Mashaba uses business associates to 'fix city'

City of Johannesburg mayor Herman Mashaba has been accused by the ANC of not following proper processes over in-sourcing.
City of Johannesburg mayor Herman Mashaba has been accused by the ANC of not following proper processes over in-sourcing.
Image: Elizabeth Sejake/Gallo Images

Johannesburg mayor Herman Mashaba has been accused of hiring his wife Connie Mashaba's company, Lephatsi Financial Services, to fix the city's ailing finances.

This has raised the ire of some in the city who viewed the move as "a clear conflict of interest" - an act that could undermine public trust in the DA-led administration.

Yesterday, Mashaba initially denied that people linked to his wife's company did work for the city.

However, he later admitted that a director of Lephatsi Financial Services had without a charge volunteered to help with city's financial modelling.

Mashaba told Sowetan his wife's companies were not doing business with the city.

"I can't fight corruption and at the same time be involved in corruption. I don't have time for that nonsense. I stay away from procurement processes."

Sowetan has seen documents indicating that three weeks ago a meeting between a representative of Lephatsi Financial Services and city officials took place with the issue of "insourcing" being discussed.

Insiders confirmed a meeting took place between Lephatsi and city executives but that the company had not been offered a contract.

"The meeting happened, but it was for the company to be introduced to the executive," one insider said.

"The meeting was to discuss the possibilities of the company assisting the city with in-sourcing and feasibility studies. But these services would be offered to the city for free.

"Even if the services that are going to be provided are free, the company was not declared. Remember that there is nothing for free in this world."

Mashaba's spokesman Luyanda Mfeka initially denied the meeting took place.

But Mashaba later told Sowetan he appointed Akhter Alli Deshmukh - the financial director for Lephatsi Financial Services - to do insourcing for the city for free.

"I asked Akhter in his personal capacity to do in-sourcing for the city for free. This has nothing to do with Lephatsi Financial Services. Tell the ANC that insourcing is going to happen whether they like it or not," Mashaba said.

The ANC in the Johannesburg region claimed that proper processes were not followed to do insourcing for the city and that Mashaba had not declared the potential conflict of interest in the council.

ANC spokesman Jolidee Matongo said: "There is a process that must be followed. If there is going to be a company that is going to be appointed there must be a tender advertised. In this instance it has not happened."

He said the ANC caucus would raise the issue during a council meeting on Thursday.

However, Mfeka said Mashaba had obtained advice on the best means of conducting the city's insourcing exercise.

"This undertaking was done on the explicit understanding that the assistance given would not entitle the company [Lephatsi] to any existing or future business with the city.

"Having access to such expertise, volunteered to the city at no cost by private individuals and within the appropriate parameters, allows government to go beyond its own constraints to improve services that benefit all our residents at no additional cost.

"The Mayor has disclosed all his interests to the Council’s Integrity Officer as required by law. That office, which is independent of the Mayor’s office, remains satisfied with the disclosures made their."


Correction

On Monday, we published an article headlined “Mashaba hires wife’s firm ‘to fix city’”.

The article was about the potential or perceived conflict of interest arising from Joburg mayor Herman Mashaba’s use of his former business associate who happens to be involved in a company in which Connie Mashaba, his wife, is a director, to help the city with insourcing of security services.

The matter is of public interest and we believe we were justified in reporting on it.
However, we regret that in the main headline we stated that he “hired” his wife’s firm when there was, in fact, no evidence of a contract between the city and the said company, Lephatsi Financial Services.

On our page 2, the headline also referred to “job for wife’s pal”, which we accept may have given an impression the mayor had employed, and was paying a salary to his former business associate when this was not the case.

An important comment from the city to the effect that Mashaba had declared his association with Lephatsi to the city was erroneously left out of the story during the editing process, hence robbing our readers an opportunity to get a complete and balanced view of the matters
involved. That, too, we regret.

Sowetan also apologises to Mrs Mashaba and Lephatsi Financial Services for not affording them an opportunity to respond before going to print as required by our press code.

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