More drama at Mpumalanga growth agency as board chair resigns in a huff

Mega CEO Xola Sithole
Mega CEO Xola Sithole

The board chairperson of Mpumalanga Economic Growth Agency, Davis Mculu, has resigned in anger after a failed attempt to remove the parastatal’s chief executive, Xola Sithole.

Directors of the growth agency had illegally put Sithole on suspension on February 4 on unspecified charges and proposed an exit package, which would see him being paid for the remaining months of his contract that is due to expire in December.

Read: Questions raised over Mega CEO Xola Sithole’s suspension

City Press has seen Mculu’s resignation letter to Mpumalanga Finance and Economic Development MEC, Eric Kholwane. Mculu resigned on Saturday.

Kholwane had accused the board of having acted illegally when they suspended Sithole without his approval. Such action, Kholwane said, constituted improper conduct and was in violation of the Mega Act, Companies Act and the Public Finance Management Act.

“I am of the view that the failure by the growth agency board members constitute improper conduct … the board members’ improper conduct has increased the agency’s exposure to non-adherence with the applicable prescripts,” the MEC said.

Kholwane had given Mculu and the eight other board members until today to explain why he should not terminate their membership. It is expected that more board members will resign this week.

Mculu said in his letter that the board had wanted to conduct a forensic investigation into the growth agency’s affairs, which they could not do with the chief executive in office.

“The organisation needs serious recapitalisation for it to survive and be sustainable hence the board developed a 12-point plan to turn around the growth agency’s business in January 2019,” Mculu said in his resignation letter.

“I however wish to express my utter dismay that the provincial executive committee finds it justified to protect the chief executive who is suspected to have looted the Government Nutrition Programme that is meant to cater for school children and patients from the poorest of the poor from our communities. There are allegations that money was looted from this programme in huge numbers of no less than R3 million a month,” he said.

Mculu said emerging farmers and suppliers of the programme could not be paid as result and some farms had collapsed.

Sithole said he would look into Mculu’s allegations before responding. Sithole was suspended alongside chief financial officer, Evert Lodewyk, and general manager for funding, Gijimane Dladla.

Sources within the growth agency said that Sithole was targeted because he did not approve of irregular transactions, which had threatened to collapse the institution before he took over.

The sources said that Sithole was being victimised for:

• Refusing to give R5 million loan to SA Go Fibre (Ltd), a company owned by the growth agency secretary Petunia Morgan’s son. The company did not meet lending criteria and Morgan allegedly worked with her son in pursuing litigation against the growth agency for declining SA Go Fibre’s application in terms of the Promotion of Access to Information Act to find out why its loan application was declined;

• Questioning the allocation of R3 million and R8 million to Raizcorp and Dalamba Victorious Trading Enterprise (Pty) Ltd respectively without procurement processes being followed; and

• Questioning the allocation of R10 million for Township Economy Revitalisation to an entity called Spazamart.

Kholwane defended the three transactions and said there was nothing untoward about them.

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