Public Works Minister Thulas Nxesi says government’s properties have been valued at R78.1 billion‚ with 40% still outstanding.
“The disclosed value of assets will increase significantly as the valuation process is finalised – and will be properly reflected on the balance sheet of the state‚” the minister said.
“The task now falls to the Property Management Trading Entity to leverage this massive property portfolio for economic development‚ job creation and black economic empowerment – as well as the generation of revenue for the maintenance of the state’s assets‚” Nxesi said in a speech to department heads meeting in Port Elizabeth.
He explained that a Real Estate Information and Registry Services (REIRS) branch had been established within the Property Management Trading Entity to ensure efficient management of the Immovable Asset Register. Amongst its achievements‚ he said‚ was an accounting of state assets:
- The department has verified 36‚852 land parcels identified between the 2013/14 and 2014/15 financial years. Verification and assessment of the remaining 6‚900 land parcels has commenced.
- A methodology for applying fair values to the Department’s properties‚ based on existing municipal values‚ is being implemented. Approximately 60% of the Department of Public Works’ properties have had municipal values applied in the 2014/15 financial year with the remainder to be completed by 31 March 2016. This has resulted in the disclosure of the department’s properties at R78.1 billion for the year ended 31 March 2015.
Nxesi said his department had also worked to stabilise its financials‚ which had improved from a “disclaimed audit opinion” in 2011/12 to unqualified audit opinions in 2013/14 and 2014/15.
The track record of the Property Management Trading Entity had improved from 2012/13 when it was disclaimed in four areas‚ to 2014/15 where the areas of qualification have reduced to two (accruals and payment of rates and taxes). These were receiving priority treatment‚ he said.
Nxesi said he had delivered on previous promises to tackle endemic corruption within the Public Works departments.
Of 319 allegations reported since 2010‚ he said 201 cases have been finalised resulting in 183 disciplinary actions being taken. Eight senior officials were dismissed for misconduct.
Three officials – two based in the Pretoria Regional Office have been dismissed for gross misconduct and corruption. One was found guilty of receiving payments from a service provider. Another was found guilty for demanding R600‚000 to facilitate payment of the invoice of a service provider. The third official pleaded guilty to accepting R20‚000 from a service provider that subsequently won a tender from the department.
The Minister also highlighted these investigations:
- An official in the Mmabatho Regional Office has been charged with corruption involving contracts to the value of R5 million awarded to a company owned by a close relative.
- Twelve officials in the Mthatha Regional Office have been charged for financial misconduct for payments of over R5 million to service providers for which no evidence was found to confirm delivery of goods or services.
- A Project Manager has been charged for awarding a R7 million contract to a construction company with which he had a close relationship‚ subsequently receiving payments amounting to R26‚450 from the company.
- An official of the Horticulture Section of the Pretoria Regional Office was charged with certifying invoices for services not rendered totalling R415‚000. In this case the fraud was detected by the Anti-Corruption Unit before payment was made. A criminal case was also registered against the official and the contractor.
Other investigations currently under way include:
- The Anti-Corruption Unit is conducting investigations in several regional offices relating to the awarding of day-to-day maintenance contracts amounting to R217 million.
- Working with the Special Investigating Unit (SIU)‚ the department has initiated lifestyle audits on certain officials that appear to be living beyond their means.
- A number of officials at the Pretoria Regional Office are being investigated for abuse of government issued petrol cards – used to fill petrol for privately owned cars in exchange for cash.
- Ten properties with a value of R15 million have been identified‚ suspected of having been irregularly transferred. Processes are under way to recover these properties‚ Nxesi said.
The Public Works department intended to “conduct detection reviews on all state properties disposed of‚ going back 10-20 years‚ to ascertain whether due process was followed”.
Alleged over-billing and negligence at ministerial homes in the Cape Town area was under investigation.
“The Department is working closely with the SIU to finalise this investigation and to hold to account both Public Works officials‚ and contractors and consultants‚ as well as to recover‚ through the courts‚ losses suffered by the department due to these overpayments.
“Conservative provisional calculations indicate that‚ with regard to eight of the Prestige Projects in Cape Town‚ the Department should consider recovery of around R11m from the contractors – for overcharging — and R10m from the consultants – for failure to perform their duties professionally‚ for example failing to verify invoices for payment and miscalculations on the final accounts.”
Nxesi said 39 cases had been referred to the SIU for investigation. Seventeen of those investigations have been concluded and the SIU recommended disciplinary action against 41 officials. Three resigned before action could be taken‚ seven received final written warnings‚ seven officials who were dismissed‚ and 24 disciplinary hearings are pending.
For potential criminal action‚ the SIU made 19 referrals to SAPS for investigation. Out of those 19 referrals‚ 18 cases have been registered with SAPS.
“In terms of civil action‚ attempts are under way to recover state monies of approximately R304 million in eight civil matters.”
Nxesi said a zero-tolerance approach would be maintained. “We now have the machinery in place to detect misconduct and bring the perpetrators to book. More importantly we have also put in place the necessary financial and management controls to minimize the risk of fraud and corruption going forward.”
A 'cleaned up' Public Works wants to leverage massive property portfolio
Public Works Minister Thulas Nxesi says government’s properties have been valued at R78.1 billion‚ with 40% still outstanding.
“The disclosed value of assets will increase significantly as the valuation process is finalised – and will be properly reflected on the balance sheet of the state‚” the minister said.
“The task now falls to the Property Management Trading Entity to leverage this massive property portfolio for economic development‚ job creation and black economic empowerment – as well as the generation of revenue for the maintenance of the state’s assets‚” Nxesi said in a speech to department heads meeting in Port Elizabeth.
He explained that a Real Estate Information and Registry Services (REIRS) branch had been established within the Property Management Trading Entity to ensure efficient management of the Immovable Asset Register. Amongst its achievements‚ he said‚ was an accounting of state assets:
- The department has verified 36‚852 land parcels identified between the 2013/14 and 2014/15 financial years. Verification and assessment of the remaining 6‚900 land parcels has commenced.
- A methodology for applying fair values to the Department’s properties‚ based on existing municipal values‚ is being implemented. Approximately 60% of the Department of Public Works’ properties have had municipal values applied in the 2014/15 financial year with the remainder to be completed by 31 March 2016. This has resulted in the disclosure of the department’s properties at R78.1 billion for the year ended 31 March 2015.
Nxesi said his department had also worked to stabilise its financials‚ which had improved from a “disclaimed audit opinion” in 2011/12 to unqualified audit opinions in 2013/14 and 2014/15.
The track record of the Property Management Trading Entity had improved from 2012/13 when it was disclaimed in four areas‚ to 2014/15 where the areas of qualification have reduced to two (accruals and payment of rates and taxes). These were receiving priority treatment‚ he said.
Nxesi said he had delivered on previous promises to tackle endemic corruption within the Public Works departments.
Of 319 allegations reported since 2010‚ he said 201 cases have been finalised resulting in 183 disciplinary actions being taken. Eight senior officials were dismissed for misconduct.
Three officials – two based in the Pretoria Regional Office have been dismissed for gross misconduct and corruption. One was found guilty of receiving payments from a service provider. Another was found guilty for demanding R600‚000 to facilitate payment of the invoice of a service provider. The third official pleaded guilty to accepting R20‚000 from a service provider that subsequently won a tender from the department.
The Minister also highlighted these investigations:
- An official in the Mmabatho Regional Office has been charged with corruption involving contracts to the value of R5 million awarded to a company owned by a close relative.
- Twelve officials in the Mthatha Regional Office have been charged for financial misconduct for payments of over R5 million to service providers for which no evidence was found to confirm delivery of goods or services.
- A Project Manager has been charged for awarding a R7 million contract to a construction company with which he had a close relationship‚ subsequently receiving payments amounting to R26‚450 from the company.
- An official of the Horticulture Section of the Pretoria Regional Office was charged with certifying invoices for services not rendered totalling R415‚000. In this case the fraud was detected by the Anti-Corruption Unit before payment was made. A criminal case was also registered against the official and the contractor.
Other investigations currently under way include:
- The Anti-Corruption Unit is conducting investigations in several regional offices relating to the awarding of day-to-day maintenance contracts amounting to R217 million.
- Working with the Special Investigating Unit (SIU)‚ the department has initiated lifestyle audits on certain officials that appear to be living beyond their means.
- A number of officials at the Pretoria Regional Office are being investigated for abuse of government issued petrol cards – used to fill petrol for privately owned cars in exchange for cash.
- Ten properties with a value of R15 million have been identified‚ suspected of having been irregularly transferred. Processes are under way to recover these properties‚ Nxesi said.
The Public Works department intended to “conduct detection reviews on all state properties disposed of‚ going back 10-20 years‚ to ascertain whether due process was followed”.
Alleged over-billing and negligence at ministerial homes in the Cape Town area was under investigation.
“The Department is working closely with the SIU to finalise this investigation and to hold to account both Public Works officials‚ and contractors and consultants‚ as well as to recover‚ through the courts‚ losses suffered by the department due to these overpayments.
“Conservative provisional calculations indicate that‚ with regard to eight of the Prestige Projects in Cape Town‚ the Department should consider recovery of around R11m from the contractors – for overcharging — and R10m from the consultants – for failure to perform their duties professionally‚ for example failing to verify invoices for payment and miscalculations on the final accounts.”
Nxesi said 39 cases had been referred to the SIU for investigation. Seventeen of those investigations have been concluded and the SIU recommended disciplinary action against 41 officials. Three resigned before action could be taken‚ seven received final written warnings‚ seven officials who were dismissed‚ and 24 disciplinary hearings are pending.
For potential criminal action‚ the SIU made 19 referrals to SAPS for investigation. Out of those 19 referrals‚ 18 cases have been registered with SAPS.
“In terms of civil action‚ attempts are under way to recover state monies of approximately R304 million in eight civil matters.”
Nxesi said a zero-tolerance approach would be maintained. “We now have the machinery in place to detect misconduct and bring the perpetrators to book. More importantly we have also put in place the necessary financial and management controls to minimize the risk of fraud and corruption going forward.”
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