State Capture Inquiry: Spotlight falls on Free State R1bn housing project

The State Capture Inquiry has heard how a R1 billion housing project in the Free State province was “completely irregular”.

The province spent millions of rands on housing between 2010 and 2011 to little or no value.

On Monday, Free State human settlements head Nthimotse Mokhesi, gave evidence before the commission.

Mokhesi came onto the scene later and brought an application on behalf of the department for its decision to be reviewed in relation to a prepayments scheme to suppliers.

In 2013, the Free State department of human settlement brought an application before the High Court in Bloemfontein to review and set aside 106 building contracts.

In court documents, Mokhesi had previously said his department made payments to contractors and suppliers without any written agreement or proof that houses had been built or partially built.

On Monday, Mokhesi told the state capture inquiry that he believed his department’s prepayment scheme was fraudulent.

But he also added that: “Perhaps I must also be very careful because not everything that looks like fraud is fraud.”

He said the sole purpose of his affidavit, which he submitted to the court was to try and persuade the court to give them a favourable judgment in order to recover the money.

Mokhesi said his department had made an advance payment of over R500 million before anything was done.

And the ultimate loss for the department was estimated in the region of over R400 million.

The commission also heard that contracts were unlawful because the department did not follow any lawful procurement processes.

The total allocation for the housing project in the Free State for 2010 – 2011 was R1.42 billion and the plan was to build over 21 000 low cost housing units, but that was not achieved.

Evidence leader advocate Paul Pretorius said: “The whole housing arrangement in the province… From the very beginning, from the appointment to the contractors, right through to the prepayment to suppliers at the end of the financial year was completely irregular. With the result that the housing scheme in the department was to put it at the lowest to total failure.”

Earlier, advocate Pretorius laid the foundation for this week’s evidence on the case.

In his opening address Pretorius told commission chairperson deputy chief justice Raymond Zondo, there had been a number of reports and investigations into the housing matter, adding the commission’s legal team did not wish to rehash the whole investigation.

“What we would like to do is focus on the issue of accountability and why certain people were not held accountable,” Pretorius said.

Pretorius also said there would be evidence about a scheme that was devised which turned out to be fraudulent.

“What is clear from the start is that neither contractors nor suppliers of materials to contractors were subject to any competitive bidding process which as we’ve dealt with in the asbestos matter, it is clearly unlawful and inexcusable,” Pretorius said.

After Pretorius’ opening statement, Mokhesi took the stand and told the commission that he did not know who selected the contracts for the housing project.

But Pretorius told Zondo that a disqualified contractor was “indeed appointed” and according to a report, the contractor “performed miserably”.

Pretorius also told the commission that each contract and arrangement should be investigated.

He said there were some allegations of links between illegitimately appointed contractors and officials.

“And of course, whilst all of that was happening a number of relatively junior employees get disciplined and dismissed and those who should be held accountable aren’t,” Pretorius said.

He gave the commission some background to the issue, saying during the 2010 and 2011 financial year, a new tender process commenced.

He also said the evidence will show that by the time the bid adjudication committee came to consider the bids, the period of validity of the tender had expired. And instead of extending the validity of the period of the tender it was abandoned.

Pretorius also said those who qualified in terms of the bids and those who were disqualified, including those who were declared incompetent to build, were all put on the database and certain officials, including then MEC Mosebenzi Zwane merely selected who they wanted to do the work. The hearing will continue on Tuesday.

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