DA: MARI, MPP - DA IN KZN SUBMIT 400 PG DOCUMENT ON CONTROVERSIAL VULINDLELA HOUSING PROJECT TO PUBLIC PROTECTOR/SPECIAL INVESTIGATING UNIT, July 22 2011
THE Democratic Alliance in KwaZulu-Natal has submitted a 400 page document relating to controversial housing development, Vulindlela, to the offices of the Public Protector and the Special Investigations Unit (SIU) in the province.
DA KZN Human Settlement spokesperson, George Mari, confirmed that the documents were handed over today. "The documents have been submitted, along with a brief from the DA, which highlights our concerns over what we believe is corruption and maladministration at the highest level. Our submission includes a detailed account on the tender process used by the province's Human Settlement Department to award a R2.1 billion tender to the developer, Dezzo Holdings.
This includes input obtained from sources within the department who have spoken on condition of anonymity, as well as legal opinion. A massive problem within the Vulindlela project relates to beneficiaries. Their subsidies are being used, yet they are not receiving title deeds and are instead being asked to sign lease agreements with the Ingonyama Trust Board.
At present there is no clarity on who the home owners will be or who is going to provide maintenance for the houses. The DA questions when the title deeds will be handed over and how. We also want to know why the province's Human Settlement department has not acquired the sites from the Ingonyama Trust Board. There seems to have been very little community consultation around these issues."
Mari said the DA had requested a full probe into these and other alleged irregularities surrounding Vulindlela. "The constitution has been breached in terms of Sections 3, 6 and 7. This cannot go unchecked. We await the response of the Public Protector and SIU."
BELOW FOLLOWS A COPY OF THE COVERING LETTER TO THE PUBLIC PROTECTOR AND THE SIU:
The Public Protector
Cc Special Investigating Unit
22 July 2011
Introduction:
The Democratic Alliance draws your attention to serious allegations of corruption surrounding the Vulindlela Housing Project within Msunduzi, which has not gone through the Supply Chain Management process. The Democratic Alliance requests an investigation into the awarding of this project to the Vulindlela Community Based Organization, which, it seems, appointed or formed the Vulindlela Development Association, a Section 21 Company, which in turn appointed DEZZO Housing Developers. The project was allegedly awarded using the Enhanced Peoples Housing Process.
The KwaZulu-Natal MEC for Human Settlement, Maggie Govender, stated during her Budget Speech in April 2011 that the Vulindlela Housing Project was at a pre-feasibility stage, while also indicating that the project was expected to yield approximately 25 000 housing units. The DA has since discovered that at the time of the MEC's announcement agreements had already been signed between the KZN Department of Human Settlement (DoHS) and the Vulindlela Community Based Organisation, dated 8 March 2011 and 29 March 2011. This pre-dates her budget speech claim that the project was at pre-feasibility stage.
Prior to this the Msunduzi Municipality, in terms of its own IDP, identified the need for housing projects in various wards. Thes housing projects, destined for Wards 1-9 subsequently went out to tender and Msunduzi Municipality then received proposals and prices for these projects. It is alleged that the Department of Human Settlements boycotted a meeting called by the municipality to action the above mentioned projects. The Department of Human Settlements allegedly then pressured Msunduzi Municipality to cancel the above tenders and then suddenly produced the Project as an Enhanced Peoples Housing Project, involving the above-mentioned Association with the involvement of Dezzo Housing Developers. Dezzo Holdings counts senior ANC members, including a member of the KwaZulu-Natal legislature amongst its stakeholders.
Recent Tender History:
While the DA believes there was a genuine attempt by Msunduzi Municipality to deliver housing within its area of jurisdiction, there are a number of events that expose a trail of Public Sector Mismanagement, and which will continue to do the residents of Vulindlela a great injustice.
Tender for pre-feasibility study - Vulindlela Housing - December 2010:
Whilst Msunduzi Municipality was involved with the tender process on the one hand, the provincial DoHS proceeded unilaterally with the Vulindlela Housing Development. This was done without adequate consultation with the Municipality - and also in violation of constitutional and other legislative requirements. Please refer to Chapters 3, 6 and 7 of the South African Constitution, which verify this.
The DoHS advertised for proposals for a pre-feasibility study for housing in the Vulindlela area in December 2010, with the closing date of 3 January 2011. This was a serious mistake, as companies engaged in this industry have to close down for the compulsory "builders break", and would therefore find it difficult, if not impossible, to prepare a proposal at this time. Although this issue was raised at the compulsory briefing session, it was summarily dismissed by Department officials. Notwithstanding this difficulty, many implementing agents worked throughout this holiday period in order to comply with the closing date.
Notwithstanding the above, the notion of undertaking a pre-feasibility study for the area as a separate exercise from packaging, obtaining approval for, and implementing projects in the area, displays an almost unbelievable lack of understanding of the housing development process by Department officials, as it would have condemned this important and urgent initiative to an extended and unnecessarily long-drawn-out preparation and approval process.
In January 2011, the DoHS gave notice that its call for proposals was cancelled, and that the project was to be re-advertised.
Tender for Packaging and Implementing Rural Housing in Vulindlela, January 2011:
At the beginning of February 2011, the DoHS once again advertised the development, this time as a single project with 25 000 subsidies.
The DA is advised that a compulsory briefing session was to be held at 11.00 on 16 February 2011 at the Mpumuza Traditional Council. Once again, approximately 40 prospective tenderers assembled for the briefing, some from as far away as Johannesburg. No official arrived from the DoHS. Phone calls to the DoHS offices revealed that the briefing had been cancelled without notice, and that no official would attend as they had been called to a regional office meeting. No apology or explanation was forthcoming from the Department's regional office or procurement section.
Observation and Comment on the Process to Date:
It would appear that:
* Msunduzi Municipality has taken concrete steps in an attempt to initiate housing development within Vulindlela for some time.
* The Provincial DoHS has deliberately intervened to prevent the Municipality from making any progress in this regard.
*The DoHS has subsequently, in violation of the constitution, attempted to unilaterally move the development process forward, without the participation of the Municipality.
Msunduzi Housing - Tender History:
Ximba Rural Housing Tender, October 2008:
In October 2008, Msunduzi Municipality advertised and received proposals for a housing project in the Ximba area.
The DoHS, through its regional office, insisted that this process be cancelled, on the grounds that it (DoHS) had not been sufficiently involved or consulted. Municipal housing officials had in fact invited the DoHS to be fully involved in the preparation for, and implementation of this proposal, but the DoHS officials failed to attend meetings or participate in any way. This left the Municipality with no alternative but to attempt to proceed on its own.
Sweetwaters, Nxamalala and Inadi Rural Housing Tender, November 2008:
In November 2008, Msunduzi Municipality advertised and received proposals for housing projects in the Sweetwaters, Nxamalala and Inadi areas.
As with the Ximba proposal, the DoHS, through its regional office, insisted that this process be cancelled, on the grounds that it had not been sufficiently involved or consulted. As before, Municipal housing officials had invited the DoHS to be fully involved in the preparation for, and implementation of, this proposal, but DoHS officials again failed to attend meetings or participate in any way, leaving the Municipality with no alternative but to attempt to proceed on its own.
Sweetwaters, Nxamalala, Inadi and Ximba Rural Housing Tender, July 2009
In July 2009, due to the previous processes having been cancelled by the DoHS, the Municipality, attempted once again to secure the Department's participation and advertised and received proposals for housing projects in all four areas.
Once again the DoHS insisted that the process be cancelled.
In all three of the above tenders, the Municipality had gone so far as receiving and adjudicating tenders, and was ready to make appointments, subject to the concurrence of DoHS officials.
Co-ordinating Committee
At around this time, a committee was established comprising members from the DoHS and Msunduzi. This was an attempt to ensure better communication and co-ordination in respect of all housing initiatives within Msunduzi.
In reality the DoHS attempted to use this structure to unilaterally impose its own agenda on the Municipality in respect of housing initiatives. The DoHS insisted that almost all municipal housing funds be directed to its own rectification programme - itself the subject of a forensic investigation at the time due to appointments made by DoHS) - leaving almost no financial resources for rural development. The DoHS threatened the Municipality with the withdrawal of funding for housing development, should the Municipality not accede to its (the Department's) demands.
This is in violation of Chapters 3, 6 and 7 of the Constitution, and removed the Municipality's ability to implement its own planning priorities (as required by other legislation), which included a significant investment in Vulindlela.
In Summary:
The DoHS has displayed complete incompetence, both in preventing the Municipality from making any progress, and in its own failures in this regard.
The DoHS has further displayed its incompetence and arrogance towards the private sector participants in this industry by its failure to attend the tender briefing and its failure to notify or apologise to those who attended.
Assuming that approximately 30 proposals would be submitted each time the project is advertised, each requiring inputs from a full professional team, and each proposal taking approximately 10 professional person-days to prepare, a conservative unrecoverable cost estimate for the proposals prepared to date amounts to approximately R10 million, with a waste of over 12 000 professional hours. This excludes the time and cost investment of public sector officials in the process.
Speculation:
The ongoing lack of progress with the Vulindlela housing initiative and the total failure of the province's DoHS in this regard have led to much unhealthy speculation amongst stakeholders as to the probable way forward.
One school of thought is that the development may be handed to a large company as a single project to implement, as a possible attempt by the DoHS to "save face", as the department realizes its own lack of capacity to manage multiple projects in the area.
This would not be well accepted by the industry at large, as many companies have already invested considerable time and expense in this initiative. In considering the scale of the development in relation to the department's annual budget it is also clear that such an option would reinforce the monopolization of the industry by a very small number of large developers (a serious problem in this Province, already acknowledged by DoHS), and would compromise the development of emerging companies in the sector, in itself a cornerstone of government policy.
A second school of thought is that the Vulindlela project could be handed over to the recently established Housing Development Agency, which has taken over the responsibilities of Thubelisha Homes. This would represent a capitulation and an acceptance of failure in this sector by the provincial government, with enormous consequences. In fact it would raise the question as to whether the provincial DoHS has any role left to play at all, and whether it hould in fact be closed down.
This move could also compromise the development of the large human resource within the project area, this being at least of equal importance to the provision of top structures to deserving beneficiaries. This is especially so due to the predominantly rural nature of the area, and the need to acknowledge, work with, and understand the complexity of the established traditional structures and communities in the area, while also optimizing work opportunities, skills development and inward investment potential inherent to a development of this nature.
Another suspicion is that Dezzo Holdings, which has politically-connected ANC members as directors - one being a senior member of the KZN Legislature - have used the Amakhosi as a front. The appointment of the project director who is a former Msunduzi mayor also raises concerns. The formation of the Vulindlela Development Association has also not been community driven as it appears that the five Amakhosi got together with the help of Dezzo Holdings to put up the proposal. The Vulindlela Development Association has also not gone out to tender on this project, choosing to use Dezzo Holdings as the implementing agent as a reward for their assistance.
Conclusion:
The DA requests that both the SIU and the Public Protector scrutinize the Enhanced People's Housing Project (EPHP) on the basis that Built Environment Support Group (BESG) executive director Cameron Brisbane - part of the original National Reference Group that drafted the EPHP policy - claims that the Vulindlela contract is in breach of the same policy that authorities says it upholds.
The VDA as a community based organisation is supposed to appoint a community resource organisation (CRO) to provide technical assistance to the VDA, with national policy prescribing that a CRO must be a non-profit entity, a safeguard against breaching the Public Finance Management Act. Dezzo Holdings is a profit-making entity and ineligible to be a CRO under the national policy. The Vulindlela project is also supposed to be community-driven, yet some residents have voiced their opposition to the deal, claiming they were never consulted.
Another huge problem within this project is that the beneficiaries, whose subsidies are being used, are not receiving Title Deeds but are asked to sign lease agreements with the Ingonyama Trust Board. There is no clarity on who the home owners or who is going to provide maintenance to the houses. When will titles be given and how? Why have the department not acquired the sites from the Ingonyama Trust Board? There seems to have been very little Community Consultation around these issues.
I await your earliest response on the above matter.
George Mari, MPP
DA KZN Spokesperson for Human Settlement
Statement issued by George Mari, MPP, DA KZN spokesperson on human settlements, July 22 2011
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