Address by Public Protector Adv Thuli Madonsela on the occasion of a media briefing at the Sheraton Hotel in Pretoria

Programme Director and Deputy Chairperson of the National Press Club Mr Jos Charle
Chairperson of the National Press Club (NPC), Mr Yusuf Abramjee
The leadership of the NPC
Members of the media
Deputy Public Protector Adv Mamiki Shai
Chief Executive Officer Mr Themba Mthethwa
Senior Managers in my office
Ladies and gentlemen

It is once again a singular honour to address you on the work of my office. While preparing this address and pondering the events of the past week my attention was drawn to the following portion of former President Nelson Mandela’s address to Ombudsmen from across the African continent gathered at the regional conference of the International Ombudsman Institute (IOI) in Johannesburg  August 2006.

"Every one of you here today is entrusted with the very important task of serving the citizens of your countries with diligence. It is thus incumbent upon you to expose every wrong you find committed in the public administration, without fear or favour. This means that the role of [an] ombudsman is sometimes a lonely one, often the only voice of the public in the face of opposition from powerful officials.”

The support my office received in the past week confirmed that the task of serving the people of South Africa with due diligence is the prevailing expectation within civil society, the leadership of government, political parties and civil soviet, regarding the work of my office.

I must say what is encouraging is the sense that on the issue of loneliness the events of the past week proved Madiba’s last sentence to be not entirely correct. My office, the Public Protector South Africa, is not a lone voice in the pursuit of good governance in the management of state affairs.

There are many South Africans in this room and beyond that are committed to ensuring that the state always operates with integrity, responsiveness and accountability. This group of people expect my office to play its part to ensure administrative justice and accountability in the exercise of public power and control over public resources.

Indeed many of us play a part in different ways as we seek to ensure that the people of South Africa get a fair deal from those they have entrusted with public power and control over their limited resources.

As we meet today, my office is in the middle of a dialogue titled “The Public Protector Dialogues with the Nation”. Through the dialogue, we seek to deepen the understanding of the mandate and responsibilities of my office. We also hope to get feedback on the extent to which stakeholders from all walks of life are satisfied with our performance on the constitutional mandate. As you know, my office’s mandate is to investigate all allegations of improper or prejudicial conduct in state affairs and the public administration, to report on that conduct and to take appropriate remedial action.

We are particularly interested in perspectives on my office’s role in dispensing administrative justice and exacting accountability in the exercise of public power and control over public resources. At the core of the dialogue is the importance of remedial action, which we believe is the magical ingredient that makes administrative justice and accountability real in the management of state affairs.

Today we are here to brief you on the outcome of an investigation that centres on accountability for the exercise of public power and control over public resources.

The report I am releasing today and which is titled “Against the Rules Too” is the second and final instalment on an investigation I was requested on 2 August 2010, to conduct.

The focus of the complaint was an allegation that the procurement of office accommodation for the South African Police Service (SAPS) national and the KwaZulu-Natal provincial headquarters had been irregular. The complaint was that the contracts, with a total cost in excess of R500 million each, were not subjected to a tender process as required by law and that Treasury regulations were violated. The conduct of National Police Commissioner General Bheki Cele was specifically singled out as having signed the alleged lease agreements and having a questionable relationship with the preferred service provider.

The investigation was split into two, to expedite the determination of the status of the procurement of the Pretoria building where there already was a purported lease in respect of the Midestad Pretoria Building. I issued a report titled “Against the Rules Too” on that investigation on 22 February 2011. I’m concerned that the implementation of remedial action has not been at the pace my team and I thought was required in order to contain financial risks to the state and other affected parties.

“Against the Rules Too” focuses on the procurement of a Durban building called the Transnet building but also comments on an attempt to procure another building when the Transnet deal fell through. The allegations in respect of the Durban building(s) are similar to those in respect of the Pretoria building.

The complainants were Advocate P Hoffman SC, Director of the Institute for Accountability Southern Africa and Mr PG Groenewald, MP. The complaints were based on an article that appeared on the Sunday Times newspaper.

Primarily the complaint related to alleged non-compliance with the requirements of section 217 of the Constitution of the Republic of South Africa, 1996 (the Constitution) by the SAPS and the Department of Public Works (DPW), and the alleged improper involvement the National Commissioner of the SAPS in the procurement of the two buildings. Questions were also raised regarding the relationship of SAPS with the preferred service provider and the cost effectiveness of the transaction. The sum total value of the leases complained of is reflected in the diagram below.

I  investigated  the  complaints  with  the  cooperation  of  the  Special Investigating Unit. The process unfolded in the following manner:

• On 3 August 2010, I requested the National Commissioner of the SAPS and the Director-General (DG) of the DPW not to proceed with the implementation of the leases, pending the finalisation of the investigation.
• Both parties responded with an undertaking not to proceed with the implementation of the said leases until the investigation was completed.
• On 11 and 19 October 2010, the DG of the DPW informed the National Commissioner of the SAPS, on the basis of the findings of an internal inquiry and independent legal advice obtained, that the lease agreement between the DPW and Roux Property Fund (RPF) in respect of the Middestad building, was invalid and that a new procurement process had to be initiated for the leasing of accommodation for the SAPS in Pretoria and Durban. He also advised me about this development on 11 October 2010.
• On 25 October 2010, I issued a preliminary report on the investigation and informed the SAPS and the DPW of my concurrence with the decision of the DPW to commence with an entirely new procurement processes in respect of the accommodation requirements of the SAPS in Pretoria and Durban. None of the parties opposed the preliminary report.
• The former Minister of Public Works, Mr G Doidge, was replaced by Ms Gwen Mahlangu-Nkabinde as from 1 November 2010.
• Shortly after Ms Mahlangu-Nkabinde’s appointment, her office obtained informal advice from the Office of the State Attorney on the lease agreement in respect of the Middestad building. The State Attorney’s letter to the Minister’s Special Advisor, date 11 November 2010, indicated that the lease agreement was enforceable. This advice was, however, given subject to a further legal opinion, to be obtained from senior counsel, at the request of the Minister’s office.
• On 15 November 2010 Minister Mahlangu-Nkabinde’s special advisor, accompanied by the DPW Director: Legal Services and Litigation met with the Public Protector in connection with the advice obtained from the State Attorney. I communicated the view that no weight should be attached to the hastily prepared opinion of the State Attorney and that I stood by contents of my preliminary report.
• The opinion of senior counsel, which also considered the procurement  process  followed by the DPW, dated 22 November 2010, concluded that the contract between the DPW and RPF was unlawful and the lease agreement therefore invalid. It supported the legal advice previously obtained by the DPW, also from  senior counsel, that the High Court should be approached with an application seeking judicial review and setting aside of its decision to enter into the lease agreement, and for an order declaring that the lease agreement was invalid on the basis of non-compliance with the relevant legislation and other prescripts.
• The legal advice that was obtained by the DPW and the Office of the Minister of Public Works was also relevant to the investigation into the procurement of the lease of the Transnet building in Durban as the same role players were involved and the same procurement process was followed. The two procurements were intertwined and the same legal principles therefore applied to both. No lease agreement existed in respect of the Transnet building when the investigation commenced.
• The investigation that forms the basis of Against the Rules Too was conducted over a period of three months and included interviews with officials and former officials of the SAPS, including the National Commissioner, officials of the DPW (including the Director-General) and visits to relevant police stations in Durban and the KwaZulu-Natal Provincial Head Office. I also  interviewed the Minister of Public Works. Voluminous documentation relating to the procurement and correspondence was perused and the relevant provisions of the Constitution, the Public Finance Management Act, 1999 (PFMA), Treasury Regulations and other procurement prescripts were considered and applied.

The report includes a schematic illustration that summarises the Supply Chain Management (SCM) process as pertains to the procurement of leased accommodation, as well the respective responsibilities of the DPW and the SAPS. I’ve included this in my speech.

Schematic: Procurement Steps and areas of responsibility in respect of leased accommodation 

The similarities identified in the procurement of the Middestad

The report also includes the following similarities identified between the procurement of the Pretoria and Durban leases. I thought these would interest to you.

(a) According to the documentation provided both buildings were identified by the SAPS (National Commissioner);

(b) The SAPS engaged the owners of the buildings prior to the DPW becoming involved in the procurement process, as was required;

(c) The total lettable area of the respective buildings had a direct influence on the demand management process of the SAPS as both buildings had been identified prior to the formal demand management process being initiated;

(d) In both instances there was no legitimate urgency that justified a deviation from the prescribed open tender process;

(e) RPF signed purchase agreements for both buildings shortly before the SAPS identified the buildings as alternative accommodation;

(f) In both instances the procurement strategy adopted by the DPW resulted in negotiations with RPF exclusively;

(g) The procurement of both leases was not reflected in the User Asset Management Plan;

(h) In both instances, funds had to be reprioritised due to insufficient funds being available in the SAPS leasing budget;

(i)  In both instances, the deviation from the prescribed tender process was not recorded or reported to the National Treasury and the Auditor-General of South Africa, as required by Treasury prescripts;

(j)  In both instances, the service provider (RPF) made contact with officials at the SAPS and the DPW and is alleged to have put pressure on them in regard to the finalisation of the procurement process; and

(k) In both cases the buildings leased were of a Grade C standard and required major refurbishment at a significant cost to the State and were leased at a rental much higher than the market rate for such building.

As a result of the above similarities a number of the findings made in respect of the procurement of the lease of the Middestad building are also applicable to the leasing of the Transnet building.

I also want to point out that the process followed by the SAPS in respect of the Transnet building was extra ordinary in the following three ways:

• The  original  plan of the SAPS was to construct a building as opposed to the option of leasing an existing building;
• A building was suddenly identified to be leased, prior to the full extent of the need being determined by the SAPS; and
• The needs analysis of the SAPS closely corresponded with the available lettable floor space of the Transnet building.

The findings in the report are divided into two sets of findings, namely, general findings and specific findings.

My general findings are the following:

(a) The need was not dealt with in the SAPS Immovable Asset Management Plan and not budgeted for.

(b) The fact that the procurement of the lease of the Transnet building was not budgeted for and included in the Immovable Asset Management Plan of the SAPS, constituted maladministration.

(c)  The involvement of the SAPS proceeded beyond the demand management phase of the SCM process.

(d) The warnings and advice from the DPW pertaining to the identification by the SAPS of  a  particular building and negotiating with a single service provider, was  regarded  by  the SAPS as interference in its affairs.

(e) The Transnet building was identified prior to the determination of the specific nature and extent of the need for alternative accommodation.

(f) If the demand management process in respect of the Family Violence, Child Protection and Sexual Offences (FCS) units was properly applied, prior to the identification of the Transnet building, the likelihood of the DPW securing alternative accommodation closer to the respective clusters, in accordance with the vision of the National Commissioner, cannot be excluded.

(g) The market rental rate for a building such as the Transnet building was determined by the DPW at R40.00 per m2. The lease agreement signed between RPF and the DPW in respect of the Transnet building reflect a rental rate of R125.30 per m2. The procurement of the lease was not in accordance with a system that is cost effective.

(h) The full extent  of the need for alternative accommodation was only determined by  the SAPS, as reflected in the needs analyses, subsequent to the Transnet  building being identified and the total let able floor space being made known to the SAPS.

(i) The failure on the part of the KwaZulu-Natal (KZN) Regional Office to comply with the conditions of the Special National Bid Adjudication Committee (SNBAC), which required that the reference to market related rental in the option analysis report be reconciled with the rental rate offered by RPF, further contributed a to lack of cost effectiveness, which amounted to maladministration.

(j) There was no legitimate justification for a deviation from the prescribed tender process.

(k) In violation of Treasury Regulations, the DPW did not record and report the reasons for deviating from a competitive process as required by SCM prescripts.

(l) The purpose of the reporting  requirement is clearly to provide  the National Treasury, as the custodian of public funds, with an opportunity to note, evaluate and, if  necessary, intervene in  the  procurement process. The failure to report the deviation  therefore accordingly deprived the National Treasury of the intended opportunity.

(m) The procurement  process did not comply with the requirement of fairness, equitability and transparency.

(n) It appears from the very nature of the process followed, namely, by entering into a negotiated contract instead of a competitive bidding process, without justification, the constitutional requirements of fairness, equitability and transparency were also not complied with. The situation was exacerbated by the fact that the contractor had already been involved in the process right from the beginning, even before the total extent of the need was established.

(o) The floor space leased from RPF exceeded the total guideline area determined by the DPW.

(p) The difference between the approved offer and the final DPW norm document equates to 4058.87m2. The financial impact of the additional floor space amounted to R77 683 352.29, excluding operational costs, over the entire lease period (nine years 11 months).

This additional expenditure, resultant from maladministration on the part of the DPW, could further have led to fruitless and wasteful expenditure as contemplated by section 1 of the PFMA.

(q) The lease agreement entered into by the DPW and the RPF was invalid as the procurement of the lease was done in a manner that did not comply with the requirements of the Constitution, the PFMA, Treasury Regulations and instructions for procurement by organs of state.

(r) The conduct of SAPS and DPW officials involved in the procurement of the lease was improper and unlawful.

(s) The failure of  the National Commissioner to ensure that  the procurement process complied with the said legal requirements and prescripts, as indicated in the findings above, resulted in the invalid conclusion of a lease agreement, to the detriment of the State, and therefore constituted maladministration.

(t) The original procurement instruction was issued on 1 July 2010, the same day on which the Director- General of the DPW took office. When the Director-General became aware of allegations with regard to the procurement process, he gave instructions in August 2010 to suspend the procurement process subject to an internal investigation that was being conducted.

(u) The SNBAC approved the lease of the Transnet building in terms of DPW Circular 10 of 2010. When the approval was brought to the attention of the Director-General, he added certain conditions in respect of the lease agreement. These conditions were, however, not complied with by the KZN Regional Office prior to or subsequent to the signing of the lease agreement with RPF the following day.

(v) Although the ultimate accountability in terms of the PFMA for the procurement of the lease remains that of the Director-General, as the accounting officer, the evidence shows that the process in respect of the procurement of the Transnet building had already progressed to an advanced stage at the time when he took office, on 1 July 2010.

(w) The evidence further indicates that the Director-General took additional steps to ensure that the procurement of the lease was cost effective by commissioning an option analysis report and conditionally agreeing to the procurement of the lease.

(x) The conduct of the KZN Regional Office of the DPW, by merely accepting that only the Transnet building could be procured and by advising the SNBAC, accordingly amounted to maladministration.

(y) The failure of the SNBAC to properly interrogate the recommended procurement strategy also amounted to maladministration.

(z) The  failure of the KZN Regional Office to comply with the conditions imposed by the SNBAC and the Director-General was improper and amounted to maladministration.

My specific findings in relation to the conduct of SAPS are that:

(a) The lease agreement in respect of the Transnet building was signed between RPF and the DPW and not by the National Commissioner of the SAPS, as was alleged. However, the National Commissioner signed both the initial and re-submitted needs analyses and a memorandum, dated 28 June 2010, authorising funding for the Transnet building lease.

(b) Although the SAPS did not sign the lease agreement, its involvement in the procurement process was improper, as it proceeded beyond the demand management phase and it further failed to implement proper controls, as required by the PFMA and relevant procurement prescripts.

(c) The SAPS failed to comply with section 217 of the Constitution, the relevant  provisions of the PFMA, Treasury Regulations and supply chain management rules and  policies. This failure  amounted to unlawful, improper conduct and maladministration.

(d) The conduct of the Accounting officer of the SAPS was in breach of those duties and obligations incumbent upon him in terms of section 217 of the Constitution, section 38  of the PFMA and the relevant Treasury Regulations. These provisions require an accounting officer to ensure that goods and services are procured in accordance with a system  that is fair, equitable, transparent, competitive and cost effective. This conduct was improper, unlawful and amounted to maladministration.

(e) On the evidence available it could not be found that an improper relationship  between the preferred service provider (RPF) and the SAPS motivated the deviation from required tender procedures.

(f) The inclusion of the operational staff of the FCS units in the needs analyses does not fully reconcile with the vision of the Minister of Police and the National Commissioner of bringing the police closer to the communities that they serve. The National Commissioner’s contention that the operational staff of the FCS units would remain at their cluster stations, is not supported by the evidence in respect of the accommodation requirements of the SAPS, as contained in the needs analyses.

My specific findings in relation to the conduct of DPW are that:

(a) The procurement by the DPW of the lease was not in accordance with a system that is cost effective and competitive, as is required by section 217 of the Constitution, the relevant provisions of the PFMA, Treasury Regulations and supply chain management  rules and policies. This failure amounted to improper conduct and maladministration.

(b) The reckless manner in which the DPW dealt with public funds in this case, particularly by not following the prescribed tender process without justification, not ensuring that the state received value for money, as well as ignoring  containment  process  that was already in place, fell short of the requirements of good governance and administration.

(c) The conduct of the DPW KZN Regional Office and that of the SNBAC was in breach of those duties and obligations incumbent upon them in terms of section 217 of the Constitution, the PFMA and the relevant Treasury Regulations. These provisions require that goods and services are procured in accordance with a system that is fair, equitable, transparent, competitive and cost effective. This conduct was improper, unlawful and amounted to maladministration.

(d) The process that led to the conclusion by the DPW of a lease agreement with RPF was fatally flawed in various respects, including non-compliance with prescribed procurement  procedures and conditions imposed by the SNBAC and the Accounting officer. This rendered the process unlawful and further constituted improper conduct and maladministration.

(e) The lease agreement should not have been entered into as it did not comply with the validity requirements of the Constitution, applicable legislation, prescripts and the instructions of the accounting officer. The lease  agreement entered into by the  DPW  and RPF was therefore invalid.

(f)  The initiation of a new procurement process in April 2011, contrary to the  undertaking given to the Public Protector by the DPW for the process to be held in abeyance pending the finalisation of this investigation and a pronouncement on the propriety of the procurement process followed, was improper and undermines public confidence in organs of state.

(g) The conduct of the Minister of Public Works in relation to the procurement by the DPW for the SAPS referred to in this report and in respect of the investigation by the Public Protector failed to meet the requisite stewardship expected from her, including the use of public resources as envisaged by sections 195 and 217 of the Constitution and the Batho Pele Principles, and her obligation to cooperate with the investigation in terms of the Public Protector Act, and accordingly constituted improper conduct as envisaged by  sections 181(3) and 182(1) of the Constitution.

The report includes the following schematic presentation of what happened in the procurement process as opposed to what should have happened. The flow chart also indicates what was done that should not have been done and what was not done that should have been done and by which of the relevant key actors.

Schematic: Findings is respect of the procurement process of the Transnet building

In the report I have also included an impact assessment. This seeks to highlight the implications of the unlawful deal to the state and consequently the people of South Africa.

The key consequences of concluding the procurement process against the law, prescripts and basic due diligences are the following:

1. Significant potential monetary loss to the state and prejudice to the South African tax payers due to the fact that no attention was paid to market value and cost effectiveness
2. Loss of public confidence in the SAPS, DPW and organs of state in general in open and transparent procurement of goods and services;
3. The perception of potential service providers that they cannot expect fair and equal treatment from organs of state;
4. A delay in improving the accommodation and working conditions of SAPS officials, which has a direct bearing on their level of service delivery;
5. The perception created by the SAPS needs analyses that vulnerable members of the community, i.e. women and children will have limited access to units of the SAPS established specifically to deal with family violence, child protection and sexual offences related matters.
6. The perception among  interviewed  officials  suggests that the SAPS could irregularly influence  the  procurement process. These perceptions were reinforced by the fact that when these officials raised serious concerns with the process followed by the SAPS and the DPW to procure the lease in writing in, they were sidelined and/or deliberately removed from the procurement process.
7. Government is essentially footing the bill for the improvement of properties owned by private entities. The expenditure incurred for such a lease could be better utilised for the construction of client specific accommodation and/or the purchasing of suitable property to accommodate client departments. It was noted from the response of the Minister of Public Works to the Provisional Report of the Public Protector that she intends formulating a policy in terms of which the DPW will in future consider favouring the construction of buildings over leased accommodation.
8. The total space requirement as reflected in the needs analysis in terms of the PI of 17 March 2011 issued by the DPW, is exactly the same as was offered by and leased from RPF in terms of the lease agreement that lapsed. It was therefore clearly tailored to suit the previous offer made by RPF. The validity of this needs analysis is therefore highly questionable and should not have been accepted by the DPW at face value.

The report proceeds to indicate the remedial action I consider to be appropriate as envisaged in section 182(1) (c) of the Constitution. The following is presented to appropriate organs of state and state actors, including the President as appropriate corrective action:

(a) The President is to consider taking action against the Minister of Public Works for her actions referred to in this report and the Report of the Public Protector on the procurement of the lease of the Middestad  building (Report no 33 of 2010/11), issued  on  22 February 2011.

(b) The Minister of Public Works should: Report to the Cabinet on her actions in relation to the procurement of the leases of the Middestad and the Transnet buildings by the DPW and her failure to fully cooperate with the Public Protector in connection with the investigation thereof, within 60 days of the date of the issuing of this report.

(c) The Minister of Police should: With the assistance of the National Treasury, take urgent steps to ensure that the appropriate action is instituted against all the relevant officials of the SAPS that acted in contravention of the law, policy and other prescripts in respect of the procurement processes referred to in this report.

(d) The DPW should:

(e) The SAPS is to:

The National Treasury is to:

Programme director

Where to from now? My humble expectation is that the organs of state I have requested to take action in the “Against the Rules” reports will be guided by section 182 (1) (c) of the Constitution. This provision of the Constitution places a responsibility on my office  to  take appropriate remedial action. The report constitutes my findings as empowered by the Constitution and the Public Protector Act and my pronouncement on what I consider to be the appropriate remedial action in the circumstances.

I further believe that the organs of state will also take into account their responsibilities under section 181(3) which enjoins organs of state to assist and protect the Public Protector and other institutions supporting democracy to ensure the independence, impartiality, dignity and effectiveness of these institutions.

Government in general has not given me reason to expect otherwise. I was heartened when I heard Minister Mthethwa, the Minister of Police say, a few days ago, “We are not the mafia.”

Indeed  if we were the Mafia I would be concerned that Michela Wrong’s observations in the chapter on “The Call of the Tribe” in her book “It’s Our Turn to Eat” would be applicable. The chapter commences with an extract the movie The God father where Michael Corleone says to his older brother “You are my brother and I love you. But don’t ever take sides against the family again.”

The way I see it, there are no sides. We are all in the same team that seeks to ensure that public power is exercised responsively and within the parameters granted by the  power givers, the people, through the constitution, the law and other measures.

I believe that this is what President Zuma had in mind when he stated the following at a gathering of African Ombudsman and Mediators in Durban.

“The office of the Public Protector, which is our focus today, has to ensure  that  citizens  are protected from violations of their rights, abuse of power, negligence, unfair discrimination and maladministration. People will have faith in the office if they know that the Public Protector will act impartially to protect their rights.”

Indeed that is what constitutionalism and the rule of law dictate.

Source: Public Protector South Africa