Exclusive: Parastatal boss exposed after bagging R4.4m golden handshake

2015-04-05 15:00

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A failing Mpumalanga parastatal’s former CEO is believed to have quit his job to escape consequences of misspending at least R40m

An Mpumalanga parastatal boss who bagged a R4.4?million golden handshake and resigned to escape a shake-up and possibly being brought to account on corruption has finally been exposed – but it remains unclear if any action will be taken against him.

The former Mpumalanga Economic Growth Agency (Mega) CEO, Advocate Boyce Mkhize, was personally implicated by a forensic audit report investigating R40?million worth of procurement and financial irregularities at Mega.

Mkhize hurriedly resigned last August with three years and four months still remaining on his five-year contract after Economic Development and Tourism MEC Skhumbuzo Kholwane disbanded the Mega board for poor performance.

Mkhize negotiated a golden handshake – which consisted of two years’ salary – despite a number of corruption allegations that had been made against him. At the time, Mkhize denied any wrongdoing and claimed he was stepping aside to give the interim board a fresh start.

However, the report – compiled by Mega’s audit committee with the help of audit firm PricewaterhouseCoopers and finalised earlier this year – tells a different tale entirely. The report, a copy of which is in City Press’ possession, is the first official confirmation that during Mkhize’s two-year stint, the struggling agency was riddled with corruption.

The report makes a number of findings against Mkhize, including that he personally:

.?Incurred about R25.8?million of irregular expenditure;

.?Paid R3.3?million to three service providers after their contracts expired;

.?Gave a number of service providers, including a marketing company, advance payments to the value of R900?000 before they did any work;

.?Overpaid two companies by R5.6?million, way above the 10% allowed for variation when a project costs more than initially planned;

.?Understated irregular expenditure to Treasury to the tune of R4.4?million; and

.?Meddled with supply chain management policies and the composition of bid committees, as well as unilaterally changed bid-committee decisions to appoint certain companies.

Mkhize’s other improprieties, the report found, included hiring service providers not registered on Mega’s database and which had not submitted certain required documents, such as tax clearance and black economic empowerment certificates.

The committee also picked up evidence of businesspeople who registered more than one company on the database to benefit multiple times on tenders.

The report found 76 of 439 companies on the database had the same directors, 108 companies used the same fax number, 42 companies had the same mobile phone number and 181 used the same landline.

“I am certain you are aware I am no longer Mega CEO and I am sure you realise that trying to elicit a comment from me on Mega documents is grossly inappropriate?… Please note that there is no transaction I presided over that was not backed up either by a [service-level agreement] or necessary supporting documents or, in certain circumstances, even sanctioned by the board,” he said. “Finally, may I be allowed to enjoy my privacy and my peace after Mega.”

A Mega official speaking on condition of anonymity told City Press: “It is surprising why this man was given a golden handshake for corruption instead of doing a forensic investigation. The current board is doing nothing and is continuing where Mkhize left off – victimising chief finance officer [Velile Mqhum], who has been exposing the corruption.”

Asked for comment, Mkhize again denied any wrongdoing and declined to respond to the audit committee’s report findings.

Mega is a critical institution established to unlock job opportunities, but it has failed to give start-up loans to small businesses and attract investment to the province for many years. It has been undergoing a restructuring process over the past five years since Premier David Mabuza decided to merge the Mpumalanga Agricultural Development Corporation, Mpumalanga Housing Finance Company and Mega into one entity.

Mabuza told the ANC provincial general council last weekend Mega had been underperforming for a long time and had cost the province investment opportunities.

“We have not been fortunate in getting the right leadership to lead this organisation. I must admit I’ve struggled to get Mega to shape up. This year I won’t spend time in the province?…?I’ll go out to find investors,” he said.

Mega has been spending its R330?million annual budget on its own survival. Recently, Mabuza entrusted Mega with bulk water supply projects worth R4.1?billion, but realised his mistake and gave the job to Rand Water.

Newly appointed Mega CEO Xola Sithole and department of economic affairs and tourism spokesperson Mohau Ramodibe did not respond to written questions sent to them last week.

It is therefore unclear if the province plans to take any action against Mkhize.

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