Daily Maverick
Dailymaverick logo

Maverick News

Maverick News

‘Toxicity’ and finger pointing at people’s champ Lorenzo Davids – ‘irregular expenditure’ scandal rocks historic organisation

‘Toxicity’ and finger pointing at people’s champ Lorenzo Davids – ‘irregular expenditure’ scandal rocks historic organisation
Velani Ludidi
By Velani Ludidi
15 Mar 2023
Facebook
1
The Community Chest of the Western Cape is a historic non-profit organisation known for tackling poverty. But a Daily Maverick investigation has revealed that for years it was divided, with staff alleging financial mismanagement and a toxic workplace. This is the first of a four-part investigative series.

On one side there are staffers who insist senior colleagues made their workplace unbearable and irregularly channelled money meant for poverty alleviation.

On the other side are individuals including Lorenzo Davids, widely viewed as a social justice activist, who some staff pointed to as a pivotal part of the problem, but who says he inherited a toxic workplace, was unable to undo that and became the target of a plot to unseat him.

At the centre of all this is the Community Chest of the Western Cape (CCWC), which is now involved in a clean-up and analysis of what went wrong.

Davids, the target of several accusations, was the CCWC’s chief executive from March 2013 to March 2021. Before that, between 2008 and 2012, he was on its board.

The CCWC is a 95-year-old non-profit organisation with a focus on food security, education, social justice and community development. 

According to its website, it has a footprint in seven provinces and helps communities in need. 

Allegations and investigations


A Daily Maverick investigation, however, has revealed what has been happening behind the organisation’s closed doors for more than a decade.

Based on interviews with former staffers, letters from whistle-blowers (see below inset) and internal reports, it is clear that serious and wide-ranging allegations have been levelled against those running the organisation.



The situation has developed to such an extent that the CCWC is set to be the focus of a full forensic audit.

In addition, the Western Cape department of social development (DSD) confirmed to Daily Maverick that it was working with the organisation “to establish if funding provided to the organisation over 7 years was misused”.

“If this is the case, the matter will be handed over to the Provincial Forensic Services for further investigation,” it said.

“The National DSD NPO Directorate may initiate its own process in respect of the allegations in terms of the NPO Act.”

This article details some of the accusations and counteraccusations emanating from the CCWC and is part one of a four-part series about what has been happening there over several years.

Daily Maverick has established that the three main claims against Davids, and some of those who worked with him, relate to his time as CEO and the mismanagement of funds, the awarding of a multimillion-rand computer system tender to a board member in what may have been a conflict of interest, and demoralised staff.

This is seemingly at odds with Davids’s background.

‘Social justice activist’


Davids has worked in the NGO sector for more than 40 years.

He is also popular on Twitter which he uses to provide updates about the rail situation in Cape Town, encouraging commuters to use trains while reminding authorities to properly maintain such services.



 In October 2022, Davids received Stellenbosch University’s Social Justice Champion 2022 award for his work in public transport.

Davids currently offers courses on leadership and funding trends in NGOs. He also helps organisations to obtain funding. 

For his part, Davids told Daily Maverick that even when he was on the CCWC board between 2008 and 2012, there were verbal clashes between staff and a senior, to the point where conflict resolution specialists were called in. 

‘A very fractured organisation’


He said that when he took over as CEO in 2013, he stepped into “what was a very fractured organisation”.

Davids believed that his efforts to get the CCWC properly focused on poverty alleviation effectively made him a target.

“I have made the statement several times during my career that many NGOs sit on millions of rand in investment and paying their staff but [claim] not to have money to help the poor. 

“That’s completely back-to-front,” he said.

Davids added: “From the outset of my tenure [at the CCWC] I faced several attempts by staff to steer me away from developing and advancing a purposeful, pro-poor, justice-focused social development pathway for Community Chest and to attempt to capture in into remaining as a ‘non-disruptive business as usual’ middle-class effort to dish out feeble grants to the poor.”

‘We did not exist for ourselves’


Davids has said that under his leadership the CCWC gave away more money to poor communities than ever before and this did not go down well with some staff.

“Over the eight years we built up a reputation with donors, government and communities of being at the forefront of social change. We developed international partnerships,” he said.

“We raised more money than ever before. But I also insisted that we give more money away to poor communities and NGOs than ever before. We did not exist for ourselves – donors did not give us money to keep us in jobs – but to help alleviate poverty.

“Yet I stand accused by staff of putting ‘staff jobs at risk’ by spending money on poor people.”

‘Fighting a losing battle’ 


There were definite fractures running through the CCWC’s staff component.

In December 2021, three CCWC board members, including Charleen Duncan who was its chair between November 2019 and December 2020 (coinciding with the tail end of Davids’s time as CEO), left the organisation.

She had led an investigation into Davids’s alleged actions, which he has fully addressed, in some cases by way of denial, to Daily Maverick.

“In the short period of my involvement, I immediately noticed a lack of due diligence processes that predated my appointment,” Duncan said.

She started processes to address those issues. 

“After implementing the above processes, I felt that I was fighting a losing battle with regard to incidents of concern at the organisation,” Duncan said.

“This led to a number of fellow board members and me resigning as a matter of principle.” 

She added that all matters that were brought to the board’s attention during her tenure, including her own investigative processes in uncovering matters of concern and her corrective measures, were recorded.

Forensic audit


The main allegation that choked the CCWC was that funds meant for poverty alleviation were irregularly channelled and used.

It is understood that, based on recommendations from an internal investigation, the CCWC was looking to appoint a firm to conduct a full-blown forensic investigation into alleged financial irregularities that had occurred there.

According to its annual reports, at the end of 2017, its reserves/surplus stood at R76,325,948.

But five years later it was in a vastly different situation.

Plummeting finances


At the end of 2022, its reserves stood at R21,857,640. 

Factors including lockdowns brought on by Covid-19 need to be taken into account when analysing everything that affected the organisation’s finances.

Davids told Daily Maverick that he could only be held accountable for funds up until February 2021, when he left the CCWC.

“During 2019 and 2020 we faced a difficult time with both poor performances by fundraisers (starting in 2019) and funding decreasing in 2020 due to lockdown – which happened across the non-profit sector,” he said. 

The current chair of the CCWC board, Richard Noor, who joined it in September 2022, also confirmed to Daily Maverick that its finances had been badly affected.

“In previous years we were sitting with healthy reserves in excess of R70-million. Those reserves have been depleted to (around) R24-million at the time of my joining the board,” he said.

“We have met with our auditors and will engage further to see how best to mitigate the risks for the future. We await guidance in respect of a forensic audit to be conducted of all Community Chest WC affairs and related allegations contained in the ‘whistle-blowers’ reports.”

Retrenchments and ‘irregular expenditure’


Noor added: “Half of the staff had to be retrenched due to the financial situation the organisation found itself in.” 

He said the CCWC had a proud history founded on a pact between itself, donors and the communities it served and that its mission was to use funds responsibly to address poverty sustainably.

“Regrettably, there have been allegations of irregular expenditure in the period prior to December 2020,” Noor said. 

The CCWC’s board was investigating a number of allegations against certain individuals – who he declined to name but who he confirmed had worked at the organisation.

Getting their house in order


Noor said measures were in place to address what had previously gone wrong. “As a Board, as we become aware of further detail, we will continue to apply ourselves to addressing these matters. We have worked intensively on stabilising the organisation in other respects during this period, including a significant right-sizing of the organisation, as well as diminished capacity arising from a smaller board during the Covid period, after some resignations. We have recovered a small portion of the money and efforts to recover the remainder are ongoing. The organisation has been stabilised, and the current financial position has improved in the current financial year.” DM

The other three articles in this series are:

Categories:

Tags: