Saturday, July 6, 2013

Zuma's R800 Nkandla Lease Agreement

Jacob Zuma pays a measly R800 to lease his 8.9 hectare Nkandla compound, say reports, and this agreement is in place for 40 years.

 Jacob Zuma pays a mere R800 per month for the lease on his 8.9 hectare Nkandla compound, according to a City Press report. This is the land on which the controversial R206-million upgrade to Zuma's private home is taking place.
The newspaper reported on Sunday that, according to documentation it obtained, Zuma's lease is for 40 years with the option to renew. Adjacent to Zuma's estate is a 6.6 hectare area, leased by the public works department, for R1 300 per month.
The newspaper also revealed a "scramble" to secure the leases, resulting in a fast-tracking of that process.
It was previously reported that an investigation by the public works department into the financing of the Nkandla upgrades would be kept a "secret". This was because the report would be referred to Parliament's standing committee on intelligence, ostensibly for "security reasons". That committee's work is not open to the public.
Meanwhile, the M&G Centre for Investigative Journalism, amaBhungane, is taking Thulas Nxesi, the minister of public works, to court in an attempt to gain access to the full details of Nkandla's funding. This is after the department ignored an attempt to obtain the documentation via the Promotion of Access to Information Act.
The Mail & Guardian previously revealed how Zuma himself was aware of the scale of the upgrades at Nkandla. Leaked documents showed that Zuma was kept abreast of the upgrades in "exhaustive detail" as early as November 2010. 
This week, Deputy Public Works Minister Jeremy Cronin told Talk Radio 702 he was anxious for an explanation on the "clearly outrageous" cost of the R206-million upgrade to Zuma's private home in Nkandla.
"It's clearly outrageous, it's clearly hard to justify."
Cronin was responding to concerns raised by Democratic Alliance parliamentary leader Lindiwe Mazibuko that Cronin's senior, Nxesi, classified a report on how the money was spent by sending it to Parliament's joint standing committee on intelligence. The committee meets behind closed doors and its members are sworn to secrecy.
Public protector Thuli Madonsela has conducted a probe into the upgrade. There is currently speculation on whether or not she will publicly release a report into the matter.
Last year, City Press reported that Zuma would pay only 5% of the bill for the upgrade, or around R10-million.
The president's private home will reportedly feature underground bunkers, a clinic, a fire station, special quarters for police, and a helipad. – Additional reporting by Sapa

The Giant Scandal That Zuma Owns

How did the government decide that it would spend more than R200-million on President Jacob Zuma's private home?

How did the government decide that it would spend more than R200-million on President Jacob Zuma’s private home? (Rogan Ward, M&G)

How was a lifelong underground operative and politician able to afford his own multimillion-rand contribution to the project? And who, besides the president and his close relatives, ­benefited from the building of the mega-kraal at Nkandla?
These crucial questions have been all but forgotten in the necessary, but distracting, debate about why the department of public works report on the project was classified, and by whom.
The Mail & Guardian has today begun publishing a series of documents that begin to cast light on at least some of these questions. Reluctantly handed over by the department in terms of the Promotion of Access to Information Act, the 12000 pages of material we have been examining are not a complete record, but they make some important things inescapably clear.
The first is that ultimate responsibility rests with the president.
The documents provided to us are thin on communication at the very highest levels, something we may be able to address through a court application for more information. What we have been able to obtain, however, demonstrates how an administrative culture of grovelling sycophancy has grown up around Zuma, and that this culture is responsible for ballooning costs, unjustified secrecy, and spending decisions that bear no relation to rationality or to the regulations surrounding presidential perks.
There is one person responsible for this Big-Man culture, and that is the man at its centre.
If the criminal justice system can be made to serve at his pleasure, after all, with acting bosses who survive on sufferance, what is it to reach into the public purse for the building of a country house?
The documents also establish beyond dispute that claims of a need for blanket secrecy cannot be sustained. On the contrary, officials’ insistence on secrecy in order to provide political cover for Zuma, rather than for reasons of security, emerges from the documents as an important contributing factor in the ruinous cost of the project. Secrecy meant less rigour in tendering for work, and a willingness to pay hush money to service providers that might otherwise have been held accountable for shoddy delivery.
Even the much criticised Protection of State Information Bill makes it ­axiomatic that classification cannot legally be carried out in order to spare the blushes of officials or politicians.
Some aspects of the Nkandla plans can justifiably be kept secret of course – alarm specifications, for example, or details of bulletproofing – but the vast array of material given to the M&G, albeit under legal duress, makes it clear how readily that information can be severed from the stuff that just plain looks bad.
The larger point is that none of this should ever have happened. Public works should have provided the limited contributions permitted in its regulations for the security of the complex. The rest should have been for Jacob Zuma’s private account.
He owns this gargantuan house, and he must own this scandal.

The Nkandla Documents

Nkandla: An orgy of kowtowing

Documents obtained by amaBhungane on Nkandla show how costs ballooned tenfold as officials scrambled to please President Jacob Zuma.

Citizens of South Africa dug deep to fund the president’s Nkandla compound. (Madelene Cronj√©, M&G)
Documents obtained by amaBhungane lay bare how Jacob Zuma's accession to the presidency set off an orgy of official grovelling that allowed the security upgrade at his private Nkandla homestead to balloon from a modest R27.8-million plan in 2009 to a projected total of about R270-million in October 2012.
The official expenditure as of June 2013 is R210 505 255 – but this does not appear to include bills still to be paid, including maintenance.
About 12 000 pages of public works department  documents relating to Nkandla, known internally as Project A, were released to amaBhungane two weeks ago. They were disclosed in response to an access to information request launched a year ago under the Promotion of Access to Information Act, apparently in a bid to head off a court hearing on the department's initial refusal of the request. (See "Long battle to get hold of redacted documents".)
The documents represent the best approximation so far of the evidence available to the special public works task team appointed by Public Works Minister Thulas Nxesi last year to investigate the scandal.
The disclosures in the documents appear to make a mockery of the government's attempt to keep its own investigation under wraps by classifying the team's report top secret and referring it for discussion behind closed doors by the joint standing committee on intelligence.
In a letter to the National Assembly speaker, Max Sisulu, last month, Nxesi said the report on the Nkandla security upgrades had been classified top secret in terms of the minimum information security standards, making it exempt from disclosure.
The documents released by the department include a number that are marked "top secret", but the classification appears to be designed more to protect the government and the president from embarrassment than to ensure security.
They include a remarkable March 2012 secret letter from Durban regional manager Kenneth Khanyile to his public works department bosses in Pretoria in which he calls for special tendering and auditing procedures for so-called "prestige projects", which would shield them from public knowledge. This was not only for security reasons, but also "because these projects are further targeted by journalists in an attempt to discredit the government in general".
The documents also include fairly detailed, but unexceptional, information about the security measures at the Nkandla compound, despite amaBhungane excluding this data in the terms of its request.
In short, there is nothing in the Nkandla files that could not have been publicly disclosed, except that they paint an unedifying picture of how senior officials and politicians:
  • Scrambled to meet deadlines set by Zuma, taking short cuts on tendering processes;
  • Shifted money from other programmes to accommodate the unbudgeted spending;
  • Implemented the Nkandla project with few proper cost controls and no allocated budget or limit on spending;
  • Were mainly concerned with delivering to Zuma (referred to as "the principal") at a speed and level of quality befitting a "prestige project";
  •  Were reluctant to allocate costs to Zuma, including for the building of a new cattle kraal, a plant nursery, a road network and other improvements that will benefit Zuma's family long after he ceases to be president  and
  • Paid out an underperforming contractor at least partly because threatened court action could cause "political fallout that could possibly influence the principal's political position very negatively".
Although the documents provide evidence that in some cases the contracts were poorly managed, there is not a great deal to support the allegations of "overcharging" apparently raised in the task team report.
But there are significant gaps – notably in relation to communication with directors general, ministers and deputy ministers and, crucially, Zuma – though the documents provide intriguing pointers that cast doubt on the president's attempts to distance himself from the project and suggest that he played an important role in how the process unfolded.
A definitive answer to this question will probably depend on the disclosure of more high-level, sensitive documentation. To this end, ama-Bhungane is likely to proceed to court as scheduled on November 5.

What did Zuma know about the Nkandla project?

Despite gaps, files suggest that President Jacob Zuma made an input on Nkandla project decisions.

In a rowdy debate in the National Assembly on November 15, President Jacob Zuma distanced himself from the process that resulted in the state spending huge amounts on upgrading security at his Nkandla home.
Expressing anger at being portrayed as corrupt for security expenses foisted on him by the state, Zuma said: "There are two different things: my homes that are built by me and my family, and the security features that the government wanted ... to satisfy their own requirements … These are matters that the government ... don't ask me, don't ask me."
But documents obtained by amaBhungane cast some doubt on the president's reply – though there are significant gaps in the material released. What is there suggests Zuma – referred to as "the Principal" – played an important role in how the process unfolded and had an input in some of the decisions:
  • An October 2009 letter from police divisional commissioner for supply chain management states: "By instruction of ... President Zuma, the existing house at Nkandla, currently accommodate [sic] SAPS members must be converted as part of the president's household."
  • It appears Zuma was key to setting deadlines – and it was at least partially this urgency that led officials to adopt "emergency" procurement procedures. For instance, in one memo the public works project manager, Jean Rindel, states: "Minister [Geoff] Doidge and [deputy director general Rachaad] Samuels … instructed this office to continue with immediate effect, as he was given a deadline by the principal to have the site operational by December 1 2010."
  • A June 3 2011 memo asking for permission not to go out on tender for electronic security features notes: "The project must be completed by October 30 2011 as per instruction from the principal. A negotiated procurement process would be faster."
  • The project was divided into two phases, with phase one including "emergency" work to ensure the basic security of the site. When contemplating phase two, officials were again influenced to abandon more open tender procedures and negotiate with the same contractors who had been appointed for phase one.
  • A memo dated January 10 2010 states: "A meeting was held with [then public works] deputy minister [Hendrietta] Bogopane-Zulu ... on December 21 2010 in which she confirmed that the principal indicated that he does not want other contractors on site in phase two."
  • It appears there was some detailed consultation with Zuma. Minutes of an emergency progress meeting on November 30 2010 state: "Bogopane-Zulu said she had a discussion with the principal on the relocation (of families). [She] mentioned she will conclude with the principal on the close off (fencing) of the relocation and report at the next meeting."
At a progress meeting on June22 2011 in was agreed that "[Minenhle] Makhanya (the architect) would meet with the principal and present the fire pool".
A high-level document dated March 18 2011 relating to the allocation of costs between the state and the president noted: "It may be necessary for these issues to be discussed with the principal as the financial implication directly affects him."
Records of these discussions with "the principal" are not included in the documents released by public works.
Zuma's spokesperson, Mac Maharaj, did not respond to questions about the president's involvement in the process.

Nkandla: Number One

Jacob Zuma's share of the 'security-related' costs has been whittled down steadily – at the state's expense.

President Jacob Zuma's contribution to the Nkandla bonanza was massaged downwards and he is now expected to pay for just 5% of the security-related improvements at his private residence.
A top-secret March 2011 memo split the bill by allocating ­R203-million to the public purse and R10.5-million for Zuma.
The document frets that "it may be necessary for these issues to be discussed with the principal [Zuma] as the financial implication directly affects him".
A "preliminary cost estimate" that was not included in the Nkandla files obtained by amaBhungane but was leaked to the media last year indicates that at one stage Zuma's "private" costs stood at R22.5-million.
The "apportionment of costs" was a touchy subject throughout the Nkandla upgrade project and many documents appear to have been omitted from the files obtained by amaBhungane.
The department allocated non-security related expenses – such as sewerage installations, a cattle ­culvert, a rubbish compaction unit and two-thirds of the landscaping – to the state.

Graphic: John McCann
A security contractor also motivated that costs such as air conditioning in areas that "preclude the opening of windows", elevators and fire-fighting equipment were security-related, and, therefore, not Zuma's problem.
A decision was later taken by the department to find millions more for air conditioning even in "low … security areas" and to fund the entire landscaping budget.
The landscaping contractor had quoted R14.3-million for the work, which included R840 000 for a "level terrace created for a function marquee".
The justification offered was that "functions are normally for heads of state and managed by DPW [department of public works]".
Presidential spokesperson Mac Maharaj failed to respond to ­questions about whether any such functions have been held at Nkandla and whether Zuma has made any contribution to the costs at all. The contractor quoted a further R1-million for a new livestock kraal.
Variation order 
"This kraal is of a higher quality than what was previously on site; however, the new kraal brings the project [into] line with prestige projects [the department of public work's categorisation of the Nkandla project]," the contractor said.
Also included in the landscaping was a tree nursery.
A quantity surveyor, who watched his cost estimates go up in smoke, wrote: "Given the nature of the project, I honestly don't think that spending this amount of money on landscaping is justifiable but, having said that, the decision still rests with the client."
In the months that followed, the question of how to split the bill went all the way "to top management", was "revised several times" and a committee was appointed "to make the final decision on this matter".
Their decision? A further ­R3.84-million to be added to the taxpayer's already astronomical financial commitment.
The official who approved the variation order (an appeal for money after unexpected costs overrun planned costs) scribbled underneath that "funds should be spent strictly on security measures at the private residence of the principal".
But the horse had already bolted, out the kraal, via the nursery, and away through the verdant rolling landscaping.

The Nkandla files

Procurement processes were overlooked and cost overruns justified as the team scurried to finish within deadlines imposed by Zuma.

In May 2009, a fortnight after Jacob Zuma's presidential inauguration, a team of officials was dispatched to Nkandla to investigate how best to secure his home.
Led by police, military and intelligence officers, who laid down security requirements, the public works team of professionals put together a detailed "scope of works".
Their extensive recommendations included the upgrading of access roads, perimeter fencing, fire-fighting, sanitation, a heliport, air conditioning with biological filters in a "safe haven" and, puzzlingly, a "revamped" cattle kraal.
The department of public works's chief quantity surveyor, Ron Singh, ran the numbers, reporting that the job would cost just less than R28-million.

Zuma's contractors

The department's national office fired instructions off to its Durban branch, where regional manager Kenneth Khanyile would oversee the procurement of specialists to plan, design and construct the upgrades.
A handwritten note by a member of the budget committee that approved the funding gave an early indication that the project was being railroaded. It read: "Due to the urgent nature of service, service must proceed and funds will be made available periodically, as and when savings materialise from prestige/PWD [public works] budget."
This urgency and a willingness to sweep aside procedures was entrenched that October in 2009, when Khanyile described an agreement with acting director general Solly Malebye in which the Durban office would be given special powers to approve big Nkandla contracts worth more than R20-million.
Meanwhile, the department's procurement processes were in effect leapfrogged to favour Zuma's personal choice of three firms, privately hired for home renovations two years earlier. This was "essential", public works project manager Jean Rindel noted, "to ensure complete integration".
The private quantity surveyors on the project, in turn, handed the department a list of contractors from which it would choose, again deviating from supply chain processes, Khanyile wrote.
By February 2010, the main building, electrical and civil contractors had been chosen. Among these were the major contractors, Bonelena and Moneymine, the latter having been hired earlier by Zuma. Moneymine's appointment by public works was also "essential", Rindel said, because the company "is trusted by the owner of the property [Zuma]".
According to internal records, public works had spent R4.1-million on the project by the end of that financial year, March 31 2010. Yet the first of three project phases had barely begun.

Zuma's deadline

By June 2010, Rindel's project team at public works was ready to hand over the site to contractors for phase one of Nkandla, or "Prestige Project A", but they had not received official sign-off from the defence department or police.
Although Rindel calculated they would need just less than ­R40-million a year for two years to complete Project A, funding had still not been found.
His request was escalated to a national budget committee, recommending that the money be siphoned from two important programmes: inner-city regeneration and the dolomite risk management programme.
The contractors moved on to site that month.
In another supply chain management sidestep, Rindel's team appointed a security consultant without first getting approval from the regional adjudication committee. Justifying this three months later, he said the work had needed to start "immediately", apparently illustrated when the consultant was called "to accompany the [deputy director general] and minister [Geoff Doidge] on visits to the fencing and glass suppliers in order to expedite the work".
By then it was August, and Doidge was clearly coming under pressure from above to fast-track Project A.
In mid-September 2010, he set a "strict deadline" for the completion of phase one. Months later, when Rindel motivated for more funding because of serious cost overruns, he revealed the source of this pressure: "[Doidge] instructed this office to continue with immediate effect, as he was given a deadline by the principal to have the site operational by December 1."
"The principal" refers to Zuma.
Within a week of setting this deadline, Doidge and other senior police, defence and public works officials met at Nkandla, where the minister dished out instructions to get things done.
Justifying the cost overruns, Rindel explained that, at this late stage, the South African Police Service had submitted a "revised" scope of works. This had Rindel rushing to appoint more service providers – for the supply of bullet-resistant glass, a generator and prefabricated structures – with "emergency" permission obtained from Khanyile. Formal permission was again sought months after procurement.
According to Rindel, "the lengthy process" of waiting for approvals "could compromise the security of the principal and would not be ­tolerated. This was made very clear by the top management of the police service and the department of defence."
But the department's chief quantity surveyor, Glenda Pasley, was worried. She wrote to Rindel: "The scope of works and costs have increased substantially on the project over the past few months, giving rise to serious concerns about what control mechanisms and parameters are in place."
She also said there was no clarity on how the enormous cost would be split between Zuma and the state.
Another surveyor, Dumi Gqwaru, lamented the state of the contracts: "If a contractor were to be nasty, she would take us to the cleaners … I could not agree more with [Deputy Minister Hendrietta Bogopane-Zulu] in referring to this project as 'project went wrong'."
Meanwhile, Zuma shuffled his Cabinet at the end of October, sacking Doidge before the deadline could be met.
The replacement minister, Gwen Mahlangu-Nkabinde, enthusiastically grabbed the Nkandla baton. In her first week in office, she submitted a detailed report to the president, reassuring him that everything was on track for December 1.
But the project team missed Zuma's deadline by three weeks. Evidently this caused consternation in high places. In a letter motivating for more fast-track measures, this time for phase two, Rindel said speed was "essential" because "the state already delayed the owner of the property [Zuma], and this caused much embarrassment to the state".
When the state prepared for the phase two contracts, it once again negotiated with Bonelena and Moneymine. As for the latter, this was once again according to Zuma's wishes.
According to a document discussing Moneymine: "[Bogopane-Zulu] confirmed that the principal indicated that he does not want other contractors on site in phase two."

Zuma's second deadline

By the end of the 2011 financial year, Project A had cost R62.3-million.
As phase two got under way, officials reluctantly began to wrestle with the question of how much Zuma would pay.
Meanwhile, Khanyile asked for permission to deviate once again from procurement prescripts for a security detection system. His request revealed another Zuma-driven deadline and a presidential secrecy requirement.
"The instructions of the owner must be respected," said Khanyile. These were that information should be contained and the project had to be completed by October 30 2011 "as per instruction from the principal".
The state quantity surveyors now complained that they had been sidelined. Pasley wrote to Rindel: "We are no longer in touch with the project as you have excluded us." And months later: "We have to date not been briefed by you." She wanted to see financial reports and cost-allocation decisions. "This is of serious concern."
Late in the year, and early in 2012, Rindel submitted another batch of requests to pay contractors extra after further cost overruns.
By March 2012, as the financial year came to a close, the state had spent almost R190-million on Project A.

Top secrecy

Throughout 2011, complaints flowed over contractor Bonelena's missed deadlines and, early in 2012, a consultant recommended that the contractor be fired. The company had cash flow trouble and was at the root of serious delays.
This appeared to elicit attention from the highest levels, because in January 2012, newly appointed Public Works Minister Thulas Nxesi met the company's owner, Thandeka Nene, in the first of several personal engagements.
In April that year, steps were taken to terminate Bonelena's contract but the company disputed it. Official memos recommended that an amicable settlement would be best to prevent information leaking out through a court battle.
This softly-softly approach – Nxesi and Nene's personal liaisons included – continued even after Bonelena filed for liquidation in July.
Even the state-owned funder, the Industrial Development Corporation, came to Bonelena's rescue. According to The Mercury, this year, the corporation bailed out Bonelena with R10-million, despite the fact that the company already owed it millions.
In correspondence with the national office, Khanyile put the problem plainly: Zuma's reputation.
"Court cases will result in public scrutiny … This is an unacceptable risk to this office and could result in political fallout that could possibly influence the principal's [Zuma] political position very negatively."
In October, press leaks resulted in a major public outcry and, as phase three of Nkandla began, internal reports projected Zuma's Project  would cost the state as much as R273.8-million – nearly 10 times what had been proposed back in 2009.