A whistleblower in the Department of Employment and Labour has complained to the Office of the Public Protector about alleged procedural irregularities in the office of minister Thulas Nxesi regarding the setting aside the R5-billion Unemployment Insurance Fund (UIF) contract with Thuja Capital.
According to media reports, the department had not followed processes when Thuja was appointed to handle workers’ money as part of an investment scheme. Nxesi consequently started the process to set the agreement aside, bringing in Adv Thabani Masuku SC to lead the court application.
But, in the copy of the anonymous complaint to the public protector, there was evidence Masuku, dictated that Nxesi appoint law firm N Gawula Incorporated Attorneys (N Gawula Inc) as his attorney of record.
The whistleblower suggests the appointment violated the Public Finance Management Act, which did not provide for a service provider to be handpicked as the department’s attorney without any procurement process being followed.
Ahead of roping in Masuku to pursue the review and set aside the UIF-Thuja agreement, Nxesi appointed the same N Gawula Inc to conduct a forensic investigation into the controversial agreement.
Consequently, the law firm would become a consultant to Masuku and a witness to the recommendations it had already made, according to the whistleblower.
But Masuku raised different reasons in his letter to Nxesi, dated September 7. “As forensic investigators appointed by the minister to conduct the necessary investigations into the agreement, they have the information necessary for us to prepare a thorough application that accurately represents the departmental interests,” he wrote.
He said he expected to hold extensive consultations with the investigators to traverse the full spectrum of issues engaged in their report.
“I do not believe that there is any conflict of interest in N Gawula Incorporated Attorneys being appointed to represent the minister and the department in this application.”
However, the whistleblower claims N Gawula Inc is said to have found that the department and UIF failed to ensure “… an appropriate procurement and provisioning system that is fair, equitable, transparent, competitive, and cost-effective”.
“However, the same firm is now planning to benefit from the department through scope extensions and contracts that do not follow the process. It is clear the report was a money-making scheme to get N Gawula Inc appointed to do more work without following any process, despite not completing the initial work scope.”
The whistleblower also alleges that N Gawula Inc failed to do a thorough job in its forensic investigation. “We have it in good authority that the service provider in question never met with the critical stakeholders to conclude and meet the requirements of the terms of reference. So, the report would be technically incomplete.”
For example, said the complainant, the law firm never met Thuja. “So how could they have concluded the due diligence and the report without meeting the provider at the centre of the forensic investigation? Also, how did they complete the review of the process followed without that engagement?”
In terms of the terms of reference, the law firm’s mandate was to investigate the department’s appointment process as well as to conduct due diligence on whether Thuja had the necessary capacity to deliver on the project. However, said the complainant, the recommendations and the terms of reference did not talk to each other at all.
“It is clear that the service provider was creating more work for themselves from the recommendations done,” said the whistleblower, adding that none of the recommendations related to the terms of reference.
The person said the recommendations gave the impression there was no process at all that existed in the department to handle the disbursements of funds for various projects.
“That is impossible. How did the department disburse billions to recipients if it had none of the processes the provider recommends? I request your office to please investigate the Masuku appointment of N Gawula Incorporated and the incomplete report produced by the service provider,” the public protector heard.
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