South Africa: The Three Businessmen and the Gauteng Social Development Department’s Millions

The department says the Hawks are investigating the sustainable livelihoods programme but will not provide details

Over the past decade, hundreds of millions of rands have been paid by the Gauteng Department of Social Development to a handful of closely-linked non-profit organisations. The Auditor-General has flagged half a billion rand in irregular expenditure on the department’s “sustainable livelihoods” programme between 2014 and 2018. Among the people whose organisations received funding from the department are businessmen Peo Boakgomo and Pule Molopo, as well as convicted hijacking kingpin Japhta Mookang. A previous director of the department’s sustainable livelihoods programme, July Maphosa, resigned in 2018 after being accused of fraud and soliciting bribes, allegations he denies. Despite several forensic audits and a purported Hawks investigation, no details have been made public.

In spite of two forensic investigations, six years after the Gauteng Department of Social Development director in charge of a R224-million “sustainable livelihoods” programme resigned and was charged for fraud, the department has still not provided any details.

A forensic audit was launched in 2018 but the outcome has not been made public. According to the department’s annual reports, disciplinary processes were also launched. But the department has not responded to our questions about the outcome of these processes.

The department has said that the matter has been referred to the Hawks for further investigation, but it provided no details. The Hawks told GroundUp that without being given a case number, they cannot confirm that they are investigating. The department did not respond to GroundUp’s questions about the case number.

Since 2012, between R120-million and R220-million has been spent annually on the department’s “sustainable livelihoods” programme, according to the department’s annual reports. This programme includes projects for skills development, job readiness, the provision of school uniforms, and food distribution.

The department’s annual reports also show that between 2016 and 2018, there was about R500-million in irregular expenditure on this programme. This was mainly because the department was procuring goods and services via non-profit organisations with no tender processes.

The director of the programme at the time, July Maphosa, resigned in 2018 after he was accused of fraud and soliciting bribes, allegations he denies.

Between 2014 and 2018, a large chunk of the annual budget for the programme went to three non-profit organisations, which shared directors. Godisang Development, a skills development agency, shared two directors and an address with another organisation called Kagisano, which project-managed the department’s school uniform project as well as community nutrition development centres. Kagisano does not appear to have any online presence and is no longer active.

The directors of Godisang Development and Kagisano – Peo Boakgomo and Pule Malopo – are long-time business associates and the co-directors of several other companies. Malopo was also a board member of a third organisation, Morithi Wa Sechaba, which was also involved with the school uniform project and food distribution.

Malopo says he resigned from Morithi Wa Sechaba’s board after the first meeting. He also says that there was no relationship between Kagisano and Godisang Development and that the shared address was simply because “we needed the most central place to cover the five regions of the province of Gauteng”.

As part of the sustainable livelihoods programme, the department entered into contracts with hundreds of small-scale co-operatives to manufacture school uniforms or grow vegetables for food banks. The idea was to economically empower the members of the co-operatives while also producing goods for those in need.

Morithi Wa Sechaba and Kagisano both project-managed the co-operatives on behalf of the department. Instead of the department paying the co-operatives directly, funds would flow via these non-profit organisations.

In 2016, Boakgomo and Malopo went into business with convicted hijacking kingpin Japtha Mookang. They each invested R1-million in a new mobile stage-and-sound truck, which they rented out for events.

Alongside Malopo, Mookang was also a founding board member of Morithi Wa Sechaba, which sub-contracted Khayalethu Agriculture Co-operative, of which Mookang was also a director and which supplied food to the department’s sustainable livelihoods programme. According to Winston Phahlane, a former director of Morithi Wa Sechaba (which no longer operates), the organisation was asked by the department to include Khayalethu in its programme.

But Mookang was asked to resign from the board of Morithi Wa Sechaba after his fellow board members learned of his criminal record. Khayalethu’s contract was put on hold. Mookang then threatened to sue the organisation.

In 2017, Mookang laid criminal charges against July Maphosa, the director of the department’s sustainable livelihoods programme. Among his claims were that Maphosa had instructed him to buy cars and pay for personal travel costs using public money. Maphosa denied this, but resigned from the department in April 2018 for “personal reasons”.

Two months later, Maphosa was arrested and charged with fraud, but these charges were later withdrawn.

Maphosa told GroundUp that he is innocent and that all funds that flowed to non-profit organisations during his tenure were in line with the department’s funding guidelines at that time. These guidelines have since been changed following fraud detection reviews by the department and findings of irregular expenditure. School uniforms, food and other goods are now procured via tender and not through non-profit organisations.

Boakgomo and Malopo told GroundUp that the appointment of their organisations was above board and that they had applied for funding and gone through the same process as all other non-profit organisations funded by the department.

Mobile stage truck

Mookang’s business relationship with Boakgomo and Molapo also soured. In May 2019, Mookang took Boakgomo and Molapo to court, claiming they owed him R500,000 to buy out his share of the mobile stage truck. They had already paid him part of his R1-million share, but withheld the rest due to devaluation and maintenance costs.

The matter was eventually struck off the roll, but court papers filed by Boakgomo in response to Mookang’s application include screenshots of WhatsApp messages from Mookang saying that the costs of the truck, including storage, were “covered through DSD funds”.

“We all know that technically no one really took money from their pockets to secure the truck,” Mookang says in one of the messages. “All the monies paid from our pockets we got back from the Dept and even some small profit margins. The truck technically was bought for us.”

However, Boakgomo told GroundUp that the truck was a “private business engagement with no involvement from the department”.

Mookang could not be reached for comment. GroundUp contacted him on several numbers previously used by him and also contacted his former lawyers, who said they did not have contact details for him.

No consequences

After Maphosa’s resignation, an investigation was launched by the provincial treasury, according to news reports at the time (May 2018). But the findings of this investigation have not been made public.

Meanwhile, according to the department’s annual reports, new Treasury guidelines and findings of irregular expenditure by the Auditor-General led the department to issue tenders for food and school uniforms.

In the wake of this, Morithi Wa Sechaba and Kagisano stopped operating. Another organisation, Atamelang Foundation, appeared on the scene after Maphosa’s resignation and took over Godisang Development’s “Welfare to Work” programme, which is part of the “sustainable livelihoods” programme, through which people on social grants were trained and connected to work opportunities.

A total of R20-million was paid to Atamelang between 2021 and 2023. Several members of Godisang Development’s staff went to work for the Atamelang Foundation after they took over the Welfare to Work programme, according to their LinkedIn profiles.

But Godisang Development’s funding did not cease entirely. Leaked funding records show that Godisang Development continued to receive funding from the department until 2023. Between April 2021 and June 2023, Godisang Development received a total of R54-million.

But Boakgomo told GroundUp that the amounts in the funding records “do not seem to correspond to any amounts on our signed [Service-Level Agreements]” and told us to ask the department for exact amounts.

However, Boakgomo confirmed that although Godisang Development’s official involvement in the Welfare to Work programme ended in 2019, “over the years the department has approached our team to assist on the programme due to our delivery track record and expertise”.

Boakgomo denied that Godisang Development had any association with the Atamelang Foundation, apart from a board position he took up in 2023, after the department’s relationship with Atamelang had ended. According to the funding records, the last money Atamelang received from the department was in the 2022/23 financial year. He said the board has not met since he took up the position.

We attempted to contact the directors of Atamelang Foundation, but there is no public information available and the foundation does not appear on the national company database. Boakgomo declined to provide us with a name or contact details.

A former manager at Atamelang Foundation told GroundUp anonymously that Atamelang Foundation was “administered” by Godisang Development, but did not provide further details. They said they did not have a contact number for a director of Atamelang Foundation and referred us to the department.

The bulk of Godisang Development’s funds were for the FSM Centre of Excellence, an artisan training academy in Soshanguve run by the department that provides courses in bricklaying, plumbing, welding, tiling, painting, glazing and electrical engineering. The department funded the majority of the centre’s students for three to six-month courses.

Boakgomo told GroundUp that the academy offers accredited courses and workplace learning and pays more than R1.7-million in stipends to more than 400 learners every month.

Sign up for free AllAfrica Newsletters

Get the latest in African news delivered straight to your inbox

Success!

Almost finished…

We need to confirm your email address.

To complete the process, please follow the instructions in the email we just sent you.

Error!

There was a problem processing your submission. Please try again later.

Earlier this year, the department suspended funding to Godisang Development after a new forensic audit of the non-profit sector was launched in 2023. The findings against the organisation have not been made public and it is unclear whether Godisang Development’s funding will be halted permanently. Many other organisations fingered in the flawed forensic audit have successfully appealed against the decision to halt their funding.

Last week, GroundUp visited the FSM Centre of Excellence, one of six “centres of excellence” funded by the department. Staff members told us that since the department has stopped its funding, 30 staff members have been laid off and the seven remaining staff members have taken 30% salary cuts.

The department has announced that Godisang Development has been referred to the Hawks for a criminal investigation. But Hawks spokesperson Brigadier Thandi Mbambo told GroundUp that without a case number, she cannot confirm or provide details of the investigation. The department did not respond to our requests for the case number.

Boakgomo told GroundUp that the organisation has not been contacted by the Hawks but confirmed that the organisation was visited by the department’s forensic auditors. Boakgomo declined to disclose the findings of the audit and referred us to the department.

The department’s annual reports claim that the sustainable livelihoods programme performed well, exceeding its targets until 2018, when Maphosa resigned and fraud detection reviews found that the procurement of goods such as school uniforms and food parcels through non-profit organisations was irregular. This caused a series of delays and the programme’s performance has been struggling since 2019.

The Auditor-General has raised concerns about the department’s internal controls and monitoring and evaluation of non-profit performance, which brings into question the reliability of the reported performance before 2019.

In March, the department appointed forensic auditing firm Open Water Advanced Risk Solutions to investigate the school uniforms project, but it was later revealed that the appointment of the firm was irregular. A new tender has since been advertised for the appointment of auditors.

The department did not respond to our questions despite several follow-up attempts. The department has also rejected our Public Access to Information Act (PAIA) requests for records of grants it allocated to non-profits between 2014 and 2024.

ADVERTISEMENT