Ithala chief gets written warning

2010-05-14 00:00

KWAZULU-NATAL MEC for Economic Development and Tourism Mike Mabuyakhulu has confirmed that Ithala Bank group chief executive Sipho Shabalala was given a written warning over the irregular awarding of a tender.

Bhomber Chithey Consulting Projects was awarded a tender worth over R150 million for school buildings without the tender being advertised.

“After deliberating on the matter, the task team found that no tenders were advertised. The reason given was that Bhomber Chithey had presented a different model of delivery when compared with the normal way of managing delivery of public works. Indeed, the task team and the board felt that the deli­very had been faster and better co-ordinated.

“The board was satisfied that there were no personal benefits that accrued to [Shabalala] with this appointment. However, the board felt that even though the speed of delivery had been quick, required tender procedures [should] not have been flouted. For this [Shabalala] was given a written warning.”

Mabuyakhulu was addressing journalists in Durban to cla­rify allegations of mismanagement and corruption by Ithala Group, which made headlines recently. He denied that Shabalala had been double-paid.

Before being seconded to Ithala, Shabalala was head of KZN Treasury. The MEC explained that because his Treasury salary was lower than the package offered by Ithala, the bank paid the difference between February and October 2009.

On another project involving a R3,4 million apartment unit, which was awarded to the company Dolphin Whispers, Mabuyakhulu said auditors ­KPMG found that certain officials from Ithala acted negligently when handling the loan award. Disciplinary processes against the officials involved — but not charges — were recommended.

Regarding a loan of R55,2 million to Zee-Net CC, which was supposed to build a residence but encountered problems before the project was completed, the MEC said Ithala took legal action to recover the loan.

The property was sold to Ithala for R20 million in January.

Another issue involving Ithala that made headlines was the failure of co-operatives to honour repayment agreements.

Mabuyakhulu said consul­tants KPMG and Excellent Works were commissioned to review the co-operatives loan book and identify shortfalls requiring management attention.

He concluded that the government believes Ithala has a strategic role to play in KZN as a development finance institution and a lender of last resort.

“We have appointed a debt collecting company, which is embarking on a no-holds-barred drive to recover money owed to Ithala by our creditors.”

THE Witness reported in November that five directors who were involved in three major developments in the city were the subjects of a forensic investigation into how Dolphin Whispers managed to secure a R48 million loan from Ithala Bank, when the maximum loan limit was R15 million. The directors included the granddaughter of former president Nelson Mandela, Nandi Mandela.

The company went into liquidation in 2008 after failing to pay a company it hired to fix defects. It also defaulted on its loan to Ithala.

Three of the five directors of Oceanspray, the company awarded the contract by Msunduzi Municipality to develop the Camps Drift waterfront, are also directors of Dolphin Whispers. They are Mandela, Vaughn Charles and Craig Simmer.

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