GAUTENG HEALTH MEC'S OUTRAGEOUS CONFLICT OF INTERESTS
I have referred to the Public Protector for investigation the controversial circumstances surrounding Gauteng Health MEC Brian Hlongwa's purchase of a R7.2 million house in Bryanston, Johannesburg (see letter below).
It is an outrageous conflict of interests for the Managing Director of a company that has a huge contract with the Gauteng Health Department to act as Mr Hlongwa's representative in a private property deal.
E-mails that I have given to the Public Protector show that Mr Richard Payne, MD of 3P Consulting, is not only described by a lawyer involved in the property transaction as Hlongwa's representative, but purports to provide guarantees for the payment.
This is a blatant breach of the Executive Members Ethics Act, specifically Section 2 (b) (iii) that refers to MECs "exposing themselves to any situation involving the risk of a conflict between their official responsibilities and their private interests".
Last year, 3P was paid R229 million, which was R169 million more than the contracted amount of R60 million, and signed a three year contract in February this year for R273 million.
I am not convinced that this huge expenditure on 3P is justified as many officials in the department complain that it just duplicates work that they already do.
It frankly looks like a sweet heart contract to me, that has escalated beyond all reasonable justification. I have therefore asked the Public Protector to also investigate whether there was any pay-off involved in this transaction.
I have established that the MEC has not declared the acquisition of this property in the Gauteng Legislature's Register of Interests, which is a breach of the Legislature's Code of Conduct.
He appears to be a very wealthy man, with a number of expensive properties. How can he afford this purely on a politician's salary?
The Gauteng Health Department overspent its budget last year by more than R1 billion, and our hospitals struggle to meet the needs of patients.
We need to know that the millions of rands spent on 3P consulting is truly justified, rather than have anything to do with the MEC's cosy relationship with its MD Mr Richard Payne.
Text of letter sent to Public Protector:
Office of the Public Protector
Private Bag X677
Pretoria
0083
Dear sir,
REFERRAL - ASPECTS RELATED TO HOUSE PURCHASE BY GAUTENG HEALTH MEC BRIAN HLONGWA
I hereby refer to you a possible breach by Gauteng Health MEC Brian Hlongwa of the Executive Members Ethics Act No 82 of 1998.
My information is that Mr Hlongwa bought a house at 163 Eccleston Crescent, Bryanston, Johannesburg late last year for R7.2 million. The transfer went through on 15 January 2009 (see Windeed attachment, but note that the date of purchase reflected seems to be in error as it should be 2008 not 2007).
This house is registered under Golden Pond Trading 363 Pty Ltd, a shelf company in which Hlongwa is the sole director and shareholder.
According to an e-mail in my possession, Mr Richard Payne, the Managing Director of 3P Consulting, was involved in this transaction as Hlongwa's representative, which is highly irregular because his company gets huge contracts from the Gauteng Department of Health (all e-mails referred to are attached).
Last year, 3P was paid R229 million, which was R169 million more than the contracted amount of R60 million, and signed a three year contract in February this year for R273 million (see Mail & Guardian report on 3 April 2009).
The e-mail is from Yousha Tayob Attorney, dated 19 February 2008, to Mrs Joeline Hlongwa, and copied to both Mr Hlongwa and Mr Payne. Tayob was acting on behalf on Mr Jabu Madlala, the seller of the property.
It concerns the transfer of this property, and refers to Mr Payne contacting the property agents to request a meeting. Tayob's e-mail notes that after this meeting, Mr Payne sent an e-mail to Tayob advising inter alia that "you (Joeline) were now in a position whereby you could ensure that the total outstanding funds would be transferred to either me or Pam Golding trust account by the 28th February 2008."
Further "That he (Payne) would be able to furnish to me (Tayob) a letter from the entity that will be supplying the funds within the next 10 days."
Another e-mail from Tayob is to Brian Hlongwa on 10 March 2008 in which he writes "Shortly prior to the due date for the delivery of the Guarantees, your representative , Mr Richard Payne requested a meeting which meeting was held at the offices of the estate agents Messrs Pam Golding. At the meeting Mr Payne advised of certain difficulties in regard to the provision of the Guarantees and undertook to provide same by no later than the end of February 2008. This was recorded in writing."
The e-mail continues: "Also in terms of the discussions between the parties, my client indicated the difficulty with the postponement date for the Guarantees and requested that an amount of R2.6 million be paid to my client immediately, and for immediate usage by my client. Your representative, Mr R Payne, confirmed that this arrangement was in order and advised that by the end of February 2008, such payment would be made for utilization by my client."
Tayob observes that the Guarantees were not put in place by 28 February, and that he "in fact received a cheque deposit payment directly into my trust account from Attorneys Siven Samuel & Associates in the amount of R1 million on the 7th March 2008 which funds will only be cleared, in the event that they are cleared, by the 21st March 2008."
This all looks highly irregular. Specifically, why is Mr Payne acting as Hlongwa's representative in a private property transaction and providing Guarantees? It needs to be investigated as a possible conflict of interests in view of the large 3P contract with the Gauteng Health Department.
Furthermore, it is not clear who paid at least R1 million in part-purchase for this R7.2 million house, and perhaps more. There needs to be a probe into "the entity that will be supplying the funds".
The question arises as to whether there is a pay-off involved here, which needs to be investigated as well.
My referral is based on, but not limited to, the following sections of the Act, but other sections may also be applicable:
Section 2 (b) (iii) "exposing themselves to any situation involving the risk of a conflict between their official responsibilities and their private interests; "and (v) "acting in a way that may compromise the credibility or integrity of their office or of the government."
Also Section 2 (c) (ii) "MECs to disclose to an official in the office of the Premier concerned designated for this purpose:
(ii) any financial interests acquired after their assumption of office, including any gifts, sponsored foreign travel, pensions, hospitality and other benefits of a material nature received by them or by such persons having a family or other relationship with them as may be determined in the code of ethics;"
I have consulted with Advocate Jules Browde, the Integrity Commissioner in the Gauteng Provincial Legislature, and have ascertained from his assistant that Mr Hlongwa has not declared his purchase of the property concerned nor the "Guarantee" that appears to have been provided by Mr Payne.
I would be grateful if you could give this matter a high priority.
Yours sincerely,
Jack Bloom
Member, Gauteng Provincial Legislature
Statement issued by Jack Bloom, MPL, Democratic Alliance leader in the Gauteng Legislature, April 9 2009
Click here to sign up to receive our free daily headline email newsletter
