BLF accuses ANC & EFF of sabotaging land expropriation

Black First Land First (BLF) condemns the betrayal of the landless by the African National Congress (ANC) and the Economic Freedom Fighters (EFF), with the strongest possible terms. The two parties have connived to waste ten months instead of amending the constitution to ensure land expropriation without compensation. The ‘public participation’ process by the Constitutional Review Committee (CRC) was a deliberate time-wasting strategy because it is not a requirement for amending the constitution.

The connivance between the two parties is a deliberate ploy to avoid amending the constitution while pretending to be committed to land expropriation without compensation. There will be no amendment of the constitution before the 2019 general election. The ANC and EFF will only expropriate the votes of the landless without compensation.

BLF has warned that the two parties are not serious about land expropriation. They just use it to get votes. The ANC and EFF jointly have the required 2/3rds majority in the National Assembly (NA) to amend the constitution but have not done so. They have instead embarked on a deliberate time-wasting process.

BLF calls on the people to demand land expropriation without compensation before 2019 elections failing which they must not vote for these two parties.

BLF is finalizing a process of taking land from the land thieves by direct action.

Issued by the National Coordinating Committee of Black First Land First (BLF NCC)
9 December 2018

Contact details

Black First Land First Email:[email protected]
Facebook: Black First Land First
Twitter: @black1stland1st
Website: www.blf.org.za

Deputy President: Zanele Lwana
Cell: +27799867225

National Spokesperson: Lindsay Maasdorp
Cell: +27 79 915 2957

Head of Media & Communications: Brian Tloubatla
Cell: +27 82 216 7664

Media Alert! #MngxitamaHomecoming rally!

Media Alert! #MngxitamaHomecoming rally!

Black First Land First (BLF) will host the #MngxitamaHomecoming rally, this coming Saturday. The rally will mark Mngxitama’s return home as the son of Tlokwe as well as the President of BLF. The rally will serve to launch BLF in the area and to kickstart the movement’s election campaign for the 2019 general election.

You are invited to the rally under the following details:

Date: 08 December 2018
Time: 10h00
Venue: Ikageng Stadium, Ikageng, Tlokwe, Potchefstroom, North-West

For media accreditation contact:

Brian Tloubatla
(Head of Media & Communications)
Cell: +27 82 216 7664

Issued by National Coordinating Committee of Black First Land First (BLF – NCC)

04 December 2018

Black First Land First Email:[email protected]

Zanele Lwana
(Deputy President)
Cell: +27799867225

Lindsay Maasdorp
(National Spokesperson)
Cell: +27 79 915 2957

Brian Tloubatla
(Head of Media & Communications)
Cell: +27 82 216 7664

BLF charges against EFF, Malema, Shivambu & others of fraud, theft, corruption & money laundering – 28 November 2018

BLF charges against EFF, Malema, Shivambu & others of fraud, theft, corruption & money laundering – 28 November 2018

Affidavit of Zanele Lwana in support of charges against EFF, Julius Malema, Floyd Shivambu, Brian Shivambu, Matsobane Phaleng and 26 others

I the undersigned Zanele Lwana do hereby make oath and state:

1. I am the Deputy President of Black First Land First (BLF), and I am duly authorized to depose to this affidavit on behalf of BLF.

2. Unless I state otherwise or the context of what I say indicates the contrary, I confirm that the averments contained in this affidavit fall within my personal knowledge and are to the best of my belief both true and correct. Insofar as I make submissions on legal matters, I do so on the advice given to me by my legal representatives, which I received during the preparation of this affidavit. Where I rely on fact outside my personal knowledge, I verily believe same to be true and correct.

3. BLF is a Black Consciousness, Pan Afrikanist movement which embraces the Sankarist leadership ethos. It is registered with the Independent Electloral Commission as a political party and is situated at 0514 Klampton Towers, 5th floor, cnr of Commissioner & Von Wielligh Street, Johannesburg.

4. The purpose of this affidavit is to provide evidence to the South African Police Services (SAPS) in support of charges of fraud, theft, corruption and money laundering against the those indicated in paragraph 6 hereunder, as well as the EFF, Julius Malema, Floyd Shivambu, and Matsobane Phaleng.

5. A VBS report titled ‘The Great Bank Heist’ which was commissioned by the South African Reserve Bank (SARB) and released on 10 October 2018, found that
from 1 March 2015 to 17 June 2018, R1.8 billion was unjustifiably received from VBS by about 53 persons. (‘The Great Bank Heist’ report. See link, http://www.politicsweb.co.za/documents/how-vbs-was-looted-the-full-report)

6. Advocate Terry Motau, the forensic investigator who inquired into the collapse of VBS Mutual Bank, accordingly recommended in the said report that action be taken to recover the lost monies from the undermentioned parties:

‘1. Vele and its associates + R936 million

2 Tshifhiwa Matodzi = R325 million.

3 Free State Development Corporation = R104 million.

4 Kabelo Matsepe = R35 million.

5 Sipho Malaba R34 million.

6 Phophi Mukhodobwane R30 million.

.7 Paul Makhavu = R30 million

8 Robert Madzonga = R30 million.

9 Andile Ramavhunga = R28 million.

10 Solly Maposa = R24 million

11 Ralliom Razwinane = R24 million.

12 Firmanox = R17.4 million

13 The Venda king, Toni Mphephu = R17.7 million.

14 Ndivhuwo Khangale = R16.8 million.

15 Sechaba Serote = R16.6 million.

16 Ernest Nesane = R16.6 million

17 Brian Shivambu = R16 million

18 Foxburgh = R15 million.

19 Paul Magula = R14.8 million.

20 Charl Cilliers = R12.6 million

21 Tiisang Private Capital = R12 million.

22 Maanda Manyatshe = R11 million.

.23 Sasa Nemabubuni = R9 million.

24 Sabicorp = R8 million.

25 Avashoni Ramikosi = R5.9 million.

26 Takalani Mmbi = R4 million.

27 Phillip Tshililo = R2 million.’

(‘WATCH: These are the people who ‘looted’ VBS Mutual Bank’ by Kabelo Khumalo. See link, https://www.iol.co.za/business-report/companies/watch-these-are-the-people-who-looted-vbs-mutual-bank-17424884)

In elaboration of the criminality of the EFF, Julius Malema, Floyd Shivambu, Brian Shivambu and Matsobane Phaleng

7. ‘The Great Bank Heist’ Indicates that Brian Shivambu, who is Floyd Shivambu’s younger brother, received an amount of R16,148,569 as ‘gratuitous payments’ from VBS Mutual Bank.

8. While the report does not indicate where that money received by Brian Shivambu ended up, further evidence as elaborated below suggests that a considerable amount went to the Economic Freedom Fighters (EFF), Julius Malema and Floyd Shivambu.

9. In ‘The Shivambu Brothers and the Great VBS Heist’, an article written by Pauli Van Wyk for Scorpio (Daily Maverick’s Investigative Unit) and published on 11 October 2018 on the newspaper’s website, the following allegations are made by Van Wyk who in turn says she has been informed by sources:

a. The EFF as well as its Deputy President, Floyd Shivambu, have both ‘benefited financially from the VBS Mutual Bank scandal’;

b. Floyd Shivambu received about R 10 million ‘VBS-rand’ via Brian Shivambu;

c. ‘The evidence (which is kept under ‘lockdown’) detailing the Shivambu brothers’ nefarious activities consists of bank statements of the relevant entities – it was not included in the report to SARB because the investigators’ mandate related specifically to VBS’;

d. ‘[T]here were more money flows from VBS through other fronts to the EFF and Shivambu,”

e. The EFF allegedly unlawfully received payment of R1.3-million from the VBS Mutual Bank into its (EFF’s) bank account (this was confirmed by three sources to Scorpio’s Van Wyk); and

f. The said three sources further revealed that Brian Shivambu allegedly transmitted approximately R10 million via Sgameka Projects (of which Brian is the sole director) into Floyd Shivambu’s personal banking account;

10. In a further article ‘VBS bank heist: EFF’s family ties and moneyed connections’
published on the DM website on 21 November 2018, Scorpio’s Pauli Van Wyk (the author), informed by sources makes the following further allegations:

On why VBS funds entering and leaving Sgameka are proceeds of crime

a. Evidently as indicated in the Great Bank Heist report, the funds of deceased mine workers (in respect of which widows and orphans were beneficiaries), municipalities, and stokvels were deposited at VBS. This money was stolen by politicians and others who were well connected via different schemes including through fake accounts. To this end management of VBS shifted this money out of the bank through various illegal schemes.

b. Sgameka Trading Pty Ltd (Sgameka), which is a business that is managed and owned by Brian Shivambu, is one of the primary beneficiaries of illicit VBS funds. Brian Shivambu contended that he received money only from Vele. The investigation by Scorpio indicates this to not be true.

c. The Scorpio investigation found 4 factors which indicate ‘that Sgameka operated as a front and a slush fund for the EFF and select EFF leaders’, namely:

i. ‘WhatsApps: Scorpio has a series of verified WhatsApps between chairman of VBS Tshifhiwa Matodzi and Phopi Mukhodobwane, general manager of treasury at VBS, where a transfer of money from related party Malibongwe Petroleum Pty Ltd to Shivambu’s Sgameka is discussed’. In this regard, ‘[o]n 8 June 2017, Matodzi requested a transfer of R5-million into the account of Sgameka’. Matodzi remarked as follows about Sgameka: “This is an extremely strategic account.’ Since as alleged Matodzi ‘kept himself busy with bribing influential politicians in order to bamboozle municipalities into investing in VBS, his remark over Sgameka’s influence is hair-raising’

ii. ‘Email: Floyd Shivambu is linked directly to Sgameka by emails from his personal gmail account relating to an additional property.‘

iii. ‘Sgameka’s income: Sgameka had no legitimate income, did not operate like a normal business bank account and paid no taxes’.

iv. ‘Sgameka’s true income streams: Sgameka received R16,1-million from companies named Robvet Pty Ltd, Wegezi Power Holdings Pty Ltd, Vele Investments ltd, Malibongwe Petroleum as well as cash deposits and what is labelled as “allocations”. Sgameka (accordingly) did not only receive money for (rendering) “consulting services” to Vele, as Brian Shivambu claimed last month’.

d. Thirteen (13) payments amounting to R16,148,569 were made to Sgameka with illicit VBS funds between June 2017 and February 2018. Taking into account the income stream of Sgameka, ‘The Great Bank Heist’ report indicated as follows in relation to the companies concerned:

i. Malibongwe Petroleum

A false deposit of R40 million was created for Malibongwe Petroleum. This company became a mechanism to illegally shift money from VBS.

ii. Vele

The company was headed by Matodzi and acquired majority shareholding in VBS bank via fraud. Moreover it benefitted from countless fraudulent transactions. It was found to be the ‘principle beneficiary of the looting’. Furthermore ‘VBS and Vele have been operated as a single criminal enterprise with Matodzi firmly at the helm’.

iii. Robvet

To procure investments by municipalities in VBS, Robvet was operated as a slush fund to make payments of ‘commissions’ to targeted municipal managers and politicians of influence. To this end VBS funds were illicitly shifted directly to Robvet, or to Robvet via the Vele group companies not limited to Malibongwe Petroleum and Wegezi. The modus operandi entailed payments being made from Robvet to front companies, mayors, politicians and municipal managers either in cash or via electronic transfers. The Great Bank Heist report found that VBS effected payments from Robvet to front companies to benefit a number of municipal officials. Furthermore the said report indicates that the management of VBS ‘did not regard the payments (made by Robvet) as legitimate operating expenses and sought to conceal them’.

e. ‘The Great Bank Heist’ found the income stream of Sgameka to be criminal. The fact that Sgameka received funds from Robvet indicates that those politicians controlling Sgameka were involved in influencing municipalities to action investments in VBS.

f. The illicit shifting of money from Sgameka read with the WhatsApps message indicated above regarding the ‘extreme strategic’ nature of the Sgameka account suggests criminality on the part of the perpetrators.

g. Evidently and as indicated in bank statements, upon money being received into the Sgameka account it was immediately shifted mostly to EFF, Mahuna Investments and the Grand Azania Pty Ltd accounts. Sgameka was accordingly used to siphon VBS funds illicitly. (See Annexure “A”, Sgameka’s bank statement).

h. Sgameka did not receive any income from any entity except from a number of ‘VBS schemes’. It received the final deposit on 23 February 2018. This was shortly prior to VBS being put under curatorship (which came into effect on 11 March 2018). To this end money was only moved out of the Sgameka account since February 2018. The movement of money into the Sgameka account is accordingly compromised and therefore illegal. In this regard the following payments are significant:
i. Four payments amounting to over R1.2 million were effected into two bank accounts of EFF between July 2017 and December 2017.

ii. Nine payments totaling in excess of R4.8 million was paid by Sgameka into the account of Mahuna between June 2017 and February 2018.

On VBS funds illicitly shifted to Mahuna via Sgameka

i. The owner and sole director of Mahuna is Matsobane Phaleng who is the cousin of Julius Malema.

j. The Mahuna account, same as with Sgameka, was operated as a slush fund. To this end it had no proper expenses and income. It also did not pay any tax. Matsobane Phaleng was a front to siphon funds for the EFF and Julius Malema.

k. Eight payments amounting to R110,000 and which was described as
‘director’s fees’ was moved out of the Mahuna account between July 2017 and February 2018 and was, according to Scorpio’s sources, paid to Malema’s cousin, Matsobane Phaleng. In this regard the funds payed out by Mahuna was previously received by it from Sgameka.

EFF benefited from VBS funds illicitly moved via Mahuna and Sgameka

l. Regarding Scorpio’s report in October 2018, ‘that the EFF received around R1.3-million in illicit VBS funds and that Sgameka paid about R10-million into Floyd Shivambu’s account … [u]pon further scrutiny of the evidence, it is clear that the income streams were more complex, based on the use of various fronts in order to siphon illicit funds towards various role-players.’ To this end ‘Scorpio found more illicit VBS funds than initially mentioned earmarked for the EFF.’

m. Yet another amount (over and above the R1.3 million mentioned above) in the sum of R600,000 designated for the EFF was moved from Mahuna into various bank accounts between July and August 2017. It is indeed significant that the movement of monies from Mahuna was described on the bank statements as ‘July 26’ and ‘EFF GP’. 26 July is in fact the birthday of the EFF thus evidencing that the payments described as “July 26” were payments made for the 2017 birthday celebration of EFF.

n. Scorpio has identified in excess of R1.8 million of VBS funds that has been illicitly moved from Mahuna and Sgameka so as to ‘prop up the EFF.’

o. The Scorpio investigation indicates that there are further funds that have been allocated for the EFF that were shifted from Mahuna.

On the VBS funds illicitly allocated via Mahuna to the Sandown property situated at 49a Edward Rubenstein

p. Julius Malema rented a property located at 49a Edward Rubenstein, Sandown, Johannesburg from 2012.

q. The neighbours of the property situated at 49a Edward Rubenstein have indicated that Malema resided at the said property until very recently. Malema has indicated that he currently stays in Goodwood, Cape Town.

r. Title deed documents seen by Scorpio suggest that during or about June 2017, the relevant property was transferred to the ‘Economic Freedom Fighters’. The buying price was reflected as R5,250,000. Dali Mpofu, the national chairperson of EFF, was involved in facilitating the deal. Mpofu did not react to Scorpio’s questions. The origin of the funds used to pay and the total amounts paid thus far for the house, are currently unknown, according to Scorpio. Julius Malema has avoided answering questions about the funds for the property in Sandown. He had said to Scorpio, “The EFF will answer that one”. Moreover Mbuyiseni Ndlozi, the National Spokesperson of EFF, responded as follows via Whatsapp when he was questioned on the issue, “we took a loan from one of the financial institutions”. He also denied that the house was allocated to Malema to live in.

s. Three payments totaling R430,000, which was allocated for the said property, was moved from Mahuna between July 2017 and February 2018 into various bank accounts. Scorpio’s investigation suggests that these bank accounts are in turn connected to a pool and the relevant property which is in EFF’s name. Scorpio’s sources indicate that there is evidence of more VBS funds illicitly moving from Mahuna to this said property.

t. There is further evidence, according to Scorpio’s key sources, of more VBS funds being illicitly used to fund Julius Malema’s lifestyle including that of his family and children.

u. Julius Malema and Floyd Shivambu were evidently aware of proxies used to siphon money. They were also aware that the EFF as well as themselves were illegal beneficiaries of VBS funds.

Concluding remarks

v. The EFF, Julius Malema and Floyd Shivambu received illicit payments from VBS Mutual Bank via a fraudulent scheme operated in a similar way to the scheme used in the 2012 ‘On Point Engineering’ corruption saga. To this end Juilius Malema was charged with fraud, corruption, money laundering and racketeering in that he used fronts and proxies to siphon money (to himself and his family) illegally obtained via fraudulent government contracts. While Malema denied any liability, the former Public Protector Thuli Madonsela concluded that he illegally benefited from the ‘On Point Engineering’ scheme. Moreover Madonsela found that Malema misused the Ratanang trust to siphon funds illicitly.

w. Effectively, Sgameka, a company owned by Brian Shivambu (Floyd Shivambu’s brother) made dubious payments to Mahuna, a company owned by Matsobane Phaleng (cousin of Julius Malema). These companies in turn conducted business like slush funds as they moved funds to wherever it was required. Julius Malema and Floyd Shivambu thus via the agencies of Matsobane Phaleng and Brian Shivambu respectively, looted the money of the poor to fund the EFF and their political and private interests.

10. We, Black First Land First (BLF), submit that the above evidence indicates criminal conduct not limited to fraud, theft, corruption and money laundering – on the part of:

a. Those indicated in paragraph 6 herein.
b. the EFF
c. Julius Malema, the President of EFF
d. Floyd Shivambu, the Deputy President of the EFF
e. Brian Shivambu, the brother of Floyd Shivambu; and
f. Matsobane Phaleng, the cousin of Julius Malema.

11. We are hereby charging the above parties accordingly.

12. To this end the SAPS is requested to subpoena, amongst others, the following persons / representatives of entities for questioning and further inquiry towards facilitating the proper administration of justice herein:

a.Those indicated in paragraph 6 herein.
b. Those implicated in the criminal actions of Brian Shivambu, including:
i. Julius Malema
ii. Floyd Shivambu
iii. The rest of the EFF Central Command Team members
iv. Brian Shivambu
v. Matsobane Phaleng
vi. Pauli Van Wyk
vii. Scorpio
viii. Adv Terry Motau SC
ix. Werksmann’s Attorneys
x. Auditors of EFF

Sources

1. ‘The Great Bank Heist’ report. See link, http://www.politicsweb.co.za/documents/how-vbs-was-looted-the-full-report

2. ‘The Shivambu Brothers and the Great VBS Heist’ by By Pauli Van Wyk for Scorpio (Daily Maverick’s Investigative Unit). See link, https://www.dailymaverick.co.za/article/2018-10-11-the-shivambu-brothers-and-the-great-vbs-heist/

3. ‘VBS bank heist: EFF’s family ties and moneyed connections’ published on the DM website. See link, https://www.dailymaverick.co.za/article/2018-11-21-vbs-bank-heist-effs-family-ties-and-moneyed-connections/amp/?__twitter_impression=true

4. Annexure “A”: Sgameka’s bank statement

5. ‘WATCH: These are the people who ‘looted’ VBS Mutual Bank’ by Kabelo Khumalo. See link, https://www.iol.co.za/business-report/companies/watch-these-are-the-people-who-looted-vbs-mutual-bank-17424884

 

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Zanele Lwana

I hereby certify that the deponent knows and understands the content of this affidavit and that it is to the best of his knowledge both true and correct. This affidavit was signed and sworn to before me at on this day of 2018, and the Regulations contained in Government Notice R.1258 of 21 July 1972, as amended, have been complied with.

 

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COMMISSIONER OF OATHS

Full names:

Address:

Capacity:

BLF submission to State Capture Inquiry on crimes of former Finance Ministers Gordhan & Nene including disappearance of over R4.3 billion – 28 November 2018

BLF submission to State Capture Inquiry on crimes of former Finance Ministers Gordhan & Nene including disappearance of over R4.3 billion – 28 November 2018

Affidavit of Zanele Lwana: BLF submission to Judicial Commission of Inquiry into state capture on criminal conduct of Pravin Jamnadas Gordhan and Nhlanhla Musa Nene resulting inter alia in the disappearance of over R4.3 billion, amounts to serving state capture by white monopoly capital

I the undersigned Zanele Lwana do hereby make oath and state:

1. I am the Deputy President of Black First Land First (BLF), and I am duly authorized to depose to this affidavit on behalf of BLF. Unless I state otherwise or the context of what I say indicates the contrary, I confirm that the averments contained in this affidavit fall within my personal knowledge and are to the best of my belief both true and correct. Insofar as I make submissions on legal matters, I do so on the advice given to me by my legal representatives, which I received during the preparation of this affidavit. Where I rely on fact outside my personal knowledge, I verily believe same to be true and correct.

2. BLF is a Black Consciousness, Pan Afrikanist movement which embraces the Sankarist leadership ethos. It is registered with the Independent Electloral Commission as a political party and is situated at 0514 Klampton Towers, 5th floor, cnr of Commissioner & Von Wielligh Street, Johannesburg. The purpose of this affidavit is to provide evidence to the Judicial Commission of Inquiry (JCOI) into state capture, of state capture by white monopoly capital, in relation to the criminal conduct of the former Minister of Finance, Pravin Jamnadas Gordhan (Gordhan) and the former Minister of Finance, Nhlanhla Musa Nene (Nene) for various offences that BLF has charged them for which are listed below. To this end BLF laid the said criminal charge(s) on 16 June 2017 at the Hillbrow Police Station under the reference number, CAS 492/6/2017.

Applicable charges

3. The charges against Gordhan (who is currently a member of Parliament) and Nene relate to each of them covering up and or being complicit in the offences and irregularities – committed by their respective Deputy Ministers of Finance, Director Generals, Executive Officers, Audit Committees, departmental officials working within the National Treasury who are working with or within the the Integrated Financial Management System (IFMS) project, Accounting Officers, Project Management Office, Procurement Department and Chief Financial Officer in the National Treasury – as indicated in the leaked Internal Audit Report attached hereto. These offences and irregularities which has resulted inter alia in the disappearance of over R4.3 billion under the watch of former Ministers of Finance, Pravin Gordhan and Nhlanhla Nene; include:

a. Failure to report irregular, wastefull, fruitless, and unauthorized expenditure as legislated in the Public Finance Management Act No 1 of 1999 as amended (PFMA)

b. Failure to safeguard public funds,and state assets

c. Financial misconduct with regards to the following:

i. Contravention of section 86 (1) PFMA for willful or gross negligence on the part of an accounting officer, in that s/he failed to comply with a provision of section 38, 39 or 40.

ii. Contravention of section 86 (2) PFMA for willful or gross negligence on the part of an accounting authority in that s/he failed to comply with a provision of section 50, 51 or 55; and

iii. Contravention of section 86 (3) PFMA for unauthorized loans or entering into a binding financial contract without permission on behalf of a department, public entity or constitutional institution.

d. Failure to perform fiduciary duties as vested in terms of the PFMA and other applicable legislation

e. Failure to comply with the Procurement Act

f. Dereliction of duties

g. Willfully allowing fraudulent activities and transactions to be conducted within the National Treasury

h. Participating and benefitting in fraudulent accounting,and financial transactions

i. Irregular expenditure

j. Unauthorised transactions and expenditure

k. Fruitless expenditure

l. Wasteful expenditure

m. Fraud and corruption

n. Looting State coffers

o. Failure to take appropriate action against officials and companies engaged/involved in conducting fraudulent activities, financial mismanagement, corruption, illegal siphoning of funds as highlighted in the IFMS Internal Audit Report.

p. Failure to disclose irregularities and Financial Misconduct within the National Treasury Department.

q. Gross violation of the PFMA with specific emphasis to sections dealing with:

i. Procurement and provisioning

ii. Internal controls

iii. Safeguarding of assets and liabilities of the State

iv. Good governance

v. Financial management

vi.. Financial reporting

vii.. Financial planning, financial accounting,

r. Irregularly awarding contract to work friends, business associates, relatives without following proper tender procedures

s. Failure to disclose gross financial misconduct to the Auditor General, Parliamentary Committee, Parliament – as prescribed in the IFRS (International Financial Reporting Standards) and required by Generally Accepted Accounting Principles (GAAP) which the PFMA and Treasury Regulations have prescribed to be an accounting Standard that in turn must be  followed by National Treasury as a Government Department and an Accounting Institution.

t. Covering up the financial misconduct, fraud,corruption and all other irregularities as cited on the Internal Audit Report.

u. Contravention of Section 34 of the Prevention and Combating of Corrupt Activities Act, 2004 (Act No. 12 of 2004) regarding his failure to report criminal activity and irregularities that were reported to Treasury.

Particulars of case

4. On 2 June 2017, Africa News Network 7 (ANN7), a DSTV news channel, unveiled how the National Treasury disregarded an internal audit report that indicates “gross negligence of business practices” in the National Treasury (NT). To this end the National Treasury is the office that is responsible for establishing and managing the critical IFMS of the Government.

5. National Treasury falls under the Ministry of Finance which in turn “is at the heart of South Africa ’s economic and fiscal policy development”.

6. The National Treasury, which is accordingly headed by the Minister of Finance, “is responsible for coordinating macroeconomic policy and promoting the national fiscal policy framework. Its role is defined by the Constitution of the Republic of South Africa and in the Public Finance Management Act. The National Treasury coordinates intergovernmental financial relations, manages the budget preparation process and exercises control over the implementation of the annual national budget, including any adjustments budgets. The National Treasury also performs functions assigned to it in other legislation”.(http://www.treasury.gov.za/ministry/info.aspx)

7. The National Treasury Internal Audit Report (Internal Audit Report) was given on September 11, 2015 to Lungisa Fuzile, the then Treasury Director General, who by virtue of the position he held, fell under the control, management and command of the Minister of Finance.This was during the tenure of the former Minister of Finance, Nhlanhla Nene and his deputy Mcebisi Jonas.

8. Nothing has since been done about that report despite the gravity of its findings, the associated risks to the reputation of National Treasury, and the sufficient evidence it contained suggesting amongst, other things, instances of mismanagement, fraud, corruption and other offences and infringements of the law.

9. The relevant Ministers of Finance to the case at hand are: Pravin Gordhan from 11 May 2009 to 25 May 2014; Nhlanhla Nene from 25 May 2014 to 9 December 2015; David van Rooyen from 9 to 13 December 2015; Pravin Gordhan from 13 December 2015 to 30 March 2017; and Malusi Gigaba from 30 March 2017 to present.

10. The current Minister of Finance, Malusi Gigaba, has since the ANN7 expose’ indicated that Treasury will investigate the claims made by the news channel and revert to the public.

11. The Internal Audit Report indicates a review on the IFMS payments made for the 2014/15 financial year (1 April 2014 to 31 August 2015).

12. This project is in line with a Cabinet decision taken in  2005 “to replace legacy systems for managing supply chain, human resource and finance functions with a modern integrated system that will improve service delivery”.  (http://www.treasury.gov.za/comm_media/press/2016/20160805%20-%20Intergrated%20Financial.pdf)

13. Moreover the IFMS project was intended to “transform management practices by providing centrally hosted and integrated financial, supply chain management and human resource management systems”. It is effectively a joint project between the National Treasury, Department for Public Service and Administration (DPSA) and State Information Technology Agency (SITA). (http://www.treasury.gov.za/comm_media/press/2016/20160805%20-%20Intergrated%20Financial.pdf)

14. Seven years on from its inception and approval, the IFMS project deliverables were found to be inadequate. In 2013 Cabinet accepted a revised plan in this respect.

15. The Internal Audit Report for the financial period indicated above, uncovers serious problems with inter alia the operation, management and control of the IMFS project.

16. It found 54 IFMS processes to be problematic. Moreover 49 of the said IFMS processes were found to have been “catastrophic”.

17. The government budgeted R4.3bn over five years for the setting up of the IFMS processes. The “[o]verall audit opinion” was that the IFMS processes were “Inadequate”. Furthermore “catastrophic” and “high” were the risk ratings given to the various processes as elaborated herein.

18.  The period of review relates to the tenure of Pravin Gordhan and Nhlanhla Nene as Minister of Finance during the respective relevant period of the financial year 2014/2015 under review.  After the end of his first tenure as Minister of Finance on 25 May 2014,  Gordhan served again in that position for the period 13 December 2015 to 30 March 2017 which in turn gave him sufficient time to address the findings and recommendations of the report. Nhlanhla Nene, the Minister of Finance from 25 May 2014 to 9 December 2015 served in that position for a major portion of the period under review.

19. Both Gordhan and Nene must accordingly be made to account for all the offences and other irregularities suggested in the Internal Audit Report as they both served at different periods of time as Minister of Finance during the period under review. Moreover Gordhan, who came back as Minister of Finance after the period of review did nothing to report the offences and irregularities reflected in the Internal Audit Report as well as to comply with the recommendations of the said report.

20. Also all successive Ministers of Finance will be liable and should be held accountable. This is however an academic point as David van Rooyen who was Minister of Finance for only 4 days and Malusi Gigaba who is Minister of Finance under whose tenure the report has emerged,  would not be liable.

21. The progress of the IFMS project is monitored on a quarterly basis by the National Treasury Audit Committee. Consequently during meeting of the audit committee on

March 25, 2015 “when the quarterly IFMS progress report was presented by (the) Head of the IFMS PMO, the Audit Committee requested National Treasury internal audit to perform a review of 2014/15 IFMS payments”.

22. To this end the review objective “was to assess the adequacy and effectiveness of the IFMS payments process (so as) to ensure complete, accurate and valid IFMS payments”.

23. The approach taken in respect of the instances reviewed by National Treasury Internal Audit (Internal Audit) are as follows:

a. The adequacy of the IFMS payment procedure was obtained and reviewed.

b. The IFMS payments made regarding the financial year 2014/15 (1 April 2014 to 31 August 2015) “to ensure accurate, valid and complete IFMS payments in relation to the project budget and contractual agreements”, was obtained and reviewed.

(See pages 5 to 6 of the Internal Audit Report).

24. On August 7, 2015 Internal Audit sent an “initial document request” to IFMS management – which is located within Treasury – for “supporting documentation relating to all IFMS expenditure for the period 1 April 2014 to 31 August 2015″. To this end by the target date for submission, being 14 August 2015, a limited amount of supporting documents was given by the management of IFMS. At a subsequent meeting with IFMS management, Internal audit “validated the limited supporting documentation received and established what supporting documentation was outstanding”. The submission date for the outstanding supporting documents was subsequently extended to September 11, 2015. Upon expiry of the extended deadline, all the supporting documentation submitted was taken as final by Internal Audit who then proceeded to conduct the review. Internal Audit was also favored with “an independent report (Basic Accounting System Report) from the Finance division of all IFMS expenditure for the period 1 April 2014 to 31 August 2015″. (See page 7 of the Internal Audit Report)

25. The audit opinion of Internal Audit on the control environment for the review of each focus area suggests the following:

a. For the focus area “IFMS Payments – Adequacy Review” the

audit opinion was “inadequate”.

b. For the focus area, “IFMS Payments – Effectiveness Review” the

audit opinion was “inadequate”.

c. The “[o]verall audit opinion” was also “Inadequate”.

26. Quite clearly, the review findings suggest that “the operation of internal controls” cannot be relied on “to mitigate the risks relating to IFMS payments to service providers” that were doing the work. To this end the control environment was found to be inadequate because of its “inefficient and ineffective operation of controls which need(ed) excessive effort and urgent and immediate attention for improvement”.

27. As indicated in the Internal Audit Report itself, it’s purpose “is to aid management to adequately and effectively manage payments and budget on the IFMS project as well as to provide the audit committee with [a] view on the IFMS payment process”.

28. Internal Audit’s finding of the IFMS procedures was that it was inadequate. They were accordingly not approved. More specifically, the audit process identified certain “inconsistencies, inefficiencies, inadequate contract and cost management, potential irregularities and financial misconduct, as well as the lack of compliance to the financial management and supply chain management guidelines” . The Internal Audit process also identified the absence of an appropriate “quality assurance function” consisting of the necessary  expertise to guarantee quality throughout the entire IFMS program more especially considering “the magnitude of the IFMS project”.

29. Consequently, “quality assurance sign-off for services and deliverables provided by the IFMS PMO service providers for the period 1 April 2014 to 31 August 2015″ was absent.

30. Furthermore, the Internal Audit found “potential irregular, unauthorized, fruitless and wasteful expenditure” for the period 1 April 2014 to 31 August 2015. To this end IFMS expenditure existed in relation to the undermentioned:

“. Service providers appointed through no formal and competitive bidding process; and

. Service providers performing work without approved service level agreements, inception reports as well as instruction to perform work”.

31. In the “KEY TO RISK RATING” used in the Internal Audit Report only two categories are relevant to this report, namely, catastrophic and high. In financial audit terms, the categories are elaborated as follows:

a. catastrophic:

This term “[i]ndicates a catastrophic level of residual risk exposure due to extreme inefficient and ineffective operation of controls which needs excessive effort and urgent and immediate attention for improvement”.

b. high

This “Indicates a high level of residual risk exposure due to inefficient and ineffective operation of controls which needs major effort and urgent attention for improvement”

(See Page 11 of the Internal Audit Report)

32. The audit findings identified during the review process reflect a  risk rating next to each of the findings under the nine different subject matters that were reviewed.  A summary of the audit findings, which have been extracted directly from the table in pages 11 and 12 of the Internal Audit Report, is as follows:

DETAILED AUDIT FINDINGS

1. IFMS PAYMENT ADEQUACY AND EFFECTIVENESS REVIEW – GENERAL

1.1 Inadequate Payment Procedures

RISK RATING: catastrophic

1.2 No Business Case for Formulating the Project Management Office

RISK RATING: catastrophic

1.3 No Budget Information and No Budget Breakdown Per Financial Year

RISK RATING: catastrophic

1.4 Lack of Project Costs Monitoring

RISK RATING: catastrophic

1.5 No Formal Independence Quality Assurance Function in Place

RISK RATING: catastrophic

1.6 Incomplete Payment Register

RISK RATING: high

1.7 Excessive Project Management Office (PMO) Expenditure In Relation To Approved PMO Budget

RISK RATING: catastrophic

1.8 Ineffective Resource Management

RISK RATING: high

1.9 Expenditure Not Related to the IFMS Project

RISK RATING: catastrophic

2. IFMS PAYMENT EFFECTIVENESS REVIEW- BITZ TECHNOLOGIES

2.1 Gaps Identified within the service level agreement

RISK RATING: catastrophic

2.2 No Inception Report

RISK RATING: catastrophic

2.3 No Statement of Work / Instruction to Perform Work

RISK RATING: catastrophic

2.4 No Timesheets to Justify the Hours Billed and Paid

RISK RATING: catastrophic

2.5 No Sign-Off/Approval of Invoices

RISK RATING: catastrophic

2.6 One Approved Deliverable To Date With No Quality Assurance Sign-Off

RISK RATING: catastrophic

2.7 Duplicate Payment Identified

RISK RATING: catastrophic

2.8 Payment Made Prior to Approval of the Service Level Agreement

RISK RATING: catastrophic

2.9 Expenditure from Cancelled Service Level Agreement Not Considered in the Financial Implication of Second Service Level Agreement

RISK RATING: catastrophic

2.10 Overspending Within Year One of the Contract

RISK RATING: catastrophic

3. IFMS PAYMENT EFFECTIVENESS REVIEW- KPMG PROBITY 1

3.1 No Terms of Reference and Request for Proposal for Probity Services 1

RISK RATING: catastrophic

3.2 No Service Level Agreement in Place for Probity Services 1

RISK RATING: catastrophic

3.3 No Inception Report

RISK RATING: catastrophic

3.4 No Statement of Work / Instruction to Perform Work

RISK RATING: catastrophic

3.5 No Timesheets to Justify Amounts Billed and Paid

RISK RATING: catastrophic

3.6 No Approved Deliverables to Justify Amounts Billed and Paid

RISK RATING: catastrophic

4. IFMS PAYMENT EFFECTIVENESS REVIEW- KPMG PROBITY 2

4.1 Gaps Identified Within the Service Level Agreement

RISK RATING: catastrophic

4.2 Gaps Identified Within the Inception Report

RISK RATING: high

4.3 No Statement of Work / Instruction to Perform Work

RISK RATING: catastrophic

4.4 No Timesheets to Justify Amounts Billed and Paid

RISK RATING: catastrophic

4.5 No Approved Deliverable To Date With No Quality Assurance Sign-Off

RISK RATING: catastrophic

4.6 No Formal Request for Ad-hoc Service Provided

RISK RATING: catastrophic

4.7 Approved Service Provider on the IFMS Panel Not Utlised to Provide the Required Service

RISK RATING: catastrophic

5. IFMS PAYMENT EFFECTIVENESS REVIEW- STRATEGIC SYSTEMS SUPPORT

5.1 Gaps Identified (Within) the Service Level Agreement

RISK RATING: catastrophic

5.2 Gaps Identified Within the Inception Report

RISK RATING: high

5.3 Work Executed Before Approval of the Inception Report

RISK RATING: catastrophic

5.4 No Approved Statement of Work / Instruction To Perform Work

RISK RATING: catastrophic

5.5 No Timesheets to Justify Amounts Billed and Paid

RISK RATING: catastrophic

5.6 No Sign Off/Approval of Invoices

RISK RATING: catastrophic

5.7 No Approved Deliverable To Date With No Quality Assurance Sign-Off

RISK RATING: catastrophic

5.8 Overspending Within Year One of the Contract

RISK RATING: catastrophic

6. IFMS PAYMENT EFFECTIVENESS REVIEW- APEX ADVISORY

6.1 Gaps Identified Within the Service Level Agreement

RISK RATING: catastrophic

6.2 Gaps Identified Within the Inception Report

RISK RATING: high

6.3 No Statement of Work / Instruction to Perform Work

RISK RATING: catastrophic

6.4 Work Executed Without An Approval Service Level Agreement

RISK RATING: catastrophic

6.5 No Timesheets to Justify Amounts Billed and Paid

RISK RATING: catastrophic

6.6 No Approved Deliverable To Date With No Quality Assurance in Place

RISK RATING: catastrophic

6.7 Service Provider Performance Assessment Not Performed

RISK RATING: catastrophic

7. IFMS PAYMENT EFFECTIVENESS REVIEW- PILOG

7.1 Gaps Identified Within the Service Level Agreement

RISK RATING: catastrophic

7.2 No Timesheets to Justify Amounts Billed and Paid

RISK RATING: catastrophic

7.3 No Approved Deliverables to Justify Amounts Billed and Paid

RISK RATING: catastrophic

8. IFMS PAYMENT EFFECTIVENESS REVIEW- AGSA

8.1 Inadequate Approval Process For Delayed Payments

RISK RATING: catastrophic

9. IFMS PAYMENT EFFECTIVENESS REVIEW- SITA

9.1 No Approved Service Request For Value Added Services

RISK RATING: catastrophic

9.2 No Timesheets to Justify Amounts Billed and Paid For Value Added Services

RISK RATING: catastrophic

9.3 No Approved Deliverable To Date For Value Added Services With No Quality Assurance in Place

RISK RATING: catastrophic

Findings 1.2 and 1.7

33. BLF will now elaborate on  findings 1.2 and 1.7 to highlight the seriousness of the offences and irregularities committed by the wrongdoers.

Finding 1.2: “No Business Case for Formulating the Project Management Office”

34. The review process observed “no business case for the formulation and operation of the IFMS Project Management Office (PMO)”. Consequently, specific functions that were required to be performed by the PMO were not defined. On 13 January 2014, 8 service provider(s) were appointed on the “IFMS panel of service providers” so as to give “PMO services to the IFMS programme” namely:

“. Apex Advisory Service;

. Bits Technologies CC t/a Abacus Advisory;

. Edward Nathan Sonnenbergs Incorporated;

. KPMG Services Pty Ltd;

. Letsema Consulting and Advisory Pty Ltd;

. Nihka Consulting Services;

. PriceWaterHouseCoopers Incorporated; and

. Sekela Xabiso (Pty) Ltd / Entsika Consulting Services”

35. Up until 31 August 2015 – the report states at page 16 thereof – “contracts for PMO services were awarded to the following service providers [extracted from the table on page 16 of the Internal Audit Report] with a total value of R139 740 920.33 against a total approved IFMS PMO budget of R145 924 202 as per the 2013 cabinet memorandum” which in turn was done “without adequately addressing key aspects of a PMO function (e.g. Quality Management, Risk Management and Cost Management)”:

a. Service Provider: Apex Advisory Services

Work Stream: (Organisational change management and communication)

Amount: R35 904 579.33

b. Service Provider:  KPMG Services Pty Ltd – Probity Services

Work Stream: Probity Services

c. Service Provider:  Bitz Technologies cc t/a Abacus Advisory (Programme and Stakeholder Management)

Work Stream: Programme and Stakeholder Management

Amount: R26 241 228.00

d. Service Provider:  KPMG Services Pty Ltd – Strategic Services

Work Stream: (Strategic Systems Planning)

Amount: R58 999 000.00

e. Total: R139 740 920.33

f. The following “Risk / Impact” factors were identified:

“.Potential fruitless and wasteful expenditure.

.Potential overspending on approved

IFMS PMO budget

.Inadequate Contract Management.

.Inadequate and ineffective PMO function “

(See page 17 of the Internal Audit Report)

36. Internal Audit pointed out that “Cabinet Memo 35 of 2013” was reviewed “to inform cabinet of the strategic changes in the IFMS project which amongst other things made reference to the establishment of a PMO”. Furthermore “the formal submission … approved by the DG for the establishment and operation of a Programme Management Office for IFMS” was also reviewed and it was disputed by Internal Audit that “this serves as the business case”. To this end it was pointed out that “[b]oth the World Bank and the EY reports referred to by management only refer to the need for the establishment of a PMO for IFMS and both cannot be referred to as the formal business case”.  (See page 19 of the Internal Audit Report).

37. Treasury was accordingly told by Internal Audit that a “refresh of the current PMO to incorporate the 10 PMO principles highlighted [by Internal Audit] … is necessary”. In this regard  “a detailed business case on the establishment of this PMO should accompany this submission to ensure an effective and efficiently functioning PMO going forward”.  (See page 19 of the Internal Audit Report).

38. Finding 1.7: “Excessive Project Management Office (PMO) Expenditure In Relation To Approved PMO Budget”

39. The review process observed that in terms of the “IFMS cabinet memorandum [the] IFMS Project Management Office (PMO) budget of R145 925 202 for the duration of the IFMS project” was approved. However, the actual expenditure of the IFMS PMO for “1 April 2014 to 31 August 2015 (17 months) was R70 613 579.65 as per the Basic Accounting System (BAS) report”.  This effectively meant that “48.39% of approved IFMS PMO budget for the duration of the IFMS project lifecycle has been spent within the first 17 months since the establishment of the IFMS PMO”. To this end the following information extracted from the table on page 26 of the Internal Audit Report is instructive:

a. Service Provider: Apex Advisory Services

Contract Duration: 5 Years

Contract Value: R34 904 579.33

Expenditure to date (1 April 2014 – 31 August 2015) – 17 months: R7 740 967.08

Expenditure %: 22.18%

Approved Deliverables: None

b. Service Provider: KPMG Services Pty Ltd – Probity 2 &Strategic Services

Contract Duration:  5 Years

Contract Value: R76 595 113.00

Expenditure to date (1 April 2014 – 31 August 2015) – 17 months: R50 559 571.75

Expenditure %: 66.01%

Approved Deliverables

Probilty Services: Prelim Probity Report – Bid Evaluation

Strategic Services – None

c. Service Provider: Bitz Technologies cc t/a Abacus Advisory

Contract Duration:  5 Years

Contract Value: R28 241 228.00

Expenditure to date (1 April 2014 – 31 August 2015) – 17 months: R12 313 040.82

Expenditure %: 43.60%

Approved Deliverables: IFMS Program Charter

d. Totals

Contract Value: R139 740 920.33

Expenditure to date (1 April 2014 – 31 August 2015) – 17 months: R70 613 579.65

Expenditure %: 50.53%

e. The following “Risk / Impact” factors were identified:

“.Ineffective cost management.

. Ineffective project management.

. Lack of budget monitoring.

. Potential overspending.

. Potentially no value for money”

(See page 26 of the Internal Audit Report).

40. As pointed out above the “Risk Rating” was described was “catastrophic”.

41. Management was accordingly told to suspend all the PMO services and to set up  “an independent quality assurance function” and to ensure that it is “capacitated with the relevant subject matter experts to support IFMS activities (PMO domains, governance structures, Original Software Manufacture lifecycle, product configuration and customization, hosting environment, lead site implementations, national roll out as well as maintenance and support) and maintain quality across the IFMS project as a matter of urgency”. Moreover, “[t]he independent quality assurance function should perform an assessment of the expenditure to date on the PMO against the deliverables and project progress as well as review the quality of the approved deliverables to date and where there is no justification for expenditure, a process to recover costs from the service providers should be initiated”. (See page 26 of the Internal Audit Report).

42. Management was further told that they “should ensure that future payments to PMO service providers are supported by approved deliverables and expenditure should be closely monitored”. (See page 26 of the Internal Audit Report).

43. KPMG SSP services was given a 5 year contract for work that could be concluded in two years. To this end, the “Agreed Action Plan” on page 26 of the Internal Audit Report instructively indicates as follows:

“KPMG SSP services – the contract and the RFQ was for specific services (as outlined in the IPW) . It was expected that these services would be completed during 2015 as they were necessary for the implementation services RFP planned for completion in the latter half of 2015. The initial contract stipulated that the termination date would be when the services (specified in the contract) were completed. During external contract review we were advised to fix the term to 5 years to align to the contracts with other service providers. The OAG adhered to this recommendation. It therefore appears as if there is excessive spending on a 5 year contract, however the spending is in line with actual work expected and delivered for that period. Given the nature of the work required, it is doubtful that the contract would have spanned for more than two years”.

44. The auditors comment on page 27 of the Internal Audit Report makes an important point. It indicates that “[t]he fact that almost half of the [amount] committed to budget had already been spent even before the conclusion and appointment of the Systems Manufacturer for the implementation of the project is [an] indication that value for money over deliverables achieved should be looked into”.

45. The Internal Audit Report indicates conduct of, inter alia, grossly neglecting business practices in the office that is responsible for the establishment and management of the IFMS of Government.

46. The internal audit details a total of 54 IFMS processes that were identified by the audit – all of which were problematic but more damning are the 49 of those that were assessed and given a risk rating of “catastrophic”. The term “catastrophic” as indicated above is suggestive of the fact that the financial management processes lacked inter alia adequate management which in turn could bring the name of the National Treasury into disrepute. In the 49 processes found to be catastrophic, financial and operating controls were evidently absent. The balance of the IFMS processes were, after assessment, given a risk rating of high.

47. Quite clearly the risks show that the operation of internal controls cannot be relied upon to mitigate against the circumstances that enable them. This – the catastrophic and high risk nature of the processes – in turn suggests criminal conduct flowing from non compliance with legislation including the prescribed regulations.

48. In the final analysis the Internal audit report concluded that the control environment has been rendered inadequate by the inefficient and ineffective controls of the environment. It pointed out that rectifying this inadequate control environment requires huge (excessive) effort and urgent attention that is immediate. To this end management was told to implement the recommendations of Internal Audit.

49. The audit findings included the fact that: the PMO of the IFMS was not established with a business plan; no breakdown of the budget for the financial years had been submitted; the project costs were not monitored; the quality assurance function was not in place, the payment register was not complete, the resource management was ineffective; and, expenditure unrelated to the IFMS project was found.

50. The management of the service level agreements, which made provision for identified service providers, were a problem in that they were irregular and illegal.

51. Bitz Technologies t/a Abacus Advisory for instance, was provided with a service level agreement for the amount of R39 745 943.00. This was R11 504 677.00 over the amount quoted by it  (Bitz Technologies), being R28 241 226.00.

52. This illegal contract was subsequently cancelled on September 30, 2014. A new contract was then concluded for R28 241 226.00. The new contract however did not take into account the fact that  Bitz Technologies had previously received payment of R5 854 881.74 relating to the service level agreement that it first signed with a contract value of R39 745 943.00. Consequently, “the actual contract value for the second service level agreement should be R22 386 384 (R28 241 266 – R5 854 881.74) instead of R34 096 148 (R28 241 266 + R5 854 881.74)” (See page 39 of the Internal Audit Report)

53. Also, payment of R1 348 905.12 was made for services in the period 1 October 2014 to 7 December 2014, when in fact no service level agreement between the Treasury and Bitz Technologies t/a Abacus Advisory was in place. (See page 38 of the Internal Audit Report)

54. Utter shock at the way the IFMS project was being run is expressed in the Internal Audit Report. In this regard the following comments relating to the finding in “2.7 Duplicate Payment  Identified” on page 38 of the Internal Audit Report is instructive:

“We cannot believe that such clear cases of [i]rregular expenditure where payments are made to Service Provider(s) in the absence of a formal contract are condoned. There is absolutely no justification for allowing such incidents from occurring whether the CFO (Chief Financial Officer) has granted permission or not.” Furthermore, “[t]he fact that a service provider conducted work prior to a contract (being) approved constitute(s) an irregular expenditure and actions must be taken against those that allowed such to happen”.

55. In this context, the Internal Audit Report observed (see page 37) that “the first signed service level agreement between National Treasury and Bitz Technologies t/a Abacus Advisory to the value of R39 745 943.00 was cancelled on 30 September 2014. The second service level agreement was signed on 8 December 2014 with a revised contract value of R28 241 225.00. As a result, the following payments to the value of R1 348 905.12 were processed for services which were rendered by Bitz Technologies t/a Abacus Advisory, without an approved service level agreement for the period 1 October 2014 to 7 December 2014.”

56. In addition, the same company, Bitz Technologies t/a Abacus Advisory, was accused of double billing for hours worked.

57. To this end, the finding in 2.7 on “Duplicate Payment Identified” (as reflected on page 37 of the Internal Audit Report) indicates as follows from the evidence reviewed:

“During the review, we noted that invoice IFMS 004 with an amount of R776 075.52 was paid for services rendered from 7 September 2014 to 18 October 2014 and invoice IFMS 005 with an amount of R718 373.28 was paid for services rendered from 12 October 2014 to 6 November 2014. As a result, the two invoices include the hours for days from 12 October 2014 to 18 October 2014 which indicates that the hours for the week (12 October 2014 to 18 October 2014) were duplicated”.

58. For the sake of brevity BLF asks that the entire Internal Audit Report which is attached hereto be incorporated as evidence in the case against the perpetrators relating to criminal and other activities involving the amount totaling to  R4.3 billion as suggested in the Internal Audit Report.

59. The South African Police Services (SAPS) are urged to investigate this matter, to prosecute Pravin Gordhan and Ndlandla Nene to the full extent of the Law and to do all that may be necessary to ensure that true justice is obtained. Regarding any other offence committed by each of the former Ministers of Finance, that relates to the particulars of the complaint herein and which has not been mentioned here – they (Gordhan and Nene) must also be prosecuted for such offences.

Extracts of applicable sections from the PFMA

The preamble if PFMA is the first applicable provision to the charges indicated above. It provides as follows:

To regulate financial management in the national government and provincial governments; to ensure that all revenue, expenditure, assets and liabilities of those governments are managed efficiently and effectively; to provide for the responsibilities of persons entrusted with financial management in those governments; and to provide for matters connected therewith.

The further applicable provisions of the PMFA include:

38. General responsibilities of accounting officers.—(1) The accounting officer for a department, trading entity or constitutional institution—

(a) must ensure that that department, trading entity or constitutional institution has and maintains—

(i) effective, efficient and transparent systems of financial and risk management and internal control;

(ii) a system of internal audit under the control and direction of an audit committee complying with and operating in accordance with regulations and instructions prescribed in terms

of sections 76 and 77;

(iii)  an appropriate procurement and provisioning system which is fair, equitable, transparent, competitive and cost-effective;

(iv) a system for properly evaluating all major capital projects prior to a final decision on the project;

(b) is responsible for the effective, efficient, economical and transparent use of the resources of the department, trading entity or constitutional institution;

(c) must take effective and appropriate steps to—

(i) collect all money due to the department, trading entity or constitutional institution;

(ii) prevent unauthorised, irregular and fruitless and wasteful expenditure and losses resulting from criminal conduct; and

(iii) manage available working capital efficiently and economically;

(d) is responsible for the management, including the safe-guarding and the maintenance of the assets, and for the management of the liabilities, of the department, trading entity or constitutional institution;

(e) must comply with any tax, levy, duty, pension and audit commitments as may be required by legislation;

( f ) must settle all contractual obligations and pay all money owing, including intergovernmental claims, within the prescribed or agreed period;

(g) on discovery of any unauthorised, irregular or fruitless and wasteful expenditure, must immediately report, in writing, particulars of the expenditure to the relevant treasury and in the case of irregular expenditure involving the procurement of goods or services, also to the relevant tender board; [Para. (g) substituted by s. 19 of Act No. 29 of 1999.]

(h) must take effective and appropriate disciplinary steps against any official in the service of the department, trading entity or constitutional institution who—

(i) contravenes or fails to comply with a provision of this Act;

(ii) commits an act which undermines the financial management and internal control system of the department, trading entity or constitutional institution; or

(iii) makes or permits an unauthorised expenditure, irregular expenditure or fruitless and wasteful expenditure;

(i) when transferring funds in terms of the annual Division of Revenue Act, must ensure that the provisions of that Act are complied with;

( j) before transferring any funds (other than grants in terms of the annual Division of Revenue Act or to a constitutional institution) to an entity within or outside government, must obtain a written assurance from the entity that that entity implements effective, efficient and transparent financial management and internal control systems, or, if such written assurance is not or cannot be given, render the transfer of the funds subject to conditions and remedial measures requiring the entity to establish and implement effective, efficient and transparent financial management and internal control systems;

(k) must enforce compliance with any prescribed conditions if the department, trading entity or constitutional institution gives financial assistance to any entity or person;

(l) must take into account all relevant financial considerations, including issues of propriety, regularity and value for money, when policy proposals affecting the accounting officer’s responsibilities are considered, and when necessary, bring those considerations to the attention of the responsible executive authority;

(m) must promptly consult and seek the prior written consent of the National Treasury on any new entity which the department or constitutional institution intends to establish or in the establishment of which it took the initiative; and

(n) must comply, and ensure compliance by the department, trading entity or constitutional institution, with the provisions of this Act

(2) An accounting officer may not commit a department, trading entity or constitutional institution to any liability for which money has not been appropriated. …

54. Information to be submitted by accounting authorities.—(1) The accounting authority for a public entity must submit to the relevant treasury or the Auditor-General such information, returns, documents, explanations and motivations as may be prescribed or as the relevant treasury or the Auditor-General may require. [Sub-s. (1) substituted by s. 31 (a) of Act No. 29 of 1999.]

(2) Before a public entity concludes any of the following transactions, the accounting authority for the public entity must promptly and in writing inform the relevant treasury of the transaction and submit relevant particulars of the transaction to its executive authority for approval of the transaction:

(a) establishment or participation in the establishment of a company;

(b) participation in a significant partnership, trust, unincorporated joint venture or similar arrangement;

(c) acquisition or disposal of a significant shareholding in a company;

(d) acquisition or disposal of a significant asset;

(e) commencement or cessation of a significant business activity; and

( f ) a significant change in the nature or extent of its interest in a significant partnership, trust, unincorporated joint venture or similar arrangement. [Sub-s. (2) amended by s. 31 (b) of Act No. 29 of 1999.]

(3) A public entity may assume that approval has been given if it receives no response from the executive authority on a submission in terms of subsection (2) within 30 days or within a longer period as may be agreed to between itself and the executive authority.

(4) The executive authority may exempt a public entity listed in Schedule 2 or 3 from subsection (2). …

55. Annual report and financial statements.—(1) The accounting authority for a public entity—

(a) must keep full and proper records of the financial affairs of the public entity;

(b) prepare financial statements for each financial year in accordance with generally accepted accounting practice, unless the Accounting Standards Board approves the application of generally recognised accounting practice for that public entity;

(c) must submit those financial statements within two months after the end of the financial year—

(i) to the auditors of the public entity for auditing; and

(ii) if it is a business enterprise or other public entity under the ownership control of the national or a provincial government, to the relevant treasury; and [Sub-para. (ii) substituted by s. 32 (a) of Act No. 29 of 1999.]

(d) must submit within five months of the end of a financial year to the relevant treasury, to the executive authority responsible for that public entity and, if the Auditor-General did not perform the audit of the financial statements, to the Auditor-General—

(i) an annual report on the activities of that public entity during that financial year;

(ii) the financial statements for that financial year after the statements have been audited; and

(iii) the report of the auditors on those statements. [Para. (d) amended by s. 32 (b) of Act No. 29 of 1999.]

(2) The annual report and financial statements referred to in subsection (1) (d) must—

(a) fairly present the state of affairs of the public entity, its business, its financial results, its performance against predetermined objectives and its financial position as at the end of the financial year concerned;

(b) include particulars of—

(i) any material losses through criminal conduct and any irregular expenditure and fruitless and wasteful expenditure that occurred during the financial year:

(ii) any criminal or disciplinary steps taken as a consequence of such losses or irregular expenditure or fruitless and wasteful expenditure;

(iii) any losses recovered or written off;

(iv) any financial assistance received from the state and commitments made by the state on its behalf; and

(v) any other matters that may be prescribed; and

(c) include the financial statements of any subsidiaries.

(3) An accounting authority must submit the report and statements referred to in subsection (1) (d), for tabling in Parliament or the provincial legislature, to the relevant executive authority through the accounting officer of a department designated by the executive authority. [Sub-s. (3) substituted by s. 32 (c) of Act No. 29 of 1999.]

(4) The relevant treasury may direct that, instead of a separate report, the audited financial statements of a Schedule 3 public entity which is not a government business enterprise must be incorporated in those of a department designated by that treasury. …

57. Responsibilities of other officials.—An official in a public entity—

(a) must ensure that the system of financial management and internal control established for that public entity is carried out within the area of responsibility of that official;

(b) is responsible for the effective, efficient, economical and transparent use of financial and other resources within that official’s area of responsibility;

(c) must take effective and appropriate steps to prevent, within that official’s area of responsibility, any irregular expenditure and fruitless and wasteful expenditure and any under collection of revenue due;

(d) 54 must comply with the provisions of this Act to the extent applicable to that official, including any delegations and instructions in terms of section 56; and

(e) is responsible for the management, including the safe-guarding, of the assets and the management of the liabilities within that official’s area of responsibility. …

63. Financial responsibilities of executive authorities.—(1) (a) Executive authorities of departments must perform their statutory functions within the limits of the funds authorised for the relevant vote.

(b) In performing their statutory functions executive authorities must consider the monthly reports submitted to them in terms of section 39 (2) (b) and 40 (4) (c).

(2) The executive authority responsible for a public entity under the ownership control of the national or a provincial executive must exercise that executive’s ownership control powers to ensure that that public entity complies with this Actand the financial policies of that executive. [Sub-s. (2) substituted by s. 34 of Act No. 29 of 1999.] 64. Executive directives having financial implications.—(1) Any directive by an executive authority of a department to the accounting officer of the department having financial implications for the department must be in writing.

64. Executive directives having financial implications.—(1) Any directive by an executive authority of a department to the accounting officer of the department having financial implications for the department must be in writing.

(2) If implementation of the directive is likely to result in unauthorised expenditure, the accounting officer will be responsible for any resulting unauthorised expenditure unless the accounting officer has informed the executive authority in writing of the likelihood of that unauthorised expenditure.

(3) Any decision of the executive authority to proceed with the implementation of the directive, and the reasons for the decision, must be in writing, and the accounting officer must promptly file a copy of this document with the National Treasury and the Auditor-General, and if a provincial department is involved, also with the relevant provincial treasury. …

76. Treasury regulations and instructions.—

(1) The National Treasury must make regulations or issue instructions applicable to departments, concerning—

(a) any matter that must be prescribed for departments in terms of this Act;

(b) the recovery of losses and damages;

(c) the handling of, and control over, trust money and property;

(d) the rendering of free services;

(e) the writing off of losses of state money or other state assets or amounts owed to the state;

( f ) liability for losses and damages and procedures for recovery;

(g) the cancellation or variation of contracts to the detriment of the state;

(h) the settlement of claims by or against the state;

(i) the waiver of claims by the state;

( j) the remission of money due to the Revenue Fund, refunds of revenue and payments from the Revenue Fund, as an act of grace;

(k) the alienation, letting or other disposal of state assets; and

(l) gifts or donations by or to the state.

(2) The National Treasury may make regulations or issue instructions applicable to departments, concerning—

(a) any matter that may be prescribed for departments in terms of this Act;

(b) the charging of expenditure against particular votes;

(c) the establishment of and control over trading entities;

(d) the improvement and maintenance of immovable state assets;

(e) fruitless and wasteful, unauthorised and irregular expenditure;

( f ) the determination of any scales of fees, other charges or rates relating to revenue accruing to, or expenditure from, a Revenue Fund;

(g) the treatment of any specific expenditure;

(h) vouchers or other proofs of receipts or payments, which are defective or have been lost or damaged;

(i) assets which accrue to the state by operation of any law; or

(j)  any other matter that may facilitate the application of this Act. …

77. Audit committees.—An audit committee—

(a) must consist of at least three persons of whom, in the case of a department—

(i) one must be from outside the public service;

(ii) the majority may not be persons in the employ of the department, except with the approval of the relevant treasury; and [Sub-para. (ii) substituted by s. 40 (a) of Act No. 29 of 1999.]

(iii) the chairperson may not be in the employ of the department;

(b) must meet at least twice a year; and

(c) may be established for two or more departments or institutions if the relevant treasury considers it to be more economical. …

CHAPTER 10 FINANCIAL MISCONDUCT

Part 1: Disciplinary proceedings

81. Financial misconduct by officials in departments and constitutional institutions.—

(1) An accounting officer for a department or a constitutional institution commits an act of financial misconduct if that accounting officer wilfully or negligently—

(a) fails to comply with a requirement of section 38, 39, 40, 41 or 42; or

(b) makes or permits an unauthorised expenditure, an irregular expenditure or a fruitless and wasteful expenditure.

(2) An official of a department, a trading entity or a constitutional institution to whom a power or duty is assigned in terms of section 44 commits an act of financial misconduct if that official wilfully or negligently fails to exercise that power or perform that duty.

82. Financial misconduct by treasury officials.—An official of a treasury to whom a power or duty is assigned in terms of section 10 or 20 commits an act of financial misconduct if that official wilfully or negligently fails to exercise that power or perform that duty.

83. Financial misconduct by accounting authorities and officials of public entities.—

(1) The accounting authority for a public entity commits an act of financial misconduct if that accounting authority wilfully or negligently—

(a) fails to comply with a requirement of section 50, 51, 52, 53, 54 or 55; or

(b) makes or permits an irregular expenditure or a fruitless and wasteful expenditure.

(2) If the accounting authority is a board or other body consisting of members, every member is individually and severally liable for any financial misconduct of the accounting authority.

(3) An official of a public entity to whom a power or duty is assigned in terms of section 56 commits an act of financial misconduct if that official wilfully or negligently fails to exercise that power or perform that duty.

(4) Financial misconduct is a ground for dismissal or suspension of, or other sanction against, a member or person referred to in subsection (2) or (3) despite any other legislation.

84. Applicable legal regime for disciplinary proceedings.—A charge of financial misconduct against an accounting officer or official referred to in section 81 or 83, or an accounting authority or a member of an accounting authority or an official referred to in section 82, must be investigated, heard and disposed of in terms of the statutory or other conditions of appointment or employment applicable to that accounting officer or authority, or member or official, and any regulations prescribed by the Minister in terms of section 85.

85. It must be stated that the South African Police Services (SAPS) has not taken this matter any further in any meaningful way and the prosecution of the perpetrators have not been facilitated despite the strong evidence that is available herein.

86. In all the above circumstances, the JCOI into state capture is accordingly requested to inquire into all the aspects of corruption and other crimes on the part of Gordhan and Nene and their role in serving state capture by white monopoly capital. BLF believes that such crimes are in service of state capture by white monopoly capital.

Attachments

1. Annexure “A”: Leaked Treasury Internal Audit Report dated March 2016

2. Annexure “B”: See ‘MEDIA STATEMENT PURCHASE OF INTEGRATED FINANCIAL MANAGEMENT SYSTEM SOFTWARE LICENCES CONCLUDED’ via link http://www.treasury.gov.za/comm_media/press/2016/20160805%20-%20Intergrated%20Financial.pdf

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Zanele Lwana

I hereby certify that the deponent knows and understands the content of this affidavit and that it is to the best of his knowledge both true and correct. This affidavit was signed and sworn to before me at                             on this           day of                             2018, and the Regulations contained in Government Notice R.1258 of 21 July 1972, as amended, have been complied with.

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COMMISSIONER OF OATHS

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