11 December 2024
At least R500-million was irregularly paid by the Gauteng social development department and channeled to companies that had not gone through a tender process. Illustration: Lisa Nelson
The Gauteng Department of Social Development, which pays out almost R2-billion in annual funding to non-profit 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 non-profit 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 non-profit 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 non-profit 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,” said Gomba.
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 Mazibuko they require Bowman to depose an affidavit to “kick off the investigation”, said Gomba.
“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,” said Gomba.
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.
The investigators found that the non-profit 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 non-profits 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 non-profit organisations that paid them. School uniforms were supposed to be supplied by sewing co-operatives, but much of the funding went to private companies, often linked to people involved in the appointed co-operatives.
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 rand 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 non-profits 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 non-profit organisation directorate, meaning the department’s Chief Financial Officer was not involved in setting the budget for non-profit organisations. Funding decisions were made by a handful of officials, including Maphosa, who chaired the adjudication panel.
The forensic reports reveal that
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 non-profit food banks and hand-selected companies to supply goods. Over 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.
This is the first of two articles about the buried corruption reports. Tomorrow we publish the details on how a senior department official channeled hundreds of millions to companies and organisations run by his associates.