million to Unital to build 500 RDP houses. There was no tender
process. The FSHS later told me that Unital had been appointed as a
‘subcontractor’ to VNA Consulting, the department’s ‘implementing agent’ for select housing projects. When I pointed out that Unital had a contract with the FSHS itself, according to the department’s own records, I heard nothing further.
The apparent lack of a proper procurement process was not the only problem. Unital was awarded the large contract just six months after it was established. Neither Li nor Thoko had any apparent experience as a construction contractor and they seemed woefully unprepared for a project of this scope. Being a new company, Unital had a Construction Industry Development Board grading of 1, the lowest possible score.
Although CIDB gradings do not apply to government tenders for housing projects, these scores serve as a good indication of a company’s capabilities and experience.
By October 2014, it was apparent that Unital was not up to the task.
The Eastern Free State Express reported that Unital’s subcontractors had downed tools because Li had not been paying them. 3 The involvement of Magashule’s daughter, however, remained under wraps.
Despite the problems on site, the FSHS continued to lavish contracts on Unital. In August 2015, the company clinched a R78-million contract to build a further 500 houses at Vogelfontein. In April 2017, it received R9 million to build 50 more. In total, Unital was awarded contracts worth R150 million to deliver 1 050 RDP houses at Vogelfontein, all without having to submit a single tender. But getting the contract is the easy part. Completing the project is an entirely different matter. Given Unital’s inexperience, it should come as no surprise that the Vogelfontein development counts among the province’s many unfinished RDP projects.
There is some confusion as to how many houses Thoko’s company actually completed. In response to my queries in early 2018, the FSHS
initially said that it had thus far paid R67.5 million to Unital for 630
finished houses. But the department later sent me an updated figure –
there were in fact only 568 completed houses. The R67.5 million correlates with the housing subsidy system’s records. The fact that Unital did not receive the full R150 million confirms that the company did not finish its work. Neither the FSHS nor Unital was able to explain why.
Inundated with complaints from Vogelfontein’s new residents, the local branch of the Democratic Alliance conducted an investigation and compiled a report in September 2017. 4 According to the report, there were fewer than 200 finished houses, many of which appeared to have been built with substandard materials and showed poor workmanship.
The biggest problem, however, was that the entire development had been left without water, sewerage and electricity. As a result, many residents were forced to build dangerous pit toilets. Others simply relieved themselves in a nearby stream, causing considerable health risks. Because the area had no basic services, some of the completed houses were left unoccupied, which resulted in them being vandalised or used by local teenagers as drug dens. In short, Magashule’s vision of a fully serviced ‘human settlement’ had turned into an underserviced
‘kasi’.
I visited Vogelfontein in March 2018 to see for myself. The DA report was no exaggeration, and they were not the only political party alarmed by the situation. A group of local SACP members showed me around and pointed out some of the problems. In one section of the development, open trenches were the only indication that the contractor
had at some point considered installing sewerage and water pipes. One beneficiary who had decided to move into his new home regardless told me it had not been built well. ‘When it rains, it leaks into my house,’ he said. ‘Some of us go up a nearby hill to relieve ourselves because there aren’t any working toilets.’
The lack of basic services was not merely the result of bad project management. Further investigation revealed that Magashule’s apparent meddling was the root cause of the terrible conditions in which the people of Vogelfontein now lived. Long before Unital arrived on the scene, the Dihlabeng local municipality appointed a firm from Gauteng to oversee a mixed housing development at Vogelfontein. The company, Emendo Project Managers and Planners, was appointed as a turnkey developer, which meant it was tasked with providing bulk services and other infrastructure along with new houses. Emendo was making good progress with some of the work. It had provided water and sewerage to some of the sites, and was in the process of constructing a sewage pump station.
In late 2013, a few months after Magashule met with Jianliang Li at Vogelfontein, one of Emendo’s subcontractors, Dam Civils, which had started on the design and construction of the new neighbourhood’s road network, was suddenly halted in its tracks. Busa Molatseli, Dihlabeng’s municipal manager, informed Emendo and Dam Civils that the local council could not approve their plans for the roads and houses. In fact, Emendo was to abandon all its activities at Vogelfontein. Baffled by the municipality’s sudden change of heart, one of Emendo’s directors asked to meet with Molatseli. During the meeting, it became clear who was behind the municipality’s unwillingness to cooperate with the turnkey developer. ‘[Dihlabeng
municipality’s] justification for its action was that … the honourable Ace Magashule had instructed it to no longer cooperate with the defendant (Emendo) on the project,’ read court papers later filed by Emendo in an ongoing legal battle over the matter.
Sources who were involved in the saga told me that, in 2014, Magashule’s office began to strong-arm the municipality into cutting ties with Emendo, signed agreements notwithstanding. These sources were able to provide me with specific details about Magashule’s meddling, including the dates, venues and attendees of meetings in which the matter was discussed. At one meeting, Magashule told the MEC for human settlements, Olly Mlamleli, the director-general in the Office of the Premier, Kopung Ralikontsane, and the HOD in the Free State Department of Cooperative Governance and Traditional Affairs, Mokete Duma, that Dihlabeng’s contract with Emendo was unlawful and needed to be terminated.
When I first reported on this issue in early 2018, Magashule’s office admitted to being involved in the Vogelfontein affair. It said it had advised the Dihlabeng municipality to boot Emendo off the project. ‘It appeared that the contracts concluded with Emendo were irregular, and as such, it should be reviewed and set aside by a competent court,’ I was told. ‘The office of the premier did not instruct the municipality, but gave legal advice.’ This seemed a bit strange. At the time, almost 90 per cent of the Free State’s municipalities were guilty of irregular expenditure, according to an auditor-general’s report. 5 Why was Magashule seemingly taking a special interest in this particular contract?
Over the next few years, the provincial government and the Dihlabeng municipality worked together to get rid of the incumbent developer.
The wheels of the alleged scheme turned slowly, but once they were put in motion, Emendo’s fate was all but sealed. In November 2015, the FSHS sent the municipality a letter urging it to institute legal proceedings against Emendo. 6 During a Dihlabeng council meeting on 25 November 2016, it was resolved that the municipality would
‘approach the High Court regarding the appointment of Emendo in order to nullify the agreement with Emendo on the land availability and development framework’. 7
While all of this was playing out, Thoko and her partner were being paid millions by Magashule’s government. At the same time, the work on Vogelfontein’s sewer network and related infrastructure ground to a halt. Emendo, meanwhile, was not willing to back down without a fight. The company complained to the national minister of human settlements, Lindiwe Sisulu, who contacted Magashule.
In September 2016, Magashule, Mokhesi, Molatseli, and other officials and stakeholders met with Emendo. The meeting’s minutes highlight Magashule’s involvement in the Vogelfontein saga. ‘Free State exco cabinet led by Premier Ace Magashule took the
resolution to take over the project … from the Dihlabeng local municipality,’
Mokhesi said, according to the minutes. He also said Emendo had been urged to ‘walk away from the project’. Furthermore, Mokhesi stated that his department had ‘appointed another Contractor to build 1 000
RDP [houses] on the project and funding was made available to them’.
That would be Unital. Emendo’s representative wanted more information on the department’s ‘Chinese’ contractor and the processes through which it had been appointed. According to the minutes, Mokhesi and Molatseli remained mum.
On ‘legal advice’ from Magashule’s office, the Dihlabeng municipality
finally lodged a legal bid at the Bloemfontein High Court in January 2017 for its agreement with Emendo to be declared void. 8 That case is ongoing.
A document from the national Department of Human Settlements’
Housing Development Agency (HDA) provides a clue as to why Magashule may have wanted to get rid of Emendo. In 2016, while the premier’s office and the local municipality were busy fighting with the incumbent turnkey developer, the HDA compiled a ‘fact sheet’ for the Vogelfontein development. According to the document, the HDA envisaged that Vogelfontein would be developed into a whole new town with more than 5 000 housing units. The total project value, which included the new houses and related infrastructure, would come to almost R4 billion.9 Considering his connections with businesspeople in the construction industry, including his own daughter, it is not difficult to imagine why Magashule would have wanted full control of this potential revenue stream.
When I first wrote about this issue for News24 in March 2018, Magashule denied that he had helped Thoko’s company clinch the RDP contracts from the FSHS. ‘The honourable premier is not at all involved in the awarding of tenders or any related processes,’ his office told me. ‘The honourable premier was therefore not involved in the appointment of the service provider with regards to the Bethlehem RDP
project.’
It was the same kind of broad denial that his office routinely dished up when confronted with allegations of corruption. The circumstances that led to the Vogelfontein mess, however, make it extremely difficult to take this denial at face value. After all, Magashule was physically present at the very first site meeting with Thoko’s Chinese business
partner. In this sense, the Vogelfontein saga resembled the Shell fuel station debacle. In both instances, the premier was at the proverbial scene of the crime right before his administration effected decisions that enriched his daughter. Most tellingly, it was Magashule who had flexed his executive muscles to make sure the incumbent contractor got taken off the project.
Even if Thoko’s Unital somehow won the contracts without any meddling from her father, the fiasco remains a terrible blight on Magashule’s legacy. In 2012, Selahliwe’s shack-dwelling residents enthusiastically bought into his promises of a fully serviced neighbourhood. While his daughter’s company made millions, these people are now left with substandard houses and no water, flushing toilets or electricity.
19
Paved with gold
No chronicle of Ace Magashule’s contentious career as premier of the Free State would be complete without mentioning the province’s Department of Police, Roads and Transport (DPRT). A host of sources ranging from former and current top provincial officials to department insiders claim that the DPRT was at the centre of Magashule’s alleged capture scheme.
Like the Department of Human Settlements and its R1-billion housing debacle, the DPRT became embroiled in a massive scandal almost immediately after Magashule took office in 2009. In 2010, the department dished out contracts to a value of about R4 billion for the rehabilitation of twenty-three roads in the province. 1 There was at least one Johannesburg Stock Exchange (JSE)–listed construction giant among the lucky contractors. According to sources familiar with the matter, some of the usual Free State businesspeople linked to the premier also got in on the action. National Treasury eventually got wind of the deal and, after an investigation, found that the DPRT had made ‘illegal and unfunded contractual commitments’ to the construction companies. 2 In an early blow to the new premier, the DPRT was placed under administration by national government as a result of the Treasury investigation. 3 One source who had been privy to the probe told me that investigators had identified apparent kickbacks paid to government officials by some of the contractors. He said the matter had been referred to the Hawks, but the case somehow died an early death.
If Treasury’s intervention ensured cleaner governance at the department, it was temporary. By the 2017/18 financial year, the DPRT
was again in the auditor-general’s bad books. With irregular expenditure sitting at R650 million and unauthorised expenditure at about R240 million – mostly resulting from dodgy contracts – the department received a qualified audit opinion. 4 While the auditor-general’s findings are shocking, the figures do not betray the brazenness with which departments such as the DPRT were apparently captured in order to enrich Magashule’s friends and family.
One DPRT insider explained how the alleged capture scheme was carried out. ‘Ace ensured people from Ngwathe and other northern municipalities were appointed as supply chain management and financial officials at our department,’ said this source. He gave me names of officials from the Ngwathe local municipality (which includes Parys), who had been moved to the DPRT. They included Norman Selai, Ngwathe’s former municipal manager, and Makalo Mohale, a former Ngwathe procurement official and ANC Youth League chairperson in the Free State. Selai became a chief director at the DPRT, said my source, but more importantly, he became the chairperson of the department’s bid adjudication committee and later the chair of the bid evaluation committee (BEC). Mohale, who once served as Magashule’s spokesperson, 5 was appointed as a supply chain manager, according to my source. He was later moved to the FSHS.
Both officials were therefore involved in appointing contractors. ‘That is how they gained control of the whole tender process,’ my source claimed. ‘The evaluation committee identifies [would-be contractors]
and makes sure the company that provides kickbacks is in the lead before the BEC’s recommendation goes to the bid adjudication
committee. The supply chain manager then ratifies the decision and ensures the department makes prepayments to the contractors.’ My source further claimed that Magashule’s departure from the Free State did not affect the status quo. ‘Ace is still in charge of the departments,’
he told me.
And Mohale and Selai did not act alone at the DPRT. ‘I can count at least fifteen senior managers in critical [financial] positions who come from Parys or from elsewhere in the Fezile Dabi region,’ said the department insider. Sandile Msibi, another alleged Magashule associate, became the department head in 2011. My sources claimed that for years Msibi acted as Magashule’s lieutenant in the DPRT, just as Tim Mokhesi had done at the FSHS. Msibi died suddenly in December 2017 from an unknown illness. 6 At his funeral, Magashule described his fallen comrade as the ‘best HOD in the history of the administration’. He then shocked mourners by claiming that the forces of ‘white monopoly capital’ had poisoned Msibi because he had refused to give contracts to such companies. ‘We are in danger of being murdered,’ Magashule claimed. ‘Once you touch the nerve of white monopoly capital, you will never survive.’ While justifying his theory, Magashule once again let slip that his administration gave out contracts on the basis of considerations other than those prescribed by the Public Finance Management Act and related laws and regulations. Msibi
‘diverted tenders away from white-owned firms to benefit blacks’, Magashule said. 7 No department head should be able to unilaterally
‘divert’ contracts in any particular direction.
There is another theory doing the rounds in the Free State’s political circles regarding Msibi’s death. It gained traction after an amaBhungane report published in City Press in March 2018 re
vealed
that Msibi had somehow amassed properties worth a staggering R25
million before his untimely death. 8 The properties were mostly held in his trust’s name, and almost all of them had been bought after he became HOD. Most tellingly, Msibi had managed to buy the properties without bank loans. This, according to some of my sources, was proof that he had received kickbacks. ‘There is no other way to explain this,’
said one former MEC. ‘He was a senior government official, yes, but where in the world would he have gotten that much money through legal means?’ According to the amaBhungane report, the Hawks had opened a ‘commercial crime inquiry’ into Msibi in early 2016. 9 The alternate theory suggests that Msibi’s death was somehow linked to the Hawks probe. ‘There were very senior ANC people in this province who were getting nervous about what might be revealed through an investigation into Msibi’s assets,’ one politician in the province told me.
‘There was even talk that he was going to cooperate with the authorities. Remember, if he had been taking bribes, he certainly hadn’t done so alone.’
So far, no one has been able to unearth evidence linking Msibi’s death to a political conspiracy. However, there are plenty of concrete facts outside the realm of rumour that detail how Magashule’s family benefited from his alleged capture of the DPRT. It would appear that a once-noble initiative to help emerging contractors in the province find their feet was turned into a cash cow for people closely linked to the then premier.
The DPRT’s Contractor Development Programme (CDP) was launched in 2008. Emerging businesses in the construction industry could apply to become beneficiaries. The department would assist them with training and skills development, after which they would be given
small contracts to help them gain experience. The contracts were mostly for road maintenance, grass cutting and related projects. 10
Thanks to the CDP, emerging contractors from all over the Free State had an opportunity to gain valuable experience and earn much-needed revenues to get their businesses going. Other provincial departments ran similar initiatives, but the province’s expenditure on the DPRT’s CDP alone was by no means insignificant. In Magashule’s nine years as premier, the Free State spent almost R2 billion on CDP contracts and other costs related to the programme. 11
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