Dirco director-general Kgabo Mahoai found guilty of gross negligence over R118m New York project

The suspended director-general of the Department of International Relations and Cooperation (Dirco), Kgabo Mahoai, has been found guilty on disciplinary charges related to spending R118-million on a dilapidated building in New York which was never bought. 

In a judgment handed down by email on Monday, 23 August, but only obtained a week later, disciplinary chair Judge Cynthia Pretorius found Mahoai guilty of gross negligence, gross dereliction of duty and breach of legal obligation, and grossly irregular, wasteful and fruitless expenditure. Pretorius said the charge of gross failure of leadership was a duplication of the first charge, and it wasn’t proceeded with.

President Cyril Ramaphosa had delegated Dirco Minister Naledi Pandor to institute the disciplinary proceedings and the hearing started on 17 March and went on for four months after Mahoai – whose contract comes to an end in December – had requested a number of postponements.

The hearing was about Tender No DIRCO 10-2015/2016, published in March 2016, for the appointment of “a development partner, for the Design, Construction, Operation, Maintenance and Finance of the suitable and sustainable office and residential accommodation for the South African Diplomatic Missions in Manhattan, New York City”. 

The tender closed on 16 April 2016 and was awarded to Simeka Group Pty Ltd/JV Regiments Capital Pty Ltd on 27 May of that year. 

“It is important to note that this joint venture had never tendered for this project,” Pretorius said.

Just a little over two weeks later Mahoai became the department’s acting director-general and the responsibility for this project fell on him.

The first charge, of gross negligence, related to the fact that Mahoai had, on 28 March 2017, approved a payment of almost R113-million, which translated to almost R118-million with commission, the exchange rate and bank charges – to Serendipity SA Investment LLC without a legally valid basis. This was a breach of the Public Finance Management Act, according to the charge sheet. Mahoai, however, said he based this approval on the fact that the pre-payment had been approved by his predecessor, Jerry Matjila, who later served as South Africa’s ambassador to the United Nations from 2016 to 2020.

Pretorius, however, said Mahoai did not have the necessary approval from the National Treasury to have done so. He wrote to the Treasury in August 2017, after he had already approved the payment, to ask for the necessary approval in terms of Treasury Approval III, but three months later he received a reply from Treasury saying: “It is the view of the National Treasury that the project should not proceed without certainty that the appointment of the preferred bidder complies with section 217 of the Constitution of South Africa which required the procurement process to be in accordance with a system that is fair, transparent, cost-effective and competitive.”

Treasury also recommended that the department go ahead with the purchase of the land on its own, without the Simeka and Regiments joint venture, to avoid any irregular expenditure.

Mahoai said the then minister, Maite Nkoana-Mashabane, as well as the department’s then chief financial officer, Caiphus Ramashau, motivated for the deal to go ahead as it originally stood, and he acted on that. (Ramashau was placed on precautionary suspension in March.) Pretorius, however, said Mahoai knew that the Treasury had not granted approval.

“It is common cause that the tender should not have been awarded due to the flaws in the tender as set out above,” she said.

As more money was not made available, Dirco could not make further payments, which meant the deal fell through.

Pretorius, in the judgment, said Mahoai testified that the whole scheme was “orchestrated” and that he acted on pressure from the minister so that “the minister prevails”, because she told him he was only an acting director-general and she would be the first respondent should there be any litigation against the deal.

The Auditor-General in July 2018 found the R118-million to have been irregular expenditure as the winning bidder did not comply with at least six requirements, one of which is that the “company who the bid was awarded to is not the same company who submitted the bidding documents”. Pretorius said Mahoai had agreed that Dirco gained no value for the R118-million that it had spent, and as the department’s accounting officer he should have stopped it.

On the charge of gross dereliction of duty and breach of legal obligation, Pretorius said Mahoai already knew by 26 January 2018 that “something untoward was taking place in Dirco in connection with the tender” and he should have made enquiries with the officials involved and investigated the matter, but he only instituted disciplinary proceedings three years later. He could have stopped the payment of the R118-million “to an entity that had not tendered and that had not been awarded the tender”. 

Pretorius said Mahoai “chose not to do so or neglected to do so in a manner that was totally inappropriate in the circumstances”. She said his explanation that he was under pressure to sign the proposal could not excuse him. 

“An accounting officer, even under pressure, should still apply due diligence and ascertain that such a proposal is supported by the facts. He failed to do so.”

With regards to the charge of grossly irregular, wasteful, and fruitless expenditure, Pretorius said Mahoai should have acted when he became aware in 2017 that Dirco was paying hold-over charges for the mission building it was in at the time, as the lease expired in 2014. This amounted to paying double the rental each month, and this continued until January 2021 before action was taken. 

Dirco spokesperson Lunga Ngqengelele has not yet reacted to a message asking for comment.

It does appear that Mahoai could appeal against the ruling, as Pretorius in her judgment said that Mahoai’s legal representative tried to introduce new arguments at the end of his re-examination under oath. One of these arguments was that no investigation had taken place into allegations of misconduct against Mahoai before the disciplinary hearing took place, but it was not dealt with in the hearing because Pretorius said it was introduced too late.

Minister Pandor was slammed by MPs last week for being absent from a meeting by the National Assembly’s portfolio committee on Dirco where Mahoai’s case, among others, was discussed, reported TimesLIVE. Pandor had previously refused to confirm that Mahoai’s suspension was in relation to the New York deal. MPs had insisted that he was not director-general at the time and not implicated by the Auditor-General, and they said Pandor was taking action against the wrong official. DM