Treasury summoned to explain ‘excessive’ R23m subsidy to new rehab centre

National Treasury is to be summoned to the South Gauteng High Court after a court battle between the Gauteng government and a small NGO revealed that Life Esidimeni hospital’s subsidiary NGO appears to have been granted a government subsidy R20 million in excess of what it is entitled to receive.

Judge Brian Spilg indicated this on Tuesday after grilling state advocate Dawie Joubert on how government approved over R23 million for the Life Recovery Centre, a newly built rehabilitation centre approved for funding last year.

The amount was to be paid urgently, according to the Gauteng department of social development, to a Life Esidimeni account using A Re Ageng, another NGO, as a conduit because the new establishment did not yet have a vetted account.

E-mail correspondence seen by The Citizen between the Treasury and A Re Ageng indicates the national department could not confirm that the amounts in question were legitimately transferred and were from the department.

The debacle culminated in an explosive court battle in which the department sought to be reimbursed and to freeze A Re Ageng’s bank accounts after R5 million destined for the Life Recovery Centre was transferred into a private business account instead.

The department claims an agreement between it and A Re Ageng was signed last year in terms of  which the NGO would be the conduit for the transfer of R23 million to be sent in two tranches, R13 million in June and R10 million in October. The NGO denied this, saying that the agreement only covered the first amount.

Subsidy payments to the cash-strapped NGO have been halted, with the department claiming the NGO’s accounts are untrustworthy. On Tuesday the shelter for abused women and children brought an application to force the department to make the outstanding payment for their fourth quarter which began in January. Workers at the shelter have not been paid for three months.

A Re Ageng director Mpule Lenyehelo said the department was punishing her organisation for being “whistle-blowers” in what they suspect was money laundering.

“If I didn’t blow the whistle now I was also going to be implicated. There was something wrong with both transactions and I still maintain that money was not legitimate money. Up until today we have not received proof of payment. They even failed to provide the judge with proof of payment,” she said.

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