Police HQ lease agreement invalid - Public Protector

Tuesday, February 22, 2011
By: 
Nthambeleni Gabara

Pretoria - The R500 million lease agreement of the new South African Police headquarters in Pretoria has been ruled as "improper and maladministration" by Public Protector, Adv Thuli Madonsela.

The Public Protector has rendered the lease invalid.

Releasing her report on Tuesday, Madonsela said the lease agreement was signed by Roux Property Fund and the Department of Public Works, and not by the National Police Commissioner as it was initially alleged.

However, Madonsela said the commissioner signed a memorandum in May last year authorising funding for the Sanlam Middestad building in Pretoria and further signed the Police needs analysis (motivating for more space) dated 19 July 2010.

"Although the SAPS did not sign the lease agreement, its involvement in the procurement process was improper, as it proceeded beyond the demand management phase and it further failed to implement proper controls as required by the Public Finance Management Act (PFMA). This failure amounted to improper conduct and maladministration," she said.

Madonsela said the conduct of the Police accounting officer was in breach of those duties and obligations incumbent upon him in terms of section 38 of the PFMA as well as relevant Treasury Regulations.

"These provisions require an accounting officer to ensure that goods and services are procured in accordance with a system that is fair, equitable, transparent, competitive and cost effective. This conduct was improper, unlawful and amounted to maladministration," she said.

Initially, the National Police Commissioner had been accused of agreeing to a R500 million property lease with politically connected businessman Roux Shabangu of Roux Property Fund without putting it out to tender.

However, Adv Madonsela said on the evidence available, it could not be found that an improper relationship between the preferred bidder Roux Property Fund and the Police motivated deviation from required rendering procedures.

According to National Treasury regulations, all contracts over R500 000 must go through a competitive bidding process.

Madonsela said the procurement by the Department of Public Works of the lease was not in accordance with the system that is cost effective and competitive as required by the Constitution, PFMA, Treasury regulations and supply chain management rules and policies.

She said the process that led to the conclusion by the Department of Public Works of the lease agreement with Roux Property Fund was flawed in various respects.

These include non-compliance with prescribed procurement procedures, such as ensuring a competitive bid process.

"This rendered the process unlawful and further constituted improper conduct and maladministration. The lease agreement should not have been entered into as it did not comply with the validity requirements of the Constitution, applicable legislation and prescripts. The lease agreement entered into by the department of Public Works and Roux Property Fund is therefore invalid," she said.

Madonsela said the department's decision to proceed with the implementation of the lease agreement -- in the face of considered legal advice from two senior counsels to the contrary, under new Public Works Minister Gwen Mahlangu-Nkabinde -- was also in breach of its fiduciary duties, requirements of good governance and amounted to maladministration.

"The reckless manner in which the department dealt with public funds in this case was improper and fell short of the requirements of good administration," she said.

She further said National Treasury must determine if irregular or wasteful expenditure was incurred by the Police and the Public Works Department in respect of procurement process and take appropriate action, where applicable.

Madonsela said Cabinet, in its first meeting convened after the publication of her report, should request the Public Works Minister's reasons for the decision to implement the lease agreement, despite the provided legal opinion by senior counsel advising the contrary.

"The Public Works Minister and Police Minister, with the assistance of Treasury, should take urgent steps to ensure that appropriate action is instituted against the relevant officials that acted in contravention of the law, policy and other prescripts of the procurement processes," she said.