Alleged mismanagement by Proudly Manenberg of Teba Development funding from Government: Manenberg Development Coordinating Structure (MDCS) briefing

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Cooperative Governance and Traditional Affairs

10 October 2011
Chairperson: Ms D Nhlengethwa (ANC) (Acting)
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Meeting Summary

The Manenberg Development Coordinating Structure (MDCS) expressed disappointment that Teba Development, a key stakeholder, was not present, and provided the Committee with a pack of documents that contained evidence in support of the Structure's allegations of mismanagement of Government funds by the leaders of Proudly Manenberg.

The Structure explained that the allegations could be viewed as a continuation of a similar presentation to the Portfollio Committee on Public Works earlier that year. The allegations related to funds from both the Department of Public Works and the Department of Cooperative Governance. The two funding conduits involved were the Independent Development Trust and Teba Development.

The Structure provided the Committee with several examples of the alleged irregularities which included incidents relating to wages, ghost workers, and unapproved activities. The Structure had approached the Committee as a last resort since all previous attempts to uncover the mismanagement of funds seemed to have fallen on deaf ears. The Structure had approached a range of institutions, including the local councillor, the South African Police Service, the Speaker of the Provincial Parliament and even the Hawks. The Structure explained that it was established as an alternative to Proudly Manenberg after unhappiness from various quarters had become evident.

The Committee needed clarity on the precise source of the funding and also the specific aims and objectives. Some Members felt that, given the billions being managed by both Teba and the  Independent Development Trust, a forensic audit needed to be instituted into the practices of these organisations. Members also asked about the exact nature of the relationship between Proudly Manenberg and the Structure.  

The Acting Chairperson promised the Structure  that the Committee would study the evidence submitted and then decide on a way forward; thereafter the Committee would provide the Structure with definite feedback.

Meeting report

In the absence of the Chairperson, Ms D Nhlengethwa (ANC) was elected as Acting Chairperson.
The Acting Chairperson welcomed all present and, in particular, thanked the Manenberg Development Coordinating Structure (MDCS) for its presence.

Manenberg Development Coordinating Structure (MDCS). [Alleged mismanagement by Proudly Manenberg of Teba Development funding from Government. Presentation
Ms Faldiela de Vries, Chairperson, Manenberg Development Coordinating Structure (MDCS), thanked the Committee for the opportunity to present. She expressed disappointment that Teba Development, being a key stakeholder in this matter, was not present at this meeting, especially since it had ample time to make arrangements to be present. She informed the meeting that her presentation would deal with allegations of mismanagement of Government funding. She explained that the community projects were funded by the Department of Cooperative Governance (DoCG) and that Teba Development was the conduit.

Ms De Vries stated that the MDCS would hand over to the Chairperson documented evidence of the allegations. She said that MDCS viewed the opportunity to present to this Committee as its last resort and was exercising its right as expressed in Section 56 of the Constitution. The MDCS supported the Government in eradicating any corrupt practices. The MDCS wished to ensure that the Manenberg community was not penalised for the actions of the leadership of the community organisations. She emphasised that a similar presentation was done for the Portfolio Committee on Public Works. In that instance the Independent Development Trust (IDT) was the funding conduit for the Public Works Department.

The Teba funding to Proudly Manenberg started in March 2010. The first allegation against Proudly Manenberg was that it failed to pay community members the correct wages and that these wages were as low as R400 per month, whilst the executive members were paid fat salaries. On other occasions community members were promised their back pay providing they complied with some highly unfair conditions, like voting for or supporting a certain person. These conditions persisted into 2011 even after the second payment was received via Teba. In fact conditions worsened to the point where community members were paid wages as low as R150 per month.

The second allegation related to abuse of Government funding: participants were instructed to perform duties that were outside the conditions of funding; participants were often threatened with dismissal should they refuse to perform any of these non-project activities; participants were made to do door-to-door canvassing on behalf of Mr Mario Wanza, Chairperson, Proudly Manenberg, who was standing as an independent candidate in the recent local government elections. When he only received 411 votes, it was alleged that he threatened to dismiss the participants; it was also alleged that they were also instructed to participate in community protest marches and to raise funds for the outstanding costs of the election campaign.

A further allegation related to absence of any skills development, a requirement for the funding. Media clippings reporting on the alleged mismanagement of funds by Mr Wanza were included in the attached documents. Also included were annexures that reflected various bank withdrawals that supported the allegations.

Further concerns related to the hours that the participants were supposed to work in the project. The understanding was that they only needed to work for eight days of the month, whilst in reality they were required to report for duty every working day of the month. This prevented them from looking for more permanent employment. The suspicion existed that the leadership was awarding itself exorbitant salaries. The accounting records did not reflect the salaries that members of the leadership paid themselves. When MDCS requested details of the audit report,  the IDT refused to release such details. The MDCS had affidavits and reports that confirmed that ghost workers were entered onto the lists of beneficiaries. Amongst these reports were statements by another breakaway group about alleged other wrongful practices by the leadership of Proudly Manenberg.

Finally, the MDCS requested that the Committee, as the custodians of the funding, would commence thorough investigations into the alleged mismanagement of the funding.

The Acting Chairperson stated that Members had a responsibility to fight corruption and welcomed the submission by the MDCS, whom she called the whistle-blowers.

Ms W Nelsen (ANC) sought clarity on the way funding was applied for and finally awarded. She wished to establish whether the 25 MDCS member organisations applied directly for funding or whether it was a case of Teba holding bulk funding which it then distributed at its own discretion. Ms Nelsen wanted to know if Teba was audited previously and from where Teba got its funding  – was it from the provincial or national Government?

Mr P Smith (IFP) and Mr J Lorimer (DA) asked for more clarity on the relationship between the MDCS and Proudly Manenberg.

Mr Lorimer asked for details about the aims of the project as well as the number of beneficiaries targeted. He wished to know the basis for the funding MDCS received from DoCG and from where within DoCG did the funding emanate.

Ms M Wenger (DA) requested details about the amounts  and the organisations involved in the alleged mismanagement of the IDT funding as reported earlier.

Ms M Segale-Diswai (ANC) stated that the annexures referred to by the MDCS did not appear in her pack. She also asked whether an investigation by this Committee would not perhaps be duplication, since the matter was previously presented to the Portfolio Committee on Public Works. She assumed that it too would launch its own investigation.

Ms Nelsen further asked whether the MDCS would be able to report on the amounts of monies that Teba was managing.

The Acting Chairperson wished for clarity on the ghost workers and asked if it was a case of the same name being listed twice -  the perception was created that two payments were made. She also mentioned that some of the practices seemed like labour issues and asked if the MDCS had referred any of the issues to other Government institutions before. She asked the MDCS to elaborate on the marches that participants had to join as was referred to in the presentation earlier.

Ms De Vries replied that the funding came from DoCG at national level through the Community Works Programme (CWP). The Acting Chairperson interjected and asked what Teba was – a person or an organisation. Ms de Vries explained that Teba Development was a Section 21 Not for Profit Organisation (NPO), and that Teba Development was a funding conduit like the IDT.

Ms Wenger asked whether Teba had received an invitation to the meeting whereupon the Committee Secretary replied that she had tried to contact it on several occasions, both telephonically and via email, but with no success.

The MDCS was not in a position to provide answers to the questions about the audit history of Teba nor the amounts of funding under its control. For this very reason it wished for Teba to be present. The contact person  for the CWP on DoCG's side, as reported in the IDT report, paragraph 4, was Mr Reckson Luvengo, Chief Director.

Ms De Vries explained the relationship between the MDCS and Proudly Manenberg by referring to the history. She said that Proudly Manenberg was started as an umbrella structure. Organisations would submit their projects to Proudly Manenberg for funding. They often did not get the funding or there were clear signs of mismanagement. As the then treasurer of Proudly Manenberg she would sometimes refuse to sign cheques because it requests for funding did not comply with the terms for the funding. The matter was referred to the Mayor who convened a community meeting 2009 to discuss the unhappiness and a way forward. The province and the Development Bank of Southern Africa  (DBSA) were also present. At this meeting the need for a new structure was discussed and that gave rise to the birth of the MDCS.

Ms De Vries stated that Proudly Manenberg received a total of R6m from the City and an equal amount from the province. However, as far as she knew, Proudly Manenberg never had to account fully for the spending of these monies. She, for example, would submit an affidavit stating that an amount of R150 000 was earmarked for improving the relationship between the Gugulethu and Manenberg communities but that not even a cent was spent in that regard.

Mr Smith asked whether Teba was present at that community meeting. Ms De Vries said that Teba was not in the picture at that time.

Ms De Vries said that Proudly Manenberg had a good image outside of the area due to their public relations activities but insisted that the community itself thought differently. Due to this Proudly Manenberg still managed to attract new funding.

Ms De Vries explained that the purpose of the visit to the Portfolio Committee for Public Works was that the funding came from them via the IDT at the time. The difficulty at that meeting was that the  Public Works officials were not present at that submission. PricewaterhouseCoopers (PWC), the auditors for the IDT at the time, recommended to the Department of Public Works (DPW) that a forensic audit be commissioned and because the DPW did not pitch for that session the MDCS was not sure how far that process had gone.

Ms De Vries replied that all the annexures were with the Committee Secretary and asked her to provide copies to the Members.

On the issue of ghost workers Ms De Vries said that the practice was to create the perception that more beneficiaries were engaged than was the case. Proudly Manenberg would then skim those wages to their own pockets. When she went public with this practice she was threatened with legal action.

Ms De Vries explained that her colleague, Ms R Pascoe, would respond to the question about the other avenues that MDCS had pursued prior to approaching the Committee. Ms Pascoe was part of the first breakaway group and was familiar with the avenues followed at the time. She stated that it was only after exhausting various avenues that MDCS decided to exercise its constitutional right to approach Parliament.

Ms Pascoe added that she and her colleagues had had an enormous fight on its hands at the time. They had approached several avenues for help including the local councillors and the Speaker of Parliament. It was as if no one wished to believe the allegations. She had been a facilitator in Proudly Manenberg and was tasked with finalising the organisation's constitution. She continued that her knowledge of the constitution had raised her suspicion that malpractices were being committed. After consulting with other stakeholders they had submitted a document to the Speaker of the Provincial Parliament; approached the South African Police Service (SAPS) and even the then Mayor Dan Plato. Nothing came of it except that some of the stakeholders ended up in prison. They were advised to seek legal assistance and used of their own personal funds to contract a lawyer. This too did not reap any benefits. The MDCS advised its breakaway group to approach the Portfolio Committee on Public Works. In order to submit to this Committee they had to spend further monies to secure the legal documents from the lawyer. They felt that the Members of the Portfolio Committee on Public Works failed them and that they were still waiting for those Members to take action, especially as they had provided them with clear evidence. She trusted that the Portfolio Committee on Cooperative Governance in turn would be able to assist them.

Ms Nelsen wished to know the date when the submission was made to the Portfolio Committee on Public Works.

Ms De Vries answered that it happened on 14 June 2011.

Mr Lorimer asked if the funding from the City and the Province had been stopped and whether the funding stopped due to the allegations of irregularities.

Ms Pascoe replied that the City did stop the funding after non-submission of audited financial statements. She assumed that the Province also stopped funding to Proudly Manenberg because  Mr Wanza had hinted as much.

Ms Pascoe said that they also approached the Public Protector and believed that an investigation was under-way.

Mr Smith interjected that he had searched via Google on the role of Teba and found that Teba was one of two organisations acting as implementing agencies for the CWP. He could not find the name of the second organisation.

Mr J Matshoba (ANC) raised concerns that the matter could be much deeper than just the Manenberg issues. He said that billions were channelled through the IDT and that all Government departments used the IDT as a conduit. He pleaded that the Committee take this matter very seriously.

Ms Nelsen added her voice to Mr Mathsoba’s plea when she said that the Committee should ask the DoCG to call for a forensic audit on both the IDT and Teba with specific reference to the Manenberg issues.

Ms Segale-Diswai added that the scope of the forensic audits should be wider than just DoCG and should even include the City.

The Acting Chairperson proposed that the Committee request that the Department include a report on the Manenberg matter in its next submission to this Committee.

Mr Lorimer also recommended that the Portfolio Committee on Public Works be approached for a report on its involvement in this matter.

The Acting Chairperson suggested that the Committee study the facts as per the annexures and then decide on calling for a joint meeting with the Portfolio Committee on Public Works but also any other Portfolio Committees involved, if any.

Ms Nelsen said it seemed that the Portfolio Committee on Public Works had already called for a forensic audit and that the Committee should enquire whether they had a report ready.

The Acting Chairperson promised the MDCS that it would certainly provide the MDCS with definitive feedback.

Mr Matshoba repeated that the Committee should approach other departments for reports on their experiences with the IDT and Teba.

The Acting Chairperson stated that the Chairperson would further apply his mind to the matter when he returned and also suggest further courses of action.

Ms De Vries wished to add that the IDT admitted in its submission to the Portfolio Committee on Public Works that there was evidence of irregularities yet it did not lay any charges with SAPS as the Public Finance Management Act (PFMA) would want. When MDCS enquired it was told to report the matter to the Hawks. She expressed her deep concern that the individuals implicated should be stopped since they had even taken the model for funding to other communities like Hanover Park, Philippi and Tafelsig.

The meeting was adjourned.


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