Durban - The chairperson of the Mhlathuze Water board of directors, Thabi Shange, has come under fire for allegedly ramming through a deviation for legal services tender that may swallow up the entity's annual budget of R9 million and require funds to be diverted from other departments to pay for it.
Documents running into 78 pages seen by IOL show that Shange even ignored a directive from the National Treasury and went on to ram through the deviation.
The issue of the legal fees started late last year when the Auditor-General (AG) flagged the repeated use of Mhlanga INC, a Durban-based law firm for legal services even when there was a panel law of firms.
NEWS: The chairperson of Mhlathuze water board, Thabi Shange, has come under fire for allegedly ramming through a deviation for a legal services tender that may swallow up the entity's annual legal budget of R9 million & require funds to be diverted from other divisions. @IOL
— Sihle Mavuso (@ZANewsFlash) November 8, 2022
The four contracts were then cancelled, leaving the water board based in Richards Bay in northern KwaZulu-Natal without a panel of legal experts to defend it, should a need arise.
According to minutes of a board meeting that was held in July, the matter came up and the need to deviate from normal procurement was discussed, as it was claimed it was risky to operate without having a legal firm to defend the water entity while the tendering process for new law firms was still in progress.
The board was asked to approve the legal fees and the law firm to be appointed since the tender was more than the R500 000 threshold the chief executive officer was permitted to approve.
In order for the deviation to be allowed, approval was to be sought from the National Treasury, but before that was to be done, several risks were identified for that route.
One of the most glaring risks was that the legal bill from the approved firm, Macgregor Erasmus Attorney (MEA) would have cost R10 million. That fee was obtained from MEA when the water board asked it to give a rough estimate of what it would cost for it to finish off the work that started with the investigation of irregularities during the time of former chief executive Mthokozisi Duze.
“Macgregor Erasmus Attorneys has invoiced R2.1m as at July 12, 2022. To date only R416 034.49 has been paid, in line with the deviation that was approved. There is an outstanding amount of R1 683 966 that needs to be paid.
“Going forward, Macgregor Erasmus Attorneys has provided tentative costs (R10m excl VAT) associated with the prosecutions of the seven staff members. These costs will obviously depend on the time spent which depend on a number of factors:
“Such arrangements would lead to a reduction in costs. Tactics by affected staff leading to long disciplinary processes. This will result in increase in costs.
“Budget implications: The above costs will be paid from the Legal budget. The 2022/23 budget is R9 000 000,” read the minutes of the board meeting.
The National Treasury then wrote to the water board, stressing that the only permitted deviation is R1 million and that should follow fair and open tendering procedures.
In the board meeting minutes, that was recorded and noted. The minutes also recorded that there was no record of another letter from the National Treasury giving a nod or taking the matter further.
In spite of all that, Shange, using her personal Gmail account, later wrote an email to former acting chief executive, Swaswa Nthloro, giving him the green light for the deviation to go ahead.
“A situation has arisen which requires very urgent action to be taken with regard to the procurement of credible Firm (s) of Attorneys to provide specialised legal advisory and any other related services to the board on sensitive matters such as these which may be prone to undue interference.
“This communication serves therefore to advise you as the acting chief executive that the Firm(s) of Attorneys be appointed as a matter of extreme urgency for the purposes of providing expert legal services to the board,” Shange wrote to Nthloro, thus concluding the deal without following procedures.
From there, a letter of appointment was sent to MEA and it duly accepted it. In comparison, MEA, which according to the board minutes was preferred because it had been dealing with corruption investigations, and prosecution arising out of a forensic report, charges far higher than the panel of law firms which were fired by Mhlathuze water board.
For instance, according to court papers in the Durban Commercial Crimes Court and the quotation given to Mhlathuze water, Mhlanga INC used to charge R2 186.73 per hour while MEA was charging R3 500.
Services for a candidate attorney from MEA cost Mhlathuze water R2 000 per hour while one from Mhlanga INC was R828.12. The concern over the pricing is contained in a letter which was seen by IOL and it has been sent to whistleblowing.co.za
Asked about the allegations, Siyabonga Maphumulo, the spokesperson of the water board, said that the board was kept abreast on the probes into the utility.
“The board of Mhlathuze Water was kept abreast on all aspects of the investigation into maladministration and misconduct at the utility. We would not like to comment on any single aspect of the allegations made against the chairperson, except to say that like we have done with other whistleblower reports in the past, we will also give this report the necessary attention and act accordingly based on the findings,” he said.
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