Nkandla Report: Improper Conduct and Maladministration

Posted On Wednesday, 19 March 2014 17:00 Published by
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The conduct of all organs of state involved in managing the Nkandla Project, particularly officials from the Department of Public Works (DPW) was unlawful and constitutes improper conduct and maladministration. Excerpts from Public Protector, Nkandla Report.

Nkandla Report

The prescribed open tender process was not utilised for the procurement of the goods and services required at any stage of the project. Treasury requirements require that all goods and services between R10 000 and R500 000 be subjected to three quotations and above R500 000, to an open tender process.

According to the DPW records, the procurement without tender processes also covered works referred to as “general site works”, amounting to more than R67 million and which included the installation of lighting, data and CCTV networks, access control facilities, bulk earth works and landscaping. Mobile accommodation for the SAPS staff and mobile generators were also procured without a tender process.

It is common cause that Mr Minenhle Makhanya (Mr Makhanya) not only served as principal agent for both the President’s private work and the state funded the Nkandla Project. Mr Makhanya served as overall architect, providing subcontractors to the Nkandla Project while serving the President as his private architect. 

Having a contract that paid him on the percentage of the cost of the measures installed also presented a risk of conflict of interest for Mr Makhanya as choosing the most expensive option meant more money as did expanding the scope of the work involved. Mr Makhanya had made R16,5 million from the Nkandla Project by the time of conclusion of the investigation.

The cost analysis shows that the Nkandla Project started from humble beginnings, but soon escalated by more than two hundred per cent (200%) within a year.

Mr Jean Rindel (Mr Rindel) evidence indicates that a decision was made by the Nkandla Project Team and the DPW to divide the project into three phases and the documents show that the entire project was not costed up front as required under both the Cabinet Policy and the National Key Points Act. 

It is worth noting that at R215 million and still rising, the cost of security installations at President Zuma’s private residence far exceeds similar expenditure in respect of all his recent predecessors.

The key violation in this regard is the failure to follow the processes outlined in the Cabinet Policy and the deviation from the 16 security measures that were recommended in the Second Security Evaluation by SAPS. This constitutes improper conduct and maladministration.

  • The organs of state involved in the Nkandla Project failed dismally to follow Supply Chain Management prescripts, such as section 217 of the Constitution, PFMA, Treasury Regulations the DPW Supply Chain Management policy, key omissions including: the absence of demand management; improper delegations; failure to procure services and goods costing above R500 000 through a competitive tender process; failure to ensure security clearance for service providers, and allowing “scope creep” leading to exponential scope and cost escalations.
  • The conduct of all organs of state involved in managing the Nkandla Project, particularly officials from the DPW, who unduly failed to comply with Supply Chain Management prescripts was unlawful and constitutes improper conduct and maladministration.
  • The DOD and SAPS officials failed to comply with Treasury Regulation 16A.3.2 imposing the responsibility for demand management on client departments, which include ensuring cost effective measures and budgeting, appropriately for such.

All the Ministers of Public Works provided incorrect information on the legal authority for and the extent of the works at the President’s private residence.

The DPW officials failed to acquaint themselves with the authorizing instruments relating to the implementation of the Nkandla Project. They failed to apply their minds and adhere to the supply chain management policy framework in respect of the procurement of goods and services for the Nkandla Project. These failures constitute improper conduct and maladministration.

Mr Makhanya’s assumption of multiple and conflicting roles as Principal Agent, the President’s architect and procurer of some of the subcontractors which placed him in a position where the advice he gave was tainted by conflict of interest and not in the public interest, which led to uncontrolled scope creep, cost escalation and poor performance by some of the contractors.

The former Minister of Public Works, Mr G Doidge, and Deputy Minister Bogopane-Zulu were at some stage involved in the implementation of the Nkandla Project. Their involvement, albeit for a short period of time, appears to have created an atmosphere that was perceived as political interference or pressure, although the evidence does not show any such intent on their part.

Funds were reallocated from the Inner City Regeneration and the Dolomite Risk Management Programmes of the DPW. Due to a lack of proper demand management and planning service delivery programmes of the DPW were negatively affected. This was in violation of section 237 of the Constitution and the Batho Pele White Paper and accordingly constitutes improper conduct and maladministration. 

The President tacitly accepted the implementation of all measures at his residence and has unduly benefited from the enormous capital investment from the non-security installations at his private residence, a reasonable part of the expenditure towards the installations that were not identified as security measures in the list compiled by security experts in pursuit of the security evaluation, should be borne by him and his family.

The amount in question should be based on the cost of the installation of some or all the items that can’t be conscionably accepted as security measures. These include the Visitors’ Centre, cattle kraal and chicken run, swimming pool and amphitheatre. The President and his legal advisers, did not dispute this in their response to the Provisional Report. The President did not dispute during the investigation that he told me on 11 August 2013 that he requested the building of a larger kraal, and that he was willing to reimburse the state for the cost thereof.

President Zuma’s failure to act in protection of state resources constitutes a violation of paragraph 2 of the Executive Ethics Code and accordingly, amounts to conduct that is inconsistent with his office as a member of Cabinet, as contemplated by section 96 of the Constitution.

The anomalies in the Nkandla Project point to the existence of systemic policy gaps and administrative deficiencies in the regulatory framework used as authority for implementing security measures at the private residences of ones of Presidents, Deputy Presidents, former Presidents and former Deputy Presidents, key among these being the absence of a cap and an integrated instrument such as the Ministerial Handbook, where all permissible measures can be found.

Appropriate remedial action to be taken on my findings of maladministration and as envisaged by section 182(1) of the Constitution is the following:

The President is to:
(1) Take steps, with the assistance of the National Treasury and the SAPS, to determine the reasonable cost of the measures implemented by the DPW at his private residence that do not relate to security, and which include Visitors’ Centre, the amphitheater, the cattle kraal and chicken run, the swimming pool.
(2) Pay a reasonable percentage of the cost of the measures as determined with the assistance of National Treasury, also considering the DPW apportionment document.

ADV. THULI MADONSELA
PUBLIC PROTECTOR OF SOUTH AFRICA

Last modified on Thursday, 20 March 2014 08:15

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