Derek Hanekom
South Africa’s Technology Innovation Centre (TIA) is on the hunt for new leadership after dismissing its CEO Simphiwe Duma and CFO Barbara Kortjass for breaching several procedural and governance protocols at the agency.
Science and Technology Minister Derek Hanekom, at a media briefing at the Department of Science and Technology (DST) offices, in Pretoria, on Tuesday, said COO Mkhululi Mazibuko and the TIA’s Werner van der Merwe had stepped in as acting CEO and CFO respectively.
The TIA, operating under the auspices of the DST, funds product innovation to boost South Africa's economic competitiveness and create jobs.
Hanekom, alongside director-general Phil Mjwara and TIA chairperson Khungeka Njobe, who replaced Dr Mamphela Ramphele last year, released the details of a forensic audit into the alleged breakdown in corporate governance, procurement processes and investment services by employees and management.
This followed the emergence of several allegations, including nepotism, intimidation, irregular investment transactions, failure to follow procedures when procuring goods and services and discrepancies in the CEO’s expense claims, levelled at Duma and several employees at the agency.
After an internal “fact-finding” exercise revealed sufficient grounds to investigate some of the allegations, the TIA in May 2013 appointed Deloitte to undertake a forensic audit, which was concluded in October last year.
This had led to the suspension of Duma, who had elected to go on “special leave” in July 2013, with Kortjass and four employees awaited disciplinary hearings.
Duma and Kortjass were suspended in October 2013 and officially dismissed effective March 31, while three other unnamed employees were handed the “appropriate sanctions” and resumed their positions at TIA. A remaining employee was still undergoing a disciplinary hearing.
“The finalisation of the disciplinary processes against the former CEO of TIA and other staff concludes a rather difficult and unfortunate chapter in the history of the agency,” Hanekom said.
The TIA’s focus would now turn to the recruitment of a suitably skilled and qualified individual to head up the entity “honestly and with integrity.”
FURTHER ACTIONS
Following the conclusion of the report, the activities revealed in the forensic audit have also been reported to authorities in terms of the Public Finance Management Act, No 1 of 1999, and the Prevention and Combating of Corrupt Activities (PCCA) Act, No 12 of 2004.
The concerns raised following the scrutiny of irregular investment transactions – the funding of the Terbrugge Community Trust project – led to an internal investment audit and prompted the agency to internally review its investment policies, Njobe noted.
The review would be completed in May.
The investment audit pointed to poor management, financial management and governance, as well as several breaches of agreement in project investments.
“The TIA board had resolved to use all available legal avenues to seek full recourse in respect of the agency’s resources,” Hanekom said.
The internal report, together with the findings from Deloitte, have been submitted to the authorities in terms of the PCCA to enable further investigation.
IRREGULAR INVESTMENT TRANSACTIONS
The concern was raised that a Limpopo-based cattle-breeding project, which fell beyond TIA’s mandate, was approved under the existing R24-million assisted reproductive technology project, which was launched in 2012 to address low reproductive rates and introduce genetically superior cattle.
The “reindigenisation of registered Nguni cattle” project, using artificial insemination technology, proposed that a registered Nguni cattle agribusiness be built at Terbrugge farm.
The concept emerged when former chairperson Ramphele worked with consultant Jim Parker on the potential of reviving cattle-farming through a pilot project on land bordering her family homestead – a fact that, along with the knowledge that she was a founder of the Terbrugge Community Trust and that Parker was an acquaintance, was made known from the start.
The Deloitte investigation also found that Duma embarked on irregular procurement transactions when the TIA appointed McKinsey & Co and Ilizwi Industrial Holdings.
In addition, the investigation found that Duma failed to adhere to the agency’s recruitment policy when signing an employment contract installing his ex-wife Kgomotso Matjila as TIA’s GM for marketing and branding in 2010 and Nhlanhla Nyide as TIA’s communications specialist in 2011 – but no substance was found in allegations that Duma irregularly appointed Pontsho Maruping the TIA’s group executive for industrial sectors.
Further, Duma’s expense claims from April 2010 to August 2013 came under scrutiny, with many expenses – emerging from 17 business-related trips – Deloitte said should not have been permitted based on an approved travel and subsistence policy.
The alleged intimidation by the former CEO – by threatening to terminate KPMG’s services if “certain” findings were revealed – was unfounded.