Court lambasts Madonsela’s NEF report

The High Court in Pretoria has severely criticised former public protector Thuli Madonsela for ordering the National Empowerment Fund (NEF) to apologise and pay “sorry money” to a Midrand businessperson whose medical supply company went bankrupt because of retracted funding.

Acting Judge Corrie van der Westhuizen set aside Madonsela’s 2014 report, Stringed Along, and her recommendations that the NEF must apologise and pay “sorry money” to businessperson Naomi Ngwenya.

Madonsela found that the NEF had prejudiced Ngwenya by giving final approval to invest R5 million in her business and later withdrawing it because she did not qualify as a “black person” under the broad-based Black Economic Empowerment Act.

She also found that the NEF was guilty of maladministration, because of the long delay in processing Ngwenya’s application for funding.

Van der Westhuizen found that Madonsela had erred in treating three different applications for funding by Ngwenya and her company, Best Care Medical Supplies CC, as one, although there were three different applications for funding.

He said the first two applications were refused within a reasonable time for cogent reasons because of Best Care’s precarious financial position and pending litigation between it and one of its suppliers.

The NEF only made an offer of R5 million after Ngwenya complained to the trade and industry department, which resulted in negotiations. The offer was conditional and was withdrawn within a reasonable time because Ngwenya was not BEE compliant.

The NEF said Ngwenya had stated that she was BEE compliant but she knew this was not true as the definition of a black person in the legislation included African, coloured and Indian people who were citizens by birth or descent or had acquired citizenship by naturalisation before April 1994, while Ngwenya was previously a Zimbabwean and was only naturalised in 1999.

The judge said the NEF’s failure to verify the information before considering the merits of Best Care’s application did not constitute maladministration and Madonsela’s findings were irrational and unreasonable.

He found that Madonsela had exercised powers she did not have and acted unlawfully when she directed the NEF to apologise to Ngwenya and negotiate with her to determine the amount of “sorry money”.

The NEF was not authorised to comply with the recommendation and would, in fact, have been in breach of its obligations and authority if it had, he said. – ilsedl@citizen.co.za