Fraud charges hang over census ads

The government’s communications arm has been accused of fraud for disposing of documents that showed how it irregularly appointed companies to advertise the 2011 census. Government Communication and Information System (GCIS) has been blamed for botching the campaign after it failed to put out a tender to advertise the population count, then paid R7 million to two companies that did not provide any services. The accusations are part of an explosive forensic audit report that has been held under lock and key – and which has led to the arrest of a man accused of stealing the document, the now-retired deputy director-general of methodology and standards, Dr Jairo Arrow.

The report was compiled by the office of the accountant-general in the National Treasury at the behest of former GCIS chief executive officer Jimmy Manyi and Statistician General Pali Lehohla. The report is now in the possession of the auditor-general and is due to be released by the end of July. StatsSA spokesman Trevor Oosterwyk said they had received the final report, which had now gone to the auditor-general’s office. Once it had been released by the auditor-general, the necessary steps would be taken. He said the report seen by The Sunday Independent was a draft. GCIS chief executive Phumla Williams would only say that the report had been stolen and that it contained information that was the subject of a court case in which the government arm was involved.

“We will respond fully once the matter has been finalised through the various processes,” Williams said yesterday. The report covers the bulk media buying contract for the 2011 census – for radio, TV, print adverts, outdoor media such as billboards, airport advertising, township and rural murals and vehicle, taxi and building wraps. GCIS was responsible for procuring media bulk buying for the census and for the appointment of two companies to implement the project. They were Light Views Productions and Likhwane Media. StatsSA gave GCIS R24.7m between October 2010 and March 2011. But, says the report, GCIS did not appoint a bid specification committee to compile a tender bid and it did not advertise its requirements for media bulk buying for the census 2011 campaign. As a result no bid adjudication took place.

The investigation found that GCIS contravened its own policies when it appointed both companies and it contravened its memorandum of understanding with StatsSA. Later, when the matter was investigated, proposals from the two companies detailing what services they would provide were not found. “It appears that an act of fraud may have been committed by GCIS by disposing of the detailed proposal of Light Views, thereby removing evidence of their irregular appointment,” states the report. According to the report, GCIS’s accounting officer could now face charges of fraud for documents that disappeared. “A charge of fraud should be registered with the SAPS in respect of the missing documents,” the report says.

If recommendations in the report are to be followed, the government agency will have to return more than R1.8m to StatsSA, which was supposed to be spent on advertising, but cannot be accounted for. And it will have to try to recoup R7m that it paid the two companies despite their not providing any services. Revelations of the the financial mess come as GCIS fights a R26m high court application from Light Views Production for failing its contractual obligations. Overall, the report recommends that the matter be referred to the police for further investigation, saying it should be established whether six government employees – five at GCIS and one at StatsSA– benefited from the contracts in any way. Three of the GCIS employees have since left the department.

As a result of the botch-up, StatsSA advertised its own tender in June 2011 for the creative advertising concepts and production and appointed Dzinge Productions, which was paid R64m to produce the “creatives”. But it is alleged that services were never rendered at the required time as both Likhwane and Light Views told investigators that they had not received the required “creatives” to produce their work. The report recommends that a detailed investigation should be initiated by StatsSA into the appointment of Dzinge Productions and into whether StatsSA had received the “creatives”. The report also criticised the payment system at the government communication’s agency.

“There appears to be a serious lack of internal controls at GCIS regarding payment of creditors, as invoices are being split to bypass the system intended to screen all payments in excess of R1m.” It alleged that GCIS’s assistant director of supply chain management, Delicate Mosupye, committed fraud by splitting a R6.9m payment to Light Views into seven separate invoices of under R1m each to “ensure prompt payment”. Her colleague Karabo Metsileng had certified that Light Views had provided services on all the invoices – but had never verified whether these services had been rendered. The expenditure is considered unauthorised and irregular.

Metsileng did not respond to media queries, which she asked to be e-mailed to her. Mosupye could not be reached for comment. The report states that even though Metsileng and Mosupye are no longer at GCIS, both should still be part of the police investigation. A third former colleague, Nkateko Baloyi, who was the deputy director of marketing at GCIS at the time and who prepared the payment commitment notifications for Light View Productions and Likhwane, should also be investigated by police, says the report. The police investigation should also probe two other officials at GCIS – Andrew Mohamed, an acting chief director, and Phumla Williams, the then-deputy chief executive officer – who were not authorised to sign-off the payment commitment notifications.

Mohammed received a written warning but no formal disciplinary process was effected. The report says the accounting officer should be charged with financial misconduct in an internal disciplinary process, under the Pubic Finance Management Act. At StatsSA, the report recommends that communication manager Oosterwyk should appear before a disciplinary hearing on charges of misconduct for his involvement in the appointment of Light Views Production. He also allegedly acted negligently in recommending the transfer of the R18m to GCIS without cost estimates.

Oosterwyk should be charged under the Public Finance Management Act for not taking effective and appropriate steps to prevent irregular expenditure from the irregular appointment of Likhwane. Oosterwyk would not comment on allegations against him, as he had not seen the report, he said. Earlier this week, Arrow appeared in the Pretoria Magistrate’s Court where the matter was struck off the roll for police to investigate further. Light Views Productions director Jakes Mocuminyane would not comment on the report, saying that the court case he had lodged against the GCIS would prove whether his company had done anything wrong. Dzinge Productions director Shandu Nesageni welcomed the investigation, saying it would exonerate him. StatsSA had been happy with his work and he had had no dealings with either Light Views or Likhwane, he said. Likhwane Media director Sakhumuzi Shabangu could not be reached for comment.