Lifestyle audits should be considered to check whether elected representatives are being truthful when they declare their financial interests every year.
Gauteng Legislature’s Privileges and Ethics Committee Report
This is my proposal following the report of the Gauteng Legislature’s Privileges and Ethics Committee concerning my referral of the alleged undeclared interests of ANC Chief Whip Brian Hlongwa as detailed in court documents.
This report was adopted by the Legislature on Friday last week (click here to view).
According to the report, Integrity Commissioner Ralph Mgijima presented his report, arising from which the Committee noted “that the matter is ‘sub-judice’ in terms of South African law and that it will be prejudicial to the rights of Hon Hlongwa to require him to submit a specific and detailed response in relation to allegations raised in the complaint.”
The Committee acknowledged the status of the investigation as current and on-going pending the outcome of the case which is currently before the South Gauteng High Court, and recommended that the Integrity Commissioner should provide a progress report on the matter in due course.
In my view this highlights the weakness of the current system where little verification is done of the financial interests that are declared annually by each member of the Legislature.
My referral was based on court documents in which the National Prosecuting Authority (NPA) alleges inter alia that: “At no time did Mr Hlongwa declare to the Gauteng Legislature the holiday to Cuba, payments towards his new house at Eccleston Crescent, various home renovations, rent-free accommodation, cash, spa treatments or other benefits received from Mr Payne, Mr Smidek, Mr Pillay or their various entities.”(Note: Mr Heinz Smidek is the CEO of the Baoki consortium that won the tender from the Gauteng Health Department for a Health Information System).
It was submitted further that Hlongwa and two senior officials “did not declare these benefits because they were well aware they were not innocently given or received, involved contractors to the GDoH and would attract attention.” (see my letter to Integrity Commissioner Ralph Mgijima below for more details of the alleged undeclared interests).
The assets of the Baoki Consortium have now been forfeited to the NPA as they conceded that they could not provide a defence concerning the alleged role of Mr Smidek in purchasing Hlongwa’s former home at 16A College Drive in Bryanston for R4.6 million as well as other gratifications to Hlongwa in order for him to improperly influence the award of the tender to Baoki.
I am disappointed that the Integrity Commissioner did not ask Hlongwa to reply to any of the allegations which are extremely serious. If he is innocent he could surely have provided a response that would not have prejudiced his case in court.
Court proceedings are unfortunately extremely slow, so Hlongwa will continue to serve as ANC Chief Whip despite strong evidence that he was remiss in not declaring his full interests when he was previously MEC for Health.
Declaration of Interests
I will be proposing that lifestyle audits are done in select cases where MPLs appear to be living well above their declared income.
This should have happened when Hlongwa declared in a story in the Sowetan newspaper in 2007 April headlined “I’m too rich for my job” that he had made 10 times his MEC’s salary from his businesses and could therefore afford a R7.2 million house.
Declaration of interests by politicians will only be effective in detecting possible corruption if they are properly verified. Lifestyle audits will be a valuable addition to methods of detecting unjust enrichment by politicians and civil service staff.
Jack Bloom MPL
DA Gauteng Shadow MEC for Health
082 333 4222
Letter sent to Dr Ralph Mgijima on 6 August 2014.
Dr Ralph Mgijima
Gauteng Provincial Legislature
Dear Dr Mgijima,
REFERRAL – ALLEGED UNDECLARED INTERESTS BY BRIAN HLONGWA
I wish to refer the issue of alleged undeclared interests by Brian Hlongwa MPL as detailed in court documents which have recently featured in the media.
I enclose an affidavit by Thabo Amos Motedi of the Directorate for Priority Crime Investigations which has been lodged in the Johannesburg High Court by the National Director of Public Prosecutions.
This forms part of an application for an asset forfeiture order for a property owned by Mr Hlongwa at 163 Eccleston Crescent in Bryanston, Johannesburg, as well as the forfeiture of claims against the Gauteng Health Department (GHD) by 3P Consulting (Pty) Ltd and the Baoki consortium.
The affidavit deals with the alleged and or suspected corruption of Hlongwa and other officials or former officials of the GHD in relation to contracts between the GHD, 3P, certain subcontractors to 3P and Regiments Healthcare (Pty) Ltd.
It is a lengthy affidavit that describes in detail how 3P won the tender to establish and manage a Project Management Unit (PMU), how this contract was irregularly increased by 20% from the original R60 million, then increased to R138 million and then extended for three years at a further cost of R273 366 500. During this time, goods and services were procured to the value of R349 732 721.10 for the GHD by 3P in breach of the procurement and financial management provisions of the Constitution and the Public Finance Management Act.
Furthermore, the relationship is described between Hlongwa and Mr Richard Payne and Mr Niven Pillay, the CEOs of 3P and Regiments respectively. Regiments was allegedly irregularly appointed to review the GHD’s Folateng project at a cost of R3 492 768. According to section 13.5 of the affidavit: “Acting either in their private capacity or through corporate entities under their control, Mr Payne and Mr Pillay paid the deposits on a house for Mr Hlongwa at 163 Eccleston Crescent and further paid to renovate Mr Hlongwa’s houses. Mr Payne also provided cash, an overseas holiday, a spa treatment and other benefits to Mr Hlongwa.”
Page 115 of the affidavit deals with Hlongwa’s failure to declare the benefits received to the Gauteng Provincial Legislature.
According to section 353 on page 115: “At no time did Mr Hlongwa declare to the Gauteng Legislature the holiday to Cuba, payments towards his new house at Eccleston Crescent, various home renovations, rent-free accommodation, cash, spa treatments or other benefits received from Mr Payne, Mr Smidek, Mr Pillay or their various entities.”(Note: Mr Heinz Smidek is the CEO of the Baoki consortium that won the tender from the GDH for a Health Information System).
Sections 354, 355 and 356 deal with a previous inquiry by the Legislature’s Integrity Commissioner, and describes how Hlongwa admitted Payne’s assistance in buying his R7.2 million house, but said that he did so as a friend. His lawyer, Mr Siven Samuel refused to answer questions about a R1 million loan by Pillay to purchase the House on the grounds of legal professional privilege.
According to section 356: “There is no evidence of any loan repayment to Mr Payne or Mr Pillay or any of the entities under their control by Mr Hlongwa or his wife or any of the entities under their control. Even if there had been a genuine loan, this was itself a gratification, and ought to have been declared by Mr Hlongwa.”
The submission of section 358 is that Hlongwa and two senior GDH officials “did not declare these benefits because they were well aware they were not innocently given or received, involved contractors to the GDoH and would attract attention.”
Hlongwa’s alleged undeclared benefits include the following:
- The total amount of R1.5 million paid by Pillay to Brisgo Properties, a company 100% owned by Hlongwa and his wife, to pay towards purchase of the Eccleston Crescent house (see page 81).
- A further R2.6 million paid by Payne and Pillay towards the Eccleston house (see pages 82 to 84). This was paid through the account of Hongwa’s lawyer, Mr Samuels.
- The purchase for R4.75 million of Hlongwa’s previous house at College Drive in Bryanston by Kemsing Services (Pty) Ltd, a Cyprus-registered company owned by Smidek. It is alleged that “the timely sale of the College Drive property and the resultant access to the proceeds of the sale constituted a gratification as defined in the Prevention and Combating of Corrupt Activities Act.” (see pages 84 to 88).
- Free rental when he stayed at the College Drive house after it was sold despite provision for occupational rental of R40 000 per month (see pages 88 to 89).
- Refurbishment of the College Drive house by Ukwakha Dezign and Creative Building Projects for a total amount of R216 540.37, allegedly paid for by Payne, Pillay and their entities (pages 89/90).
- Payment of R1 563 674 from Kemsing on 8 May 2009 into Hlongwa’s personal account purportedly for the purchase of furniture but is alleged to be “a cover-up for a cash gratification” (page 90).
- Payment for renovations to the Eccleston Crescent house amounting to R1 444 382.89 from Pillay, Samule and entities associated with Payne and Pillay (pages 89 to 90).
- Trip to the Durban July Handicap for Hlongwa and his wife in 2008, including two nights at the Beverley Hills Hotel, paid for by Regiments (pages 92 to 93).
- Spa treatment for Hlongwa and his wife, complete with limousine transport, on 30 July 2009, paid for by 3P, the value being approximately R8381 (page 111).
All of the above should have been declared in the public declaration of Hlongwa’s interests, but I can find no record of it in the public section of the Register of Members’ Interests for the relevant years. I do not, of course, have access to the confidential section.
I request that you investigate this matter as the apparent failure to declare the above interests would be a major breach of the Code of Conduct.