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By Zintle Mahlati 
3h ago
Johannesburg – The Zondo State Capture Commission has analyzed the details of why the Free State human settlements department made 600 million rand in payments to contractors and suppliers for work that was not delivered.
The former head of the Free State Department of Human Settlements, Nthimotse Mokhesi, took the stand in the investigation on Monday.
Mokhesi’s appearance centered on an affidavit he wrote while serving as HOD and seeking relief in court for the department to recover over R600m that was paid to various vendors and contractors to build 14,000 RDP homes for the citizens of the Province.
Mokhesi has explained that 600 million rand was paid to suppliers and contractors in a fraudulent scheme devised by the former human settlements MEC Mosebenzi Zwane and later by HOD Gift Mokoena.
In late 2010, the department found itself in a position to lose most of its R1bn housing budget. National Treasury regulations stipulate that a department’s budget can be recovered from a province if it is not spent within a given financial year.
The national minister for human settlements at the time, Tokyo Sexwale, was aiming to recoup the budget from the Free State human settlements department as it appeared that the province would not meet its goal of spending the budget. At that time, in October 2010, only 10% of the budget had been spent.
Zwane and Mokoena were said to have approved payments to suppliers and contractors in a plan to ensure that the housing budget was not recovered by the national department and redistributed to other provinces, which had met their spending budgets.
The commission’s testing leader, attorney Paul Pretorius, explained that the scheme involved agreements with 135 building contractors and that prepayments were made to these contractors before the final products were received.
What made these payments illegal was that the procurement processes state that the contractors must be responsible for procuring the construction material and, once the first phase of the project is completed, the contractor can begin claiming the department, through proper checks and balances.
This process did not happen.
Another illegal component of the scheme was how the department also reached agreements with 112 suppliers for the construction material to be delivered to designated contractors.
This meant that the department assumed responsibility for supplying the construction material to the contractors.
Mokhesi told the commission that this was illegal as it went against the first agreement with the contractors that stated that they were responsible on their own for ensuring that the construction material was supplied.
Mokhesi explained the illegality of the agreements; “There were some material supply agreements that were signed with 112 suppliers. These material suppliers would then supply material to the contactors that is inconsistent with the first contract. Now it became the responsibility of the department ”.
Mokhesi agreed that the general motive for the deals was to ensure that the bulk of the housing budget was spent as quickly as possible so that it couldn’t be lost. The money was paid in five months, between the end of 2010 and the beginning of 2011 with no acquisition processes being followed and internal controls being circumvented.
“I think it is simple, it was to ensure that the department does not lose money with the fiscus and other provinces. The payment and purchase material resulted in this type of process or scheme. There was a possible loss for other provinces of the conditional grant,” he explained Mokhesi.
Contractors and suppliers were paid more than 600 million rand, while no houses were built in 2011.
Mokhesi said it was unclear how many houses had been built so far, but admitted that very little had been delivered.
Mokhesi, who had written arguments for the Bloemfontein High Court to allow the department to recover the funds, said that at the time the loss to the department had been estimated at 500 million rand.
The Bloemfontein High Court agreed with the facts provided by Mokhesi and the province that the plan to ensure that the housing budget was spent was fraudulent.
The commission will hear from Mokoena this week.
Political Bureau
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