Public Works Minister tackles irregularity in Government leases

SA Public Works Minister Thulas Nxesi

The Public Works Minister Thulas Nxesi says 22 irregular or fraudulent leases have been identified and will be coming under the microscope.

Twenty-two irregular or fraudulent leases had been identified in Johannesburg and civil action would be instituted to recover the more than R64m involved, Public Works Minister Thulas Nxesi said yesterday.

In a remarkably frank media briefing ahead of his maiden budget vote in the National Assembly yesterday, Mr Nxesi said fraudulent and irregular leases, where the state paid exorbitant prices for leasing buildings, were so numerous that the property market in some areas had been permanently distorted.

Every lease held by the state is to be audited — there are more than 3000 — by a joint team from public works and the Treasury. This work would take about a year to complete.

"There are no quick wins with leases. Years of poor management, undercapacity and lack of financial controls have provided fertile terrain for fraud and corruption," Mr Nxesi said.

"Serious irregularities have come to light thanks to the dedicated work of the Special Investigating Unit. It is for this reason that shortly after my appointment (late last year) I removed certain financial delegations to regions of the department, such as withdrawing their powers to sign leases."

Mr Nxesi said 22 such leases had been identified in one region alone, involving R64m, and "this includes leases where the Department of Public Works paid for the duration of the lease without the building being occupied".

"We have instructed our lawyers to approach the high court to nullify these irregular lease agreements and institute action against whoever unduly benefited." Criminal cases had been launched against several officials, including some who had left the department, and after investigations, "arrests are imminent".

Mr Nxesi said there had been collusion between his department’s officials and owners of buildings to inflate the prices paid for the leases above the market rate. Corrupt officials had been rewarded for this collusion.

Democratic Alliance public works spokeswoman Anchen Dreyer said MPs had been told the extent of the corruption in the department was so wide and deep that it was "scary".

"The question is, can we trust this department with our tax money?" Ms Dreyer asked.