DHS investigations, suspensions, resignations, reinstatements, George building collapse; with Minister

Meeting report

The Chairperson opened the meeting by informing Members that the Minister had requested that she join the meeting at 10h30, as she had been deployed elsewhere and would be delayed. He had therefore decided to start the meeting at 10h00 so that the Committee could deal with its outstanding internal business.

As a result, the Committee then considered its second term programme and its minutes prior to the deliberations.

The Committee Programme and the minutes of 5 March and 19 March were considered and adopted.

George building collapse report

Ms Thembi Simelane, Minister of Human Settlements, provided details of the role played by the National Home Builders Registration Council (NHBRC) in the collapse of the George building.

She said that a detailed 250-page report on the collapse had been concluded and submitted to her Ministry on 26 March. It had indicated a failure of the systems at the NHRBC. These ranged from enrolment certifications, the structural engineering and drawings that were not submitted on time, to key areas of oversight by the Council that were not complied with. The report revealed that Phase 2 of the enrolment of the development was received on 24 November 2023, and the construction start date was recorded on the enrolment form as 4 December 2023. The application had been incomplete, and with further reviews of the enrolment forms, the NHBRC had established that the builder had not disclosed material information.

Minister Simelane linked these events with the suspension of the NHBRC's chief executive officer (CEO) in November 2024 by the NHBRC's Council. One of the reasons for this was that the CEO lacked the requisite sense of urgency on matters arising from the George building's collapse. The CEO had placed senior officials linked with the George building collapse on special leave, but had proceeded to mislead the NHBRC Council by informing them that he had placed them on precautionary suspension, as they had directed. The CEO had performed supervisory responsibilities of two executive managers -- Mr Craig Makapela and Ms Millicent Kabwe -- who were on probation, when their performance was unsatisfactory.

The Minister said the Council was in the process of charging the CEO and instituting a disciplinary enquiry.

See presentation attached for further details

Discussion

Mr L Mphithi (DA) welcomed the suspension of the CEO. He requested clarity on the statement that the CEO had misled the Council on the suspension of the two officials.

Ms S Frenchman (NCC) asked what actions had been taken against the construction company, whether they had since received any other contracts, and if there was any criminal litigation that had since been instituted.

Mr K Sithole (IFP) expressed concern that there seemed to be no consequence management taken against officials and the contractors involved in the incident. He asked if structural evaluation had been done before construction. He sought clarity on the impasse where officials had disputed the findings of the Auditor-General (AG), and how this was dealt with. He also raised concerns regarding the allegations of bribes from contractors. Was the CEO on paid suspension?

Ms B Kegakilwe (ANC) enquired if there were any recommendations in the NHRBC in the report. She wanted more details on what actually happened that had led to the collapse of the building.

Mr T Gamede (MKP) asked what concrete measures the Department would take to ensure stability at the top management of the Council. The Committee's oversight had shown that the management's instability had hindered the organisation’s ability to deliver services.

Mr S Dithebe (ANC) wanted to know the status of the CEO in terms of disciplinary action, and when a report on that should be expected. He also enquired about the role of the George municipality with regard to collaborating with the NHBRC, given that the project was within its jurisdictional area. Had any persons been criminally charged following the tragic loss of lives? He asked if blacklisting the contractor would not be considered, considering the gravity of their role in the incident, including withholding information in what seemed a premeditated manner. This needed to be followed up, including with structures like the Companies and Intellectual Property Commission (CIPC). 

Ms T Magagula (ANC) wanted to know if the building plan had been submitted to, and approved by, the municipality. Did the inspectors inspect all phases of the project?

Ms Z Abader (MKP) noted that it had been 11 months since the incident, but there had been no accountability from the Council beyond the suspension of the CEO, no reports on the assistance given to families of the deceased, or any consequence management for the builders. She said what was needed were direct answers on these matters, including what would be done to prevent this from happening again.

The Chairperson asked who had conducted the investigation.

Minister's response

Minister Simelane said she had mentioned that there were homebuilder certification irregularities. The building was initially listed on paper as a single-storey building, not the multi-storey project it became, leading to glaring inconsistencies and irregularities on the side of the NHBRC. The project was a five-storey structure. Hence, it had to be reviewed by the NHBRC's internal professional engineer to ensure that the structural design complied with the design codes SANS 10100-1, and this was not done. A Mr Kruger had confessed that this was done because they did not have enough money to register.

There were then issues with the enrolment procedures by the Council. The finding was that Ms Sueanne Maart, an employee of the Council had failed to review the necessary documentation by Mr Kruger, to ensure that all the sectional work and the titling were correct. She had reported to her superior, who had also let the system down by not following the verification processes.

The report revealed that the technical system used to approve projects of this nature at the Council needed to be reviewed. This was one of the issues flagged for correction to ensure these fatal errors are not repeated. According to the report, the person responsible for capturing information into the system was a Ms Faith Nyakati, who was on leave at the time, but the person who used the system for this purpose was able to log in using Ms Nyakati’s details.

The report also said that Mr Shameel Alexander, a customer service consultant, had been improperly placed within the grant system used for role delegations. This meant the organogram and access to roles at the Council also needed to be looked at.

The Minister then referred back to the finding on enrolments. The commencement of building started on 3 July 2023, but the enrolment had been completed 8 to15 days after that, which meant there was a finding against Mr Kruger of Liatel Developments and NHBRC officials, including Ms Sinazo Ntaka, who was supposed to deal with the oversight of the building. The report also said that the global positioning system (GPS) at the Council also had problems. There was tampering with it after the incident to close gaps, but these were still revealed by the investigation. This also needed to be attended to by the Council. She said there was not much found on the materials used -- the concrete and other materials were of quality -- but the problems were with the system.

On consequence management, the Minister said the individuals named in the report should face disciplinary action. When the building collapsed, the Council's Board had met. Their instruction was that all the people involved in the project should be placed under precautionary suspension, to allow for the investigations to commence. The allegation was that the CEO did not do this, but had rather placed the employees on special leave. The issues related to the role of Liatel had been sent to the South African Police Service (SAPS) for their own investigation.

Minister Simelane said there were inconsistencies with the submission of plans to the municipality, as the plans for a multi-storey building were not submitted. In summary, the real cause of the tragic incident was the processes that were not followed from registration -- the change from a single to a multi-storey project. There were reports of cracks that were caused by pillars that were not strong enough to hold the weight of the changes made later. She would check and report to the Committee on consequence management against the contractor, including whether they had received any more contracts after the incident. She noted, however, that there was an ongoing criminal investigation, including against some of the NHBRC officials.

She said the report only recommended the referral of Liatel to the SAPS for their role, including culpable homicide. She noted the suggestion of looking into the blacklisting of the developers and would check what the law allowed in this case. She wished to verify some information on the names listed on the report for action, and confirm that information with Members.

She said there had been a lack of cooperation from the side of the municipality, including the availability of information from them. She would even recommend that the Portfolio Committee consider meeting with the George Municipality to get a better understanding of what had happened.

The Minister said that the investigation had been carried out by a company called Chavani Risk Advisory and Forensic Services, hired by the Council.

National Housing Finance Corporation investigation

Minister Simelane reported on the National Housing Finance Corporation's (NHFC's) investigation into the conduct of its CEO, which had resulted from allegations by a whistleblower.

She premised this part of the presentation with a concession that there was a lot of instability in the agencies of the Department of Human Settlements (DHS). This was particularly the case with the positions of CEOs and Chief Financial Officers (CFOs) in the agencies. Her approach was to bring back stability through appointments so that the work could continue.

She said the Board of the NHFC had appointed Nexia SAB&T to investigate the whistleblower's allegations. Some of the allegations were:

• The CEO had arranged an expensive party/function;
• CEO had asked junior staff whether they knew the identity of the whistleblower;
• The NHFC had paid for alcohol that was consumed at a staff party/function;
• The CEO had received Christmas gifts from the South African Society of Bank Officials (SASBO); and
• The CEO took SASBO members out to lunch or dinner.

On 18 November 2024, Nexia SAB&T issued the final report of their preliminary investigations and findings. On 1 April 2025, the NHFC company secretary indicated that the board chairperson would submit the status on this matter in the board close-out report.

There was also the office space issue in Sandton -- the lease on 90 Grayston Drive. The Auditor General (AG) found the current three-year lease and the one-year lease to be irregular. The NHFC had disputed this, and the AG had escalated the matter to National Treasury. National Treasury reviewed the matter, and in their response, they agreed with the AG’s findings. There was no new update from the NHFC on the above matter. The CEO continued to perform her functions, and the process of appointing a new board would soon be underway.

See presentation attached for further details

Discussion

Mr Dithebe expressed concern about the allegations leveled against the CEO. What were the recommendations of the outgoing Board on the matter? Had an investigation been conducted?

Mr Mphithi said that besides the irregularity of the lease agreement, the AG had also found fruitless and wasteful expenditure, and pronounced on the limitation of scope. According to the AG, the short-term irregular expenditure amounted to R1.5 million, and R15 million in the long term. He asked the Minister what the value of the fruitless and wasteful expenditure at the agency was. What was the limitation of scope that was referred to by the AG? He sought clarity on the status of the Board at this stage -- were they still in office, and if not, who was responsible for those duties until the appointment of a new Board? He said it would also be helpful if they could get a full list of the reports on the investigation at the NHFC.

He also asked what the findings had been of an investigation into the use of the company card, an allegation made by a whistleblower in the past. Had the Minister invoked Section 49 of the Public Finance Management Act (PFMA) regarding the NHFC? He pointed out that there were several issues that were on the whistleblower's report that were not mentioned in the presentation, and he wondered why this was the case. Why was the Department not acting on the lease issue? He urged the Minister to look deeper into what was happening at the corporation.

Mr Gamede asked the Minister what systemic interventions she would implement to ensure accountability, effective governance and sustained leadership in the entities, and how the implementation would be monitored.

Ms Abader expressed concern at the lack of accountability at the corporation. The Board’s term had come to an end on 28 March, and nothing had been done about this. She said this indicated arrogance and defiance from the NHFC, blatantly ignoring National Treasury and the AG, while Parliament was being kept in the dark. It was deeply concerning that an entity responsible for affordable housing showed disregard for procurement processes. Why was the Committee not getting any reports on forensic investigations?

DHS's response

The Minister said the Board was wrapping up, and she expected its report on that same day. She had been advised that the Section 49 process was automatic, and the process to replace the Board was underway. The panel was finalising the security clearance processes, and taking these to the relevant Cabinet committee. She took note of the issues of accountability at the NHFC and the availing of forensic reports. She had not seen any, but had been briefed by the Board when she took office. She looked forward to the board report, and could share it with the Committee.

On the functionality and interventions, a different model of accountability would be implemented. All boards previously reported to the Minister, and the reconfiguration had seen at least two being delegated to the Deputy Minister (DM) as part of sharing duties. The DM had already started with some of the work. Of the entities, only the Community Schemes Ombud Service (CSOS) was not fully functional. She was awaiting certain processes for the board appointments there, as three of the nominated people had not passed clearance requirements. Work was being done to build that stability, and they would keep on updating the Committee. She hoped the credit card issue would be covered by the closing report from the Board.

Dr Alec Moemi, Director-General (DG), DHS, responded that the Board had not suspended the CEO, but had only declared its intention to do so. They were in the process of seeking her representations as to why she should not be suspended. The close-out report of the Board was supposed to make a determination and recommendation to the next Board. The Minister would need to apply her mind, however, taking into consideration and ensuring application of the fundamental principles of natural justice and fair play.

The Department had satisfied itself that there was a need for additional space at the entity, having sent one of the Deputy DGs to perform due diligence. What was irregular, as found by the AG, was the process followed in acquiring that space. The finding was that the additional floor rented was not fully occupied, but paid for. The DG said there was established practice led by National Treasury on irregular expenditure, which he outlined. From engagements with the Board, they had been adjoined to deal with the irregular expenditure and report to the Minister. There was also an investigation initiated by the Board, a report on which the Minister awaited. It was only then that the Minister would be able to act.

Dr Moemi said that Section 49 had indeed kicked in, but Section 49(2) of the PFMA indicated that in the absence of an accounting authority, the accounting officer would take over to act as such for the envisaged period. The status of the investigation report was preliminary, and it was the Board’s responsibility to finalise it. The Minister would then be able to process it, and as earlier committed to the Committee, the report would be shared with the Members.

The Chairperson said they acknowledged that the Minister had been appointed towards the end of last year, and was still grappling with issues and being briefed. The issues to be followed up on would still need to be followed up, as promised at this meeting.

Mr Mphithi asked if it would not be logical for the Board’s term to be extended so they may complete all outstanding reports.

The Chairperson said the Minister would note this suggestion.

He also asked the Minister to provide, as promised, the lifestyle audits of inspectors at the NHBRC, as well as the George Report. The Committee had made provision for the Minister to give a briefing on lifestyle audits in the coming term.

Social Housing Regulatory Authority

Minister Simelane briefed the Committee on the removal and reinstatement of the Social Housing Regulatory Authority's (SHRA's) CEO, and the resignation of the Chief Ombud of the Community Schemes Ombud Service (CSOS)

The contracts of employment of the CEO and the Corporate Services Manager (CSM) had been terminated by the SHRA Council. The Minister had asked the SHRA Council to respond to specific matters in relation to this.

Regarding SHRA's CEO, Mr Sandile Luthuli, the matter was heard at the Commission for Conciliation, Mediation and Arbitration (CCMA),which ruled in favour of Mr Luthuli. The Council had deliberated on the matter and decided not to reinstate Mr Luthuli, but to take the matter on review at the Labour Court.

Regarding Ms Lorato Sithole, CSM, SHRA, the matter was heard at the CCMA, which had ruled in favour of Ms Sithole. The Council had deliberated on the matter and they decided to negotiate a settlement. Once SHRA had appointed legal representatives, MM Baloyi Attorneys, to conclude the negotiations, the Council would be briefed accordingly for approval.

In 2022, the CSOS board appointed Nexia SAB&T to investigate procurement and recruitment irregularities within CSOS against the Chief Ombud. After the preliminary investigation report, the Chief Ombud, Adv Boyce Mkhize, had resigned in April 2023. The chairperson and deputy chairperson had then met with the CSOS executive committee (EXCO), and had been informed that the Chief Ombud had resigned following the preliminary investigation report. 

Please see the presentation attached for further details

Discussion

Mr Mphithi asked what the way forward in terms of the SHRA CEO and CSM positions would be. Now that the CCMA processes on these two positions were completed, the relevant reports could be shared with the Committee, as promised in the past, so it could understand the context of what happened in the organisation.

Mr Gamede said the Ministry should conduct a comprehensive review of the appointment processes in its entities, the performance management systems and governance structures. They should also develop standardised governance frameworks that provide clear guidelines for all board appointments, and such things as succession planning. The implementation of these frameworks should be monitored.

Ms Abader said it must be remembered that these litigations had been done on taxpayer’s money. Why was the SHRA Council not held accountable for not doing due diligence, only for them to lose at the CCMA?

Responses

Minister Simelane said that they would allow the Board to complete its processes and hand over to oversight before they could act. There were issues of fairness with the CEO at the CCMA. The CSM had decided not to entertain a reinstatement because of the protracted process, and had chosen to negotiate a settlement. She did not have a formal report yet, but these were from notes from an official meeting with the board chairperson.

Relocation of the Ghiff community in Stellenbosch

The Minister said the DHS was working with the Western Cape Department of Infrastructure, the Stellenbosch Municipality and the Housing Development Agency (HDA) on addressing the Ghiff informal settlement matter. Financial Implications would be realised for the relocation, installation of services, land tenure etc, and these would be borne out of the Informal Settlements Upgrading Grant (ISUG) allocated to the municipality by the province.

Central to the relocation of the Ghiff informal settlement was the Stellenbosch Municipality availing land, and expediting the Spatial Planning and Land Use Management Act (SPLUMA) approval. The municipality was a competent authority to approve both the relocation and the SPLUMA application, but there had been delays in the SPLUMA application. The Ghiff informal settlements residents were currently being provided with temporary sanitation and portable water by the Stellenbosch Municipality.

See presentation attached for further details.

Discussion

Mr Gamede referred to the delays in critical projects like relocation. He asked what steps the Minister would take to improve intergovernmental coordination, expedite project implementations, and ensure that lessons from these delays informed future project implementation.

Ms Abader said she hoped the project would get underway in the next month, as committed to at the meeting. She spoke of the indignity suffered by people due to bureaucratic delays.

Mr Dithebe commended the collaboration that had taken place between Parliament, through the Portfolio Committee, and the executive, through the DHS, on this particular project. He requested that there be a deliberate intent to acquire land with a view to giving back dignity to the people. There were serious challenges in the City of Cape Town on human settlements that needed to be attended to.

Minister’s concluding comments

The Minister said she appreciated the opportunity to brief the Committee on the various reports. There was a very clear strategy and plan for the entities being worked on, and they would give updates to the Committee on an ongoing basis.

The meeting was adjourned.