Public Protector, Report No. 22 of 2013/14 on an investigation into allegations of maladministration, corruption and potential conflict of interest against the former Minister of communications, Hon Dina Pule , MP in connection with the appointment of service providers to render event event management services for the hosting of the ICT Indaba held in Cape Town from 4 - 7 June 2012, December 5 2013

Executive Summary

(i) "UNSOLICITED DONATION" is my report as the Public Protector that is issued in terms of section 182(1)(b) of the Constitution of the Republic of South Africa, 1996 (the Constitution), sections 3(2)(a) and 3(3) of the Executive Members' Ethics Act, 1998 (Executive Members' Ethics Act) and section 8(1) of the Public Protector Act, 1994 (the Public Protector Act).

(ii) The report relates to an investigation into allegations of maladministration, corruption and a potential conflict of interest made against the former Minister of Communications, Hon. Ms Dina Pule, MP (Hon Pule), in connection with the appointment of service providers to render event management services for the hosting of the Department of Communications' ICT Indaba (The ICT Indaba) held in Cape Town from 4-7 June 2012.

(iii) The investigation followed a complaint lodged by Hon Marian Shinn, MP of the Democratic Alliance (Complainant), on 20 June 2012 in terms of section 4(1) of the Executive Members Ethics Act, 1998, (EMEA) against Hon Pule who was Minister of Communications at the time and is said to have abused her position as Minister to improperly influence decisions in her department and entities under her departmental supervision to improperly benefit a certain Mr Mngqibisa and later to cover her tracks.

(iv) The gist of the complaint was that a man known as Mr Phosane Mngqibisa (Mr Mngqibisa), reported to be romantically linked to Hon Pule had irregularly withdrawn millions of Rand estimated at R6 million (R6m), from sponsorship funds meant for the ICT Indaba held in Cape Town from 4 to 7 June 2012. It was further alleged that Hon Pule's Department, the Department of Communications (DOC) improperly paid R10 million (R10m) to Carol Bouwer Productions (CBP). It was also alleged that Hon Pule should have known about Mr Mngqibisa's involvement in organizing the event and that such involvement posed a potential conflict of interest. It was also alleged that Hon Pule received a pair of Christian Louboutin shoes as a gift from Mr Mngqibisa, bought in Spain and paid for with the ICT Indaba funds through his agency, Khemano Productions (Khemano), subcontracted for the Indaba by CBP at the instance of Hon Pule's Department. Subsequent allegations included that Hon Pule had undertaken several overseas trips with Mr Mngqibisa, with her Department paying for his expenses as her spouse or official companion.

(v) By the time the investigation was finalised, Hon Pule, who had been Minister of Communications since October 25, 2011, had relinquished her position as Minister and assumed the position of ordinary Member of Parliament. The allegations relating to the relationship with Mr Mngqibisa date back to Hon Pule's brief stint as Deputy Minister of Communications from 11 May 2009 until her transfer to the Presidency where she served as Deputy Minister until her appointment as Minister of Communications.

(vi) The complaint was based on an article that appeared in the Sunday Times newspaper publication of 17 June 2012 titled, "It's just not ayoba!" Several articles were published on the matter thereafter leading to Parliament initiating its own investigation on the same issues in terms of the Parliamentary Code of Ethics. In response to those allegations, Hon Pule persistently denied any romantic link to Mr Mngqibisa or involvement in the subcontracting of his company, attacking both the media and its sources as inspired by improper motives.

(vii) Hon Pule's decision to suspend cooperation with this investigation to focus on the Parliamentary investigation that had commenced after this investigation was one of the reasons the investigation was not concluded expeditiously. Another key reason for the delay in finalising the investigation was that shortly after I was asked to investigate, Hon Pule announced that she had requested the Auditor-General (AG) to investigate. I then agreed with the AG that I would wait for that process to be concluded and then decide what my process would entail at the conclusion of his process. I advised the President accordingly, in compliance with section 3(3) of the EMEA.

(viii) It was only upon receiving the AG report and establishing that due to remit limitations, he had not covered certain aspects of the impugned ICT Indaba deal that we were able to scope our work and commence with the investigation. The investigation was further delayed by the unavailability of Hon Pule and her officials for interviews and requests for postponement of dates for submission of documents. Hon Pule and others also requested long extensions for the submission of comments to the provisional report.

(ix) The investigation process included an analysis of applicable laws and policies, exchange of correspondence, securing and analysing relevant documents and conducting interviews and/or meetings with Hon Pule, Officials in her Department, Mr Mngqibisa and his business associates, Ms Carol Bouwer of CBP and representatives of co-sponsors of the Indaba, being Vodacom, MTN and Telkom.

(x) In arriving at my findings, I have been guided by the standard approach adopted by my office, which simply asks: What happened? What should have happened? Is there a discrepancy between what happened and what should have happened? If there's a discrepancy does the conduct amount to improper conduct or in this case maladministration and unethical conduct?

(xi) As is customary, the "what happened" inquiry is a factual question settled on the assessment of evidence and making a determination on a balance of probabilities. The question regarding what should have happened on the other hand relates to the standard that the conduct in question should have complied with. In determining such standard I was guided, as is customary, by the Constitution, national legislation and applicable policies, guidelines and related benchmarks. Among such benchmarks were general Public Service Guidelines and guidelines contained in the July 2006 report of the Public Service Commission on managing conflict of interest in the public service. I also sought guidance from international benchmarks, particularly the OECD (Organisation for Economic Co-operation and Development) Guidelines on Managing Conflict of Interest.

(xii) Principles developed in relevant previous reports of the Public Protector, referred to as touchstones, were also taken into account. Key reports consulted in this regard were those dealing with the Code of Ethics and conflict of interest investigations such as "In the Extreme", "Costly Moves", "Costly letters", "To be Or Not To Be In Conflict"and "Inappropriate Moves. I also took into account the observations of the first public Protector of South Africa, Advocate Selby Baqwa when he was called upon to adjudicate on the propriety of the conduct of the then Premier of Mpumalanga Hon Ndaweni Mahlangu following allegations that he had said that lying was a normal part of being a politician.

(xiii) I also took into account submissions made by relevant parties, including Hon Pule and the Complainant, following the receipt of my provisional report made available to them on 17 September 2013 with an opportunity to respond to its contents by 25 September 2013. In compiling their responses to the provisional report, Hon Pule and the DOC were assisted by their attorneys, Malan & Mohale Attorneys whilst Mr Mngqibisa was assisted by Messrs F R Pandelani Incorporated Attorneys. The "legal" assistance included correspondence from the attorneys requesting extension of time for the submission of responses to the provisional report. I acceded to these requests and responses were finally received on 25 and 28 October 2013 respectively.

(xiv) On analysis of the complaints, the following issues were identified and investigated:

(a) Did the DOC irregularly appoint CBP to coordinate the 2012 ICT Indaba, in violation of the prescribed procurement processes, rules and prescripts?

(b) Did Hon Pule issue endorsement letters under the authority of the DOC for private companies to support and sponsor the hosting of the 2012 ICT Indaba and if so, was such conduct improper?

(c) Did Hon Pule direct the payment of an amount of R10m to CBP by the DOC as a contribution towards the hosting of the 2012 ICT Indaba and if so, were such directives and payment improper?

(d) Was the MTN sponsorship of R15m irregularly diverted by Mr Mngqibisa into ABR Consulting (ABR) bank account instead of the CBP account specifically designated for the Indaba funds and did he subsequently improperly transfer R6m of this money into his Khemano?

(e) Did Hon Pule represent to her Department that Mr Mngqibisa was her official companion and travelled with him overseas at state expense and if so, was this conduct improper and in violation of the Executive Ethics Code?

(f) Did Hon Pule benefit from a pair of red Christian Louboutin shoes, from Mr Mngqibisa, the owner of Khemano, a company subcontracted for and benefited from the ICT Indaba?

(g) Was there a potential conflict of interest occasioned by an alleged romantic relationship between Hon Pule and Mr Mngqibisa as a consequence of which, the latter benefitted improperly out of the financial sponsorships contributed by private companies towards the hosting of the DOC's ICT Indaba held in Cape Town from 4 to 7 June 2012?

(h) Did Hon Pule improperly cause or allow her Department to benefit Mr Mngqibisa improperly in the execution of the ICT Indaba?

(i) Was the conduct of Hon Pule inconsistent with the Executive Ethics Code?

(xv) My findings are the following:

(i) Regarding the lawfulness and propriety of the appointment of CBP by the DOC to coordinate the 2012 ICT Indaba:

1. My finding is that CBP was not appointed by the DOC to coordinate the Indaba. The Indaba was CBP's project that could have been executed by CBP without the DOC's consent; though needing the DOC's blessing for the desired industry support and impact. There was accordingly no unlawfulness or impropriety on the part of the DOC or CBP in regard to CBP coordinating the hosting of the ICT Indaba.

(ii) Regarding the lawfulness or propriety of the alleged issuing by Hon Pule of endorsement letters under the authority of the DOC for private companies to support and sponsor the hosting of the 2012 ICT Indaba:

1. My finding is that Hon Pule did solicit sponsorship support for the ICT Indaba but that such conduct per se was not unlawful or improper. I further find that Hon Pule was not the first to issue sponsorship support letters on behalf of CBP and the ICT indaba and that Deputy Minister Bapela (Hon Bapela) had already done so.

2. The allegation that Hon Pule pressured Telkom and the affected mobile phone companies to sponsor the event is not substantiated by evidence as event sponsors denied this allegation during interviews. I must point out though that Hon Pule should have been circumspect with regard to actively encouraging entities under her supervision to donate funds as they may have found it difficult to go against her wishes as a figure with authority over them.

(iii) Regarding the allegation that Hon Pule improperly directed the payment of an amount of R10m to CBP by the DOC as a contribution towards the hosting of the 2012 ICT Indaba:

1. My finding is that Hon Pule did commit her Department to "donate" R10m as financial assistance to the ICT Indaba through her letter dated 15 December 2011, addressed to Ms Carol Bouwer. However, on the basis of evidence before me, my finding is that such financial assistance was unsolicited. The process was also not executed in accordance with Treasury Regulation 21 regulating the granting of gifts, donations and sponsorships by the state. Her conduct and that of her Department was accordingly, unlawful, improper and constitutes maladministration.

2. I further find that as CBP innocently accepted the "donation" and integrated the money in the ICT Indaba coordination operations, it would be unjust to require that the money be refunded. It is also clear that the state derived some value from the event and related activities although a lot of that value was later undermined by the negative publicity.

(iv) Regarding the allegation that Hon Pule improperly, and in violation of the Executive Ethics Code, represented to her Department that Mr Mngqibisa was her spouse or companion and travelled with him overseas at state expense:

1. My finding is that despite numerous denials at various fora, Hon Pule did represent to her Department that Mr Mngqibisa was her official companion, the key evidence being a form completed upon her appointment as Deputy Minister of Communications.

2. I further find that, by her own admission during the interview on 28 June 2013, Hon Pule and Mr Mngqibisa had a romantic relationship. She added that he was, however, not her spouse as he was married to someone else under civil law and was therefore not entitled to spousal benefits. She offered to ensure that all Departmental expenditure on Mr Mngqibisa's trips would be reimbursed before this investigation was finalised.

3. In this regard, Hon Pule made good on her promise as Mr Mngqibisa paid back on 18 July 2013, an amount of R89 326.35 that was inappropriately spent on him by the DOC in respect of the September 2009 trip to Mexico where he accompanied Hon Pule on her official visit to that country.

4. However, my finding is that Hon Pule was not entirely honest as she stated that the relationship ended before she became the Minister of Communications while evidence relating to trips undertaken as Minister of Communications confirms a relationship. I can also not reasonably accept her submission that she did not know that her office unilaterally reflected and funded Mr Mngqibisa as her spouse during her trips as Deputy Minister and later as Minister. Hon Pule's conduct in this regard was unlawful and unethical. The act of trying to pass the buck onto staff is, on its own, grossly improper and unethical.

(v) Regarding the allegation that the MTN sponsorship of R15m was irregularly diverted by Mr Mngqibisa into ABR banking account instead of the CBP account specifically designated for the ICT Indaba funds and that he subsequently improperly transferred R6m of this money into his Khemano:

1. My finding is that the allegation is substantiated by evidence and that Mr Mngqibisa's conduct in this regard was unlawful and improper. His conduct points to abuse of the power he enjoyed due to his special relationship with the DOC and Hon Pule. There was neither authorisation from CBP for the siphoning of MTN sponsorship funds to ABR, nor agreement for a management fee of R6m nor authorisation of the appropriation of that money.

2. I further find that the appropriation of R6m or a substantial part thereof constitutes improper enrichment on the part of Mr Mngqibisa's company and that the siphoning of this money was made possible through the surplus funds caused by the unsolicited and unlawful "donation" of R10m from Hon Pule.

(vi) Regarding the allegation that Hon Pule improperly benefitted from a pair ofChristian Louboutin shoes worth R10 000 from Mr Mngqibisa, owner of Khemano which was subcontracted for and benefited from the ICT Indaba:

1. My finding is that although Hon Pule was wearing new red soled Christian Louboutinshoes at the event, no concrete evidence linked the shoes to Mr Mngqibisa or Khemano. I accordingly, find no justifiable reason to reject her explanation that she bought the shoes for herself and owns several shoes from this exclusive brand.

(vii) Regarding the allegation that Hon Pule's alleged romantic relationship with Mr Mngqibisa created a potential conflict of interest which benefitted him improperly from the financial sponsorships contributed by private companies towards the hosting of the DOC ICT Indaba held in Cape Town from 4 to 7 June 2012:

1. My finding is that there was a real and not just a potential conflict of interest on the part of Hon Pule regarding her duty to act in the best interest of the DOC and her loyalty to Mr Mngqibisa on account of their relationship. Faced with divided loyalties, as is always the case in a conflict of interest situation, I am convinced that Hon Pule chose Mr Mngqibisa's interests above those of her Department and ultimately, the State.

2. It was Hon Pule's Department that brought Mr Mngqibisa and his company to the ICT Indaba fold without CBP's request, which had indicated clearly in its prior communication to the DOC that it already had an execution partner by the name ofHunta Live, an agency that was eventually elbowed out as Khemano and its subcontractors took over the 2012 ICT Indaba coordination processes.

(viii) On the allegation that Hon Pule caused her Department to benefit Mr Mngqibisa improperly in the ICT Indaba:

1. My finding is that this allegation is substantiated. Through actions and omissions, Hon Pule caused her Department to benefit Mr Mngqibisa and his company Khemano improperly. Contrary to what had been said to CBP about Khemano's profile, neither Khemano nor Mr Mngqibisa had done any work for the DOC before or done any project of the magnitude of the ICT Indaba. Mr Mngqibisa and his company further benefited from the R15m diverted towards ABR and ultimately, the R6m siphoned to Khemano allegedly as management fees but without the authorisation of the principal, CBP.

2. I further find that Hon Pule acted in breach of paragraph 2.3(g) of the Executive Ethics Code in that her unlawful extension of spousal benefits to Mr Mngqibisa amounted to making improper use of allowances available to her.

(ix) Regarding whether or not Hon Pule's conduct was inconsistent with the provisions of the Constitution and the Executive Ethics Code:

1. My finding is that Hon Pule's conduct was grossly at odds with the provisions of section 96(2) of the Constitution as well as the Executive Ethics Code, particularly paragraphs 2 and 3 thereof. Not only did she violate the code by failing to manage the conflict of interest arising from her relationship with Mr Mngqibisa, the preponderance of evidence indicates that Hon Pule directed and/or allowed her staff, particularly her PA and Mr Themba Phiri, to violate the law and departmental policies by inserting Mr Mngqibisa into the ICT Indaba coordination and irregularly extending other favours to Mr Mngqibisa. She also caused or allowed her staff members to lie to Parliament, the AG and my office during these institutions' respective investigations.

2. I further find that due to the conflict of interest referred to in this report; it was difficult if not impossible for any of the parties, particularly officials in the DOC and CBP management to reign in Mr Mngqibisa. Hon Pule's conduct was, accordingly, improper and in violation of the Executive Ethics Code and brought the eminence of both the Executive and Parliament into disrepute.

3. I also find that, by wilfully misleading Parliament during the investigation and in offering a half-hearted apology on the day Parliament decided on the findings of the Parliamentary Joint Committee on Ethics and Members' Interests into her conduct, Hon Pule violated paragraph 2.3(a) of the Code which specifies that "Members of the Executive may not wilfully mislead the legislature to which they are accountable."

(x) The appropriate remedial as envisaged in section 182(1)(c) of the Constitution is the following:

(a) The Hon Dina Pule

(i) To make good on her promise made on 28 June 2013 to quantify all amounts spent by the DOC on Mr Mngqibisa's overseas trip to Mexico in September 2009 and all other destinations and to ensure that every cent is paid back to the state by 31 January 2014.

(ii) was noted that on 18 July 2013, Mr Mngqibisa only refunded the DOC an amount of R89 326.35 which was reprehensively spent on him by the department in respect of his trip to Mexico, undertaken in September 2009 where he accompanied Hon Pule on her official visit to that country.

(iii) To issue an open apology to Ms Carol Bouwer, for subjecting her to a hidden agenda placing her in an untenable position; The Sunday Times, for the persistent insults and denial of the truth that she eventually admitted to me on 28 June 2013; affected members of Staff of the DOC, for placing them in an unethical situation involving persistent lies and deceit and to Parliament, for persistently misleading thisaugust constitutional pillar and never admitting the truth right until the end.

(iv) To consider vacating her seat in Parliament to minimise the damage caused by her undermining this institution, particularly by never admitting the truth even after having done so to me.

(b) The President

(i) To take note of the findings and expedite the finalisation of the review of the Executive Members' Ethics Act and the Executive Ethics Code to eliminate variouslacunae identified in my previous and predecessors' reports.

(c) The Speaker of the National Assembly

(i) To take note of the findings and remedial action directed to the President and Hon Pule and ensure Parliament takes this into account in its ordinary oversight work.

(ii) To monitor that Hon Pule makes good on her promise to repay state funds irregularly spent on Mr Mngqibisa.

(d) The Minister of Communications

(i) To ensure that funds owed by Mr Mngqibisa are urgently calculated and reclaimed from him.

(ii) To consider commissioning an audit with a view to verify all the trips abroad undertaken by Mr Mngqibisa at state expense whilst accompanying Hon Pule and recover from him all what the department would have improperly paid for him.

(iii) To ensure expeditious execution of the disciplinary processes in respect of employees that acted unlawfully and in violation of the Public Service Code of Ethics in relation to the 2012 ICT Indaba and the conduct of this investigation.

(e) The Minister of Public Service and Administration

(i) To urgently consider subjecting all Members of the Cabinet and Provincial Executives to an Ethics Seminar and ensure that all new Ministers attend an ethics seminar within 2 months of assuming office.

(ii) To ensure that the Executive Ethics Code is turned into a pocket booklet to be provided to all members of the Executive on assumption of office and also captured in posters to be placed in all Executive Offices.

(iii) The Law Enforcement Agencies already seized with the matter to proceed expeditiously on matters already referred to them by Parliament.

Issued by the Public Protector, December 5 2013. The full document can be accessed via the link below.

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