, City Press reported that Mokonyane was pushing ahead with the merger of Mhlathuze and Umgeni’s water boards, despite misgivings by Treasury. In a strongly worded letter in September 2015, former Treasury director-general Lungisa Fuzile warned former water and sanitation director-general Margaret-Ann Diedricks that merging the water utilities could expose Umgeni “to serious risk, including a credit downgrade”.

Umgeni has a R600m loan from the European Investment Bank and has issued bonds in excess of R600m. Fuzile also told Diedricks that creditors could see the merger as a disestablishment of Umgeni, and demand that their loans be repaid immediately.

City Press further reported last year that Mokonyane had appointed Dudu Myeni – controversial chair of SAA and the Mhlathuze Water board, and an ally of President Jacob Zuma – as chairperson of the interim board that would oversee the merger of Umgeni and Mhlathuze. In November, the Pietermaritzburg High Court ordered that Myeni not be allowed to serve a third term as chair of Mhlathuze Water and that she should leave when her term expired. Mokonyane has dissolved that board, and it is not yet clear whether Myeni would be eligible to serve on the board of any new entity.

A senior executive at Umgeni said there were two major tenders in the works at Umgeni, which politicians and businesspeople were positioning themselves for.

“There is a massive R18bn tender coming up at Umkhomazi for bulk water provision, and there is also a desalination plant that is expected to cost upwards of R6bn,” the executive said.

Mokonyane’s spokesperson, Mlimandlela Ndamase, said: “Processes relating to the appointment of a chief executive are undertaken by the board and finalised in consultation with the minister. The board is aware that, when it solicited the views of the minister on the extension of the contract of Mr Gamede, the minister advised that, given the processes announced in 2015 on the establishment of a single water board for KwaZulu-Natal, it would be inadvisable to extend such a contract without an assessment on progress made towards the single agency.”

On Mokonyane’s removal of the board, Ndamase said: “The board’s term of office expired on June 30. The minister has not terminated the board; rather its term has expired. To this end, a process to appoint a new board has commenced and will be expedited to ensure stability at the utility.”

Mahlalutye and Gamede declined to comment.

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