Gauteng government’s buried corruption probe (part one) — how it went unpunished as nonprofits suffered

12 Dec 2024

A forensic audit into R500-million corruption in the Department of Social Development was hidden, and nonprofit organisations paid the price.

The Gauteng Department of Social Development, which pays out almost R2-billion in annual funding to nonprofit organisations serving the province’s most vulnerable residents, has failed to act decisively on corruption.

Forensic reports finalised five years ago by Bowmans, a law firm, and BDO, an auditing firm, found evidence of fraud and corruption by department officials and a handful of nonprofit organisations and business people. But those implicated remain unpunished.

At least R500-million was irregularly paid by the department for school uniforms, dignity packs and food parcels; money which ultimately made its way to companies that had not gone through a tender process.

The forensic reports, which were finalised in 2019, recommended disciplinary action against officials, blacklisting of companies and certain nonprofit organisations, and further investigation by the Hawks. But these recommendations were largely ignored by the Gauteng government until recently.

An attempt by the previous MEC, Mbali Hlophe, who served between October 2022 and June 2024, to reignite the investigation failed to successfully discipline implicated officials.

Under Hlophe, 13 officials were suspended between September 2023 and February 2024 but have since returned to work after the department failed to hold disciplinary hearings. Several officials implicated in the reports were never suspended.

Control over funding was centralised to the office of the head of department, Matilda Gasela, herself accused of fraud (Gasela was appointed by premier Panyaza Lesufi despite fraud allegations). This resulted in catastrophic delays to the 2024 nonprofit funding process, leaving hundreds of organisations without subsidies for months.

MEC Faith Mazibuko, who took over from Hlophe after the 2024 elections, has not yet seen the reports, according to her spokesperson, Teddy Gomba. “The MEC has read about the report in the media, like everyone else. However, it has never been shared with her, not even by the former MEC,” Gomba said.

The matter was referred to the Hawks after the finalisation of the reports, but the investigation stalled.

Gomba said Mazibuko had met the Hawks on Monday. The Hawks told her they required Bowman to depose an affidavit to “kick off the investigation”.

“The MEC does not want to second-guess why her predecessors did not act on the report. Unfortunately, the MEC lacks the power to discipline her predecessors,” Gomba added.

Several of the companies that received funds were run by associates of the head of the then director of the department’s sustainable livelihoods programme, July Maphosa. Among the allegations against Maphosa are that he personally benefited from the companies he appointed, including a trip to Dubai and having his tertiary education paid for.

Irregular appointments

The investigators found that the nonprofit organisations involved in the department’s “sustainable livelihoods” programme had mainly been appointed outside of the usual procedure, which should have included an application and adjudication process.

Instead, the department, under the leadership of Maphosa, appointed several organisations without a competitive tender process to act as “conduits” for companies.

Some of the nonprofits running for the department’s dignity pack, school uniform and food programmes were appointed without having applied for these programmes. Others applied only months after the deadline. Several organisations received funds from the department before they had even signed a contract.

Tender processes were completely bypassed and there was no evidence of a competitive bidding process, the forensic audit found.

Several of the companies that supplied and distributed food, dignity packs and school uniforms shared directors with the nonprofit organisations that paid them. School uniforms were supposed to be supplied by sewing cooperatives, but much of the funding went to private companies, often linked to people involved in the appointed cooperatives.

The department’s annual reports declared that targets were met on these programmes, but the investigators found significant discrepancies in the reported performance. They also found millions of rands inaccurately reported in the department’s annual financial statements.

“This process was flawed and farcical from the outset as the stated purpose for inviting proposals was not the true nature or purpose of the process,” the report reads.

Sometimes payments would be made by nonprofits to suppliers, on instruction from Maphosa and other GDSD officials, for goods and services outside of the scope of the contracts with the department.

Decision-making was delegated to the department’s nonprofit organisation directorate, meaning the department’s chief financial officer was not involved in setting the budget for nonprofit organisations. Funding decisions were made by a handful of officials, including Maphosa, who chaired the adjudication panel.

The forensic reports reveal that:

No evaluation reports were created for the nonprofit organisations;

Organisations were individually asked to submit documents and proposals, including some after the closing date;

Maphosa had misled the panel by saying that business plans had been received from some organisations when they had not;

There was also no vetting of organisations’ board members and the appointment of organisations was therefore irregular; and

The total amount paid to organisations exceeded the department’s own budget.

Department fails to reform

Despite these forensic audit findings and stated attempts by the department to clamp down on corruption, the department failed to change course.

In 2024/25, the department failed to award tenders for food parcels and dignity packs, instead deviating from supply chain management processes to appoint nonprofit food banks and hand-selected companies to supply goods. More than R6.5-million was declared irregular in the department’s 2024/25 annual report.

The DA’s shadow MEC for social development, Refiloe N’tshike, told GroundUp: “I am concerned that no one ever acted on these [reports] and the portfolio committee was not even made aware of them, yet they were commissioned using public money. One wonders whether there was a deliberate attempt to hide the findings and recommendations of the reports.”

The department, which has been ignoring our queries since July, did not respond to GroundUp’s questions. The MEC’s spokesperson only responded on behalf of the MEC, not the department. DM

This is the first of two articles about the buried corruption reports. Later today we publish the details of how a senior department official channelled hundreds of millions to companies and organisations run by his associates.

First published by GroundUp.

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Irregular appointments

Department fails to reform