The Zondo Commission of Inquiry into allegations of state capture continued to hear low-cost housing asbestos-related evidence this week, with Nthimotse ‘Tim’ Mokhesi, head of the Free State Human Settlements (FSHS) department returning to provide more detail.
Blackhead Consulting was appointed by the department to ascertain the extent of asbestos in low-cost housing in the Free State, for a contracting fee of R255 million. This is known as the ‘asbestos project’.
Blackhead Consulting entered into a joint venture (JV) with Diamond Hill Consulting.
Unbeknown to the department, the JV did nothing other than pay R54 million to a company called Master Trading. Master Trading’s only task was to find a company that could actually do the work. Master Trading then sub-contracted the Ori Group, which was paid R21 million to carry out the asbestos audit.
Evidence leader Paul Pretorius SC remarked that at some stage the JV “inserted itself into the string of correspondence” involving the asbestos contract. Pretorius said this appeared to be the first mention of the JV. Mokhesi had not noticed the appearance of the JV.
‘Not party’ to the agreement
Mokhesi said he was not a party to the JV agreement signed between Blackhead Consulting and Diamond Hill. “On my side I had somehow assumed that Diamond Hill must have been part of the Gauteng project … which turned out later to be not the case.…”
Mokhesi said the supply chain management had not obtained all the relevant documents which would have revealed that the JV was not part of the initial contract.
Commission chair deputy chief justice Raymond Zondo asked Mokhesi if he would not accept that as head of department he had an obligation to apply his mind to an issue and satisfy himself that the work being done was in line with the law.
Mokhesi replied that the officials in supply chain management were trained, and that he trusted them. He accepted that maybe he should have done more.
The slippery question of accountability
Pretorius remarked that the commission comes across the question of accountability again and again. And that the senior official lays the blame on the junior official, and the junior official says they were following orders.
Essentially, no one admits to accountability or responsibility, and no one accepts the consequences.
Zondo said he would like to see more leaders saying that they take responsibility.
Thabane Zulu, at the time director-general (DG) of the National Department of Human Settlements, was apparently under the impression that Blackhead would be appointed to a departmental panel or to a database. Zulu was not aware of the existence of the joint venture, nor that the JV was being directly appointed. Zulu was also apparently under the impression that the asbestos would be disposed of and eradicated.
Pretorius noted that Mokhesi requested the FSHS legal department to confirm whether the contract would include the disposal of asbestos.
Reprioritising business plans
Zulu played a role in the finalisation of the contractual arrangements, and in particular on the making available of funds.
Mokhesi explained that a business plan can be reprioritised, and this will be approved by the DG: “ … we run a multitude of projects at the same time; you are allowed to revise the business plan.” Reprioritisation means that a particular project will be halted to make way for another.
Zondo asked Mokhesi if he was obliged to ascertain whether the department received value for money at the end of a contract.
Mokhesi replied that all the information gathered by the commission was not available at the time. Nevertheless, he was of the view that the department received value for money.
The property deal with Sodi and the R650 000
In 2015 Mokhesi and the CEO of Blackhead Consulting, Edwin Sodi, entered into a “commercial property transaction”.
First, they entered into an agreement in which it was agreed that Mokhesi would establish a family trust to purchase a property in Bloemfontein, and that Sodi would “invest” in that property.
Pretorius noted that at that juncture the asbestos audit was already finalised, but not all payments had been made to the joint venture.
The trust was only registered a few months after the agreement, and duly purchased a property.
Sodi made a payment of R650 000 to the trust to settle his “portion”, and the trust purchased the property. Sodi had no interest in the trust and had no real right to the property. The only obligations and rights came from the agreement. Sodi only had a personal right against the trust if the scheme had to collapse.
Pretorius claimed that the trust was only created as a vehicle to purchase the property, and pointed out that there is no official document to indicate that Sodi had an interest in the property (for example in the deeds office). Further, there is no record in Mokhesi’s bank account that Sodi had paid R650 000 towards the property, as this was paid directly to the trust.
Mokhesi: “This money was not given to me. It is for investment purposes.”
Mokhesi gave a long explanation of how one finds a risk-free investment … with the best return on investment “Sodi would not come out in a better position than if he placed his money elsewhere”.
Mokhesi has lived in the house since 2015. Sodi paid 40% for the house, and Mokhesi insists that this is mutually beneficial.
Mokhesi explained that he in any event is paying more to reduce the outstanding bond, and pays all the expenses. The agreement stipulates that the house will be sold or refinanced after seven years, and Sodi will get his share.
Despite further questioning from Zondo and Pretorius, Mokhesi stuck with his story that this was a commercial venture, and that he had received no personal advantage. Sodi’s payment of R650 000 was not disclosed by Mokhesi to the FSHS, as it was a commercial payment made to a trust.