4 days ago
IDT mistrust (Part Two) — Minister Zikalala's ‘whitewash' that secured IDT CEO Malaka her job
Former public works minister Sihle Zikalala lowballed the findings of an investigation he had commissioned, paving the way for Tebogo Malaka's appointment as chief executive of the Independent Development Trust (IDT) despite her involvement in a R45-million lease scandal.
Evidence suggests that interventions by former public works minister Sihle Zikalala and his close comrade, then-IDT chair Kwazi Mshengu, stifled National Treasury investigations into allegations against then acting-CEO Tebogo Malaka and substituted a superficial probe by Zikalala's department.
Nine days before the 2024 national elections, Zikalala endorsed Malaka's elevation from acting to permanent CEO on the basis that his probe 'found no wrongdoing' against her, but the probe had not been mandated to investigate Malaka.
Last month the IDT was slapped down in its attempt to review the contract that Malaka was accused of mishandling after Malaka herself had deposed the founding affidavit.
Part One of this series showed how Kwazi Mshengu, Zikalala's confidant and then-IDT chair, led the board in abandoning a National Treasury investigation into the parastatal's procurement of a new head office lease — even refusing to be briefed on its provisional findings.
Mshengu and the board asked Zikalala to have his Department of Public Works and Infrastructure, of which the IDT is an implementing agency, investigate instead.
The current story shows that while departmental auditors went on to produce a damning report on procedural irregularities, they had also warned Zikalala they were unequipped to probe — and could not investigate — substantive allegations against Malaka and others — a limitation he readily accepted.
Despite the auditors recommending a further probe by the department's anti-corruption unit, Zikalala instantly wrote to Mshengu endorsing Malaka's appointment, claiming the auditors had 'found no wrongdoing' on her part.
This was on 20 May 2024, just nine days before the national elections that ushered in the Government of National Unity.
Mshengu signed off on Malaka's appointment six weeks later, as new ministers — including the DA's Dean Macpherson, Zikalala's successor — were being sworn in.
Zikalala's exoneration proved decisive for Malaka, whose elevation from acting to permanent chief executive was blocked after she had entered a five-year, R45-million lease with politically connected Moepathutse Property Investments behind the board's back. This followed a procurement process marred by allegations of favouritism.
Moepathutse, which has denied wrongdoing or any relationship with Malaka and sued the IDT for damages and costs, which the IDT itself estimates amount to almost R14-million, after it failed to occupy the building.
The IDT responded by washing its dirty linen in court. It argued that the lease was invalid because tender specifications had been 'tailor-made' for Moepathutse's Irene property and because Malaka had signed without the requisite board authority.
The IDT's defence took a potentially fatal hit two weeks ago when the Gauteng Division of the High Court in Pretoria dismissed a review application it had brought to set the lease aside.
The judge found that the IDT had failed to prove the lease was 'tainted by any illegality' in any way.
Malaka — despite being heavily conflicted — had deposed the IDT's founding affidavit.
Under pressure
In response to amaBhungane's questions, Zikalala, now Macpherson's deputy, did not address why his endorsement of Malaka had claimed 'no wrongdoing' despite the probe's limited remit.
He said, however, that he had held back Malaka's appointment for more than a year pending the investigations, and that she had 'engaged in legal challenges through her lawyers relating to [her] appointment'.
Zikalala said that when he became minister in March 2023, his predecessor, Patricia de Lille, had already recommended Malaka to the Cabinet. 'I am the minister who withdrew the [recommendation] for investigations to be conducted.'
As detailed in part one, the board then considered procuring a forensic firm to conduct a probe, but hesitated to entrust the process to IDT management, then led by Malaka in acting capacity. One thing led to another and the National Treasury, assisted by law firm ENS, commenced a forensic investigation on the board's behalf.
Towards the end of the year, a reconstituted board, now chaired by Mshengu, canned the Treasury investigation and asked Zikala to have his department investigate internally instead.
The board's resolution still targeted Malaka though, calling for Moepathutse's selection to be probed 'specifically relating to the relationship between the lessor and the acting CEO'.
But the new probe was neither forensic nor focused on Malaka.
Zikalala — who said he was committed 'to serve with integrity, transparency and accountability' — shared the final report with amaBhungane.
This report shows that the request to investigate had been routed through the department's inter-governmental relations unit to the internal audit unit, not its governance, risk and compliance branch, whose remit includes fraud and corruption investigations.
The audit unit agreed to help, but only with an 'assurance audit' to check compliance with control prescripts. 'Internal audit performs assurance audits and not investigations/forensic audits which reside within governance, risk and compliance.'
So concerned were the auditors that the limitations of their approach be understood that they insisted on Zikalala's approval and board concurrence before they started.
'The minister approved the proposed assurance audit approach on 15 March 2024.'
The internal audit chief signed off on her team's report two months later.
Within its narrow lane, the report was damning.
It was 'unable to provide reasonable assurance that the procurement process was fair, transparent and regular'.
It identified multiple gaps in the procurement file and 'material non-compliance to procurement policies, laws and regulations'.
However, the report also reiterated that 'our audit did not cover the review of conflict of interest of executive management, the board members, [and supply chain management] officials to any bidder, especially to the recommended bidder'.
This, it said, 'requires special tools that we do not have'.
The auditors went on to recommend that the board, in consultation with the minister, ask the governance, risk and compliance anti-corruption unit after all 'to investigate further the areas' they could not cover or where information had been unavailable to them.
No wrongdoing
On 20 May 2024 — the same day the audit report was signed — Zikalala addressed a letter to Mshengu in his capacity as board chairperson.
'You will recall the proposal,' he wrote, 'to hold in abeyance the matter of the confirmation of Ms Tebogo Malaka… pending the conclusion of the investigation… The investigation by the department has been completed and no wrongdoing was found on the part of Ms Malaka.
'As such, I want to confirm my concurrence to the board's decision to appoint Ms Malaka as the IDT chief executive officer.'
Zikalala did this knowing his audit team had not probed allegations against Malaka — and despite briefings from the previous board that the Treasury had been tasked to do just that.
Zikalala sent the letter nine days before the elections saw the ANC lose its majority and he lost his post. Mshengu signed off on Malaka's appointment on 3 July 2024, the day new ministers, including Macpherson, were sworn in.
Both Mshengu and Zikalala denied there was any connection between their respective actions of canning the Treasury probe, declaring Malaka cleared by the department, and getting her appointed before Macpherson took charge.
Mshengu, whom Macpherson removed from the board, said: 'You would also know that IDT is a state entity and its operations are not subject to changes in government. Therefore, the appointment of Ms Malaka as CEO had nothing to do with changes in government. In any event, no one knew what would be the outcomes of the national general elections.'
Zikalala said the board had terminated the Treasury investigation of its own accord and that there was 'no so-called 'haste' on my part' to appoint Malaka. He reiterated that he had ordered investigations after becoming minister and had paused the appointment 'for a period of more than a year until there were legal procedures initiated against me as minister'.
Another investigation
Zikalala also stressed that Malaka's appointment was not the end of the road and that the governance, risk and compliance anti-corruption unit had in fact 'commenced its deeper investigation' as recommended by the internal auditors.
That probe only started last November, months after Zikalala was replaced as minister.
The department confirmed that the investigation was concluded in mid-February, but was awaiting the director-general's sign-off. Its terms of reference included 'determining whether there was irregular, improper and/or criminal conduct by IDT official(s) and/or third parties'.
AmaBhungane has submitted a request under the Promotion of Access to Information Act for the canned Treasury investigation reports, and will do the same for the anti-corruption unit report.
Who will pay?
Meanwhile, the costs of this debacle continue to mount.
When Moepathutse filed its damages claim, the IDT responded with a special plea, claiming that the bid had been tailored to suit Moepathutse's building and that Malaka had concluded the lease without board approval, which was required due to its value.
The IDT asked the court to pause the damages suit it applied in order to review its own decision and void the lease. When the IDT finally filed the review in March 2024, the deponent to its founding affidavit was none other than Malaka — hopelessly conflicted.
She put hardly any admissible evidence on the table and the outcome was predictably dire.
In a judgment delivered on 16 May, acting judge S J Myburgh complained repeatedly that the IDT had provided no evidence that its decisions were improper.
'The IDT has failed to show that the agreement concluded between itself and the respondent was tainted by any illegality. I thus find myself in agreement with the argument made by the respondent that this application is simply an attempt by the IDT to avoid liability in terms of the now cancelled agreement.'
The court dismissed the IDT's application with costs, and Moepathutse's damages claim, which the IDT's latest annual report says now stands at almost R14-million, is effectively irresistible, unless, perhaps, the IDT throws Malaka under the bus.
