by the City Press Newspaper on Sunday
23 July 2007
Seven years too late for a scandal
The Minister of Housing and all housing MECs have expressed their shock at
the headline of the Sunday newspaper City Press which was written to attract
readers to a R2 billion scandal they uncovered, when in fact this is a story of
projects that were stopped seven years ago.
A number of newspapers reported on this matter at the time. Over the last
seven years, the government has been dealing with the projects that emanated
from the initial stock, constructed by inexperienced contractors. What has
happened over the past two years is that the Minister has insisted that these
projects should be finalised by March 2008. It is therefore a scandal that was
unearthed and concluded seven years ago and government took a stand that it
would not accept this shoddy work.
The facts are that the newly elected government in 1994 introduced a housing
subsidy scheme with a vision to build 1 million houses in 10 years. Many
provinces and municipalities did not have the capacity not only to project
manage but to administer the funds transferred, as a result some of the
projects were left incomplete because developers defrauded government and in
some cases due to lack of skills and capacity to manage implementation of major
projects by various sphere of government.
By 2002, most of these projects were stopped by the government, so that they
can be rectified. By 2004 the department instituted an inquiry into all blocked
projects to understand the scale and impact on government. The scale has now
been put in monetary terms and obviously the costs have increased inter alia
due to the rising cost of materials. Some projects have legal implications,
i.e. where fraud was committed and these are before the courts. Where there are
no legal implications, the Minister has insisted that these be prioritised so
that even as we build new stock, that which was stopped in 2002 is
completed.
A breakthrough was made in 2004, when the Minister of Housing and all
Housing MECs commissioned the National Home Builder Registration Council
(NHBRC), a government agency tasked with ensuring quality of each house in the
country to audit and give a final total of all incomplete projects up to 2004
with a view to ring fence all the projects, and complete them by 2008.
The NHBRC and all the provinces identified among other causes of projects
being left incomplete are lack of project management skills in the early 90s;
fraud and corruption by some developers in collusion with government officials
and community conflicts in some provinces. They also found that some of the
funds were not lost as they were directed to deal with floods and new
emergencies.
On completion of that government initiated audit, the Minister and all MECs
of housing approved in early 2005, guidelines to be used by the private sector
and municipalities and provinces to complete all this projects by March 2008.
Resources were allocated to fast track the completion. On the other hand
government initiated a process to recover the funds from those developers who
vanished with some of the funds. The President has signed a national
proclamation for a full investigation into fraud and corruption in the
government housing scheme. Working with other law enforcement agencies a number
of developers are being investigated, some of them have been to court and the
due process of law will take place until funds are recovered. Where officials
have been involved in fraud, we will finalise investigations, see if we can
recover the funds and where necessary criminal charges will be laid against
them.
What the City Press describes as work of a highly investigative team of
journalists is a sensationalised report of the work the Minister and MECs of
housing have been working hard to finalise since 2004. The department has
learnt a lot of lessons from the 1994-2004. Our quality assurance systems have
been improved, all municipalities and provinces, supported by the national
department and specialists project management companies have developed new ways
of monitoring implementation and ensuring that South Africa will never have a
history of incomplete projects again.
On quality of government subsidised houses, the NHBRC now enrols all
government subsidised projects; it will ensure that the highest quality is
delivered, the NHBRC warranty is now applied on government subsidy housing
where necessary. It must be emphasised that the Minister of Housing and MECs
initiated the process to audit all incomplete projects, committed resources,
started a process to recover funds from developers, and will finalise all
incomplete project by March 2008. No new incomplete project has been identified
since 2004, our stringent project management structures and systems will ensure
that the word blocked or incomplete housing projects never exist in housing
delivery.
This is a historical problem and these projects were stopped in 2002 for
legitimate reasons. It is a major headache for the government, to be dealing
with this in its third term in government. If proper legislation was in place
from the start, many of these challenges could have been avoided. We now have
the necessary legislation in place and the NHBRC was commissioned to establish
whether we can revive the blocked projects. If approval is granted by the
NHBRC, Thubelisha has been appointed, in terms of its new mandate to see to the
successful unblocking of these projects.
Enquiries:
Ndivhuwo Mabaya
Cell: 083 645 7838
E-mail: ndivhuwo@housing.gov.za
Issued by: Department of Housing
23 July 2007
