Where is the money?

2017-05-21 05:51
Virginia Petersen.

Virginia Petersen.

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Cape Town - In an unprecedented move, MPs are intent on pursuing a retired former director-general of social development to account for more than R1 billion in irregular expenditure.

Members of Parliament’s standing committee on public accounts (Scopa) are determined to get Virginia Petersen, the former head of the SA Social Security Agency (Sassa), to explain her part in the turmoil there.

However, finding Petersen – who resigned from Sassa last year – has proved a stumbling block.

“We have not been able to locate her contacts. We even tried to solicit assistance from Sassa,” Scopa chairperson Themba Godi told the meeting on Tuesday.

Need criminal action

Godi said they had engaged Parliament’s legal department to try to locate Petersen and give her an opportunity to tell the committee how millions of rands’ worth of irregular, fruitless and wasteful expenditure were incurred on her watch.

“Any declared fruitless expenditure must be pinned to an individual, who must pay it back if they are still alive. If it is irregular, it is a question of determining whether you require disciplinary measures against those individuals or you need criminal action,” said Godi.

At issue is R1.1bn incurred by Sassa and approved by Petersen. The bulk of the irregular expenditure was spent on the extension of contracts with security firms (R414m); on the unlawful lease contract concluded with Trifecta/Delta (R223m); and on forensic investigations by a company hired by Sassa (R74.6m).

The focus the past few days was on the R316m paid by Sassa to Cash Paymaster Services (CPS) in 2014, after it claimed that it had enrolled more grant recipients and beneficiaries than it was contracted to do.

In its investigation, amaBhungane found that Sassa and its then chief executive officer (CEO), Petersen, accepted the CPS claim at face value and paid over the money – despite the fact that the five-year contract awarded in 2012 required CPS to undertake payment and enrolment. For that, CPS was to be paid an all-inclusive fee of R16.44 for each grant recipient.

Problematic transaction

Civil society organisation Corruption Watch petitioned the High Court in 2015 to have the payment reversed. Sassa and CPS opposed the legal action for two years, until Sassa withdrew its objection last week.

Parliament heard that the agency had paid about R100 000 in legal fees for three counsels, but there were still outstanding invoices.

MPs demanded that Sassa supply Scopa with the legal action on which it based its decision to oppose the Corruption Watch case – and the legal action to now withdraw that opposition.

Thokozani Magwaza, Sassa’s current head, called the R316m payment “a thorn in our lives” and described it as “a very problematic transaction that has taken place”.

Magwaza said after explaining last year why they felt the amount had been a legal transaction, he later found “glaring errors”, adding: “We also received legal advice that it may not be prudent to carry on defending the issue because of those glaring errors in the contract and in the transaction”.

Given a chance

The DA’s Tim Brauteseth suggested that Sassa should institute civil action against Petersen, saying politicians could be removed by the president but “accounting officers can go to jail”.

Brauteseth said that, since the person responsible for the irregular expenditure had left Sassa and could not be dismissed, a civil claim against her was the only option.

“We cannot allow a CEO who presided over R1.1bn of irregular, fruitless and wasteful expenditure, to walk away. It cannot be a signal [of acceptability] to future CEOs out there.”

Social Development Minister Bathabile Dlamini leapt to Petersen’s defence, saying she should be given a chance to respond to the misspending of R316m on the re-registration of grants.

Dlamini warned MPs not “to push everything to Virginia”.

Provincial government

“It would be good for all of us to have proper information. Virginia did not institute processes. She came in when she had to approve and in such a situation, you put your trust in your officials”, said the minister, adding that Petersen had motivated why she had to pay that amount. The remaining team asked for Treasury approval, which was given.

“Because just one non-governmental organisation challenges that, condoning the action is withdrawn. I want to know if there is any other department which has faced that in South Africa.

“Whatever decision we make must be based on evidence,” said Dlamini.

She said the expenditure accusations were damaging someone who had brought systems to Sassa...a tough place.

“Virginia did her work excellently”, she added.

City Press contacted Petersen for comment on Friday. “I don’t speak to journalists,” she said, before ending the call.

Petersen is a former director-general in the Western Cape premier’s department. She served under Ebrahim Rasool, Lynne Brown and briefly under Helen Zille.

Petersen took early retirement from the provincial government a few months after Zille took office.

Zille confirmed that Petersen retired while being investigated for her role in the discredited Erasmus commission of inquiry, appointed by Rasool to probe allegations of maladministration and spying in the City of Cape Town.

“She resigned before we could proceed with that investigation. We could not proceed because she was no longer in office”.

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