A wedding and ‘contracts for friends’ at embattled CSOS

Among the companies found to have been irregularly appointed and paid at the embattled Community Schemes Ombud Services (CSOS), an entity under the department of human settlements, was one belonging to a friend of its former accounting officer, advocate Boyce Mkhize. 

A Sunday Times investigation has uncovered that Mkhize presided over the appointment of a slew of companies belonging to his friends, former South African Post Office marketing general manager Khumbulani Ndebele and his wife Nokukhanya Khanyi Khumalo, as well as their relatives.

While Khumalo and Mkhize refused to admit they knew each other, the Sunday Times found indisputable proof on Ndebele’s social media account and YouTube channel that showed Mkhize attended the couple’s wedding in 2019 and gave a speech at it in which he confirmed he and Ndebele were “friends”.

The companies amassed millions from the entity while the couple went shopping for expensive designer clothes and ate out at restaurants, Ndebele’s social media account shows.

“uKhumbu, I’ve known him for quite a while, and he’s a generous guy, a very loving guy, a loving someone. But I found of late that he’s also taken his love for the finer things to another level ... Khanyi, you’re looking beautiful,” he said at the wedding.

One of the contracts is a human resources recruitment tender awarded to Vashma Projects, a company in which Ndebele’s sister-in-law, Nomsa Khumalo, is a director. Ndebele resigned his directorship of the company before the contract was given to it, and Nomsa Khumalo was appointed to the position months after the award.

An investigation into the award of the tender to Vashma, by Nexia SAB&T, found the company had been given the contract in 2021, despite there already being a panel of companies providing HR functions to CSOS, and without the knowledge of the executive responsible for HR. The company was paid more than R500,000 before it even signed a contract with CSOS. 

Nomsa Khumalo later applied for a call centre supervisor and call centre agent position at CSOS and, despite this glaring conflict of interest, was shortlisted for the role. It was only after members of the interviewing panel disagreed with a recommendation to hire her — she performed poorly at the interview — that the appointment was halted. 

At the time, CSOS call centre supervisor Nomsa Semata recommended her appointment, on the dubious basis that Nomsa Khumalo’s previous experience in the private sector meant she was better suited for the position. This was despite other candidates who had actual call centre experience performing better in the interviews. 

A CSOS insider with intimate knowledge of the process said they had wondered why there was such a push to employ Nomsa Khumalo. “She came third or fourth (I can’t remember exactly) in terms of scoring, but when the appointment memo came, it stated that number one and number two should be bypassed and give her the job instead, for some very flimsy reasons. Fortunately, it didn’t happen,” the source said. 

“She is also involved with two companies who are on the CSOS panel of marketing and advertising agencies. The two companies work together and have been allocated work worth about R11m for this financial year, which included the production and placement of billboards, as well as regional activations for Cape Town and Gauteng.”

As the CSOS accounting officer, Mkhize signed the award letter sent to Vashma, but the service was curiously requested by CFO Thembelihle Mbatha, who is not in the client department. 

CSOS is a government entity established to act as a national regulator and alternative dispute resolution body to ensure good governance in community schemes, including gated communities, across South Africa. 

It receives R500m a year through levies collected from more than 70,000 participating sectional title schemes. But millions have been lost or stolen through maladministration and procurement corruption.

The Sunday Times also uncovered that, besides Vashma, even more companies linked to Ndebele were appointed by CSOS during Mkhize’s tenure, without Mkhize making any declaration of a potential conflict of interest or recusing himself. They are: 

• Alpha HR, which has the same Waterfall, Midrand, address as Nomsa Khumalo, and whose sole director is Sibongiseni Ndebele. Sibongiseni Ndebele was also a director at Vashma in 2017.
• Miyacom, an advisory services, tax and forensic firm whose director is Nokukhanya Khumalo, Khumbulani Ndebele’s wife and an employee at the Reserve Bank. Miyacom was paid R2.3m by CSOS.

Two weeks ago, the Sunday Times reported how on Mkhize’s watch CSOS irregularly appointed a senior employee, Kgabo Hlahla, who participated in the improper award of a R116m ICT tender now beset with problems.

The five-year contract, awarded in 2021 to Interfile, is one of several tenders that are part of a National Education, Health and Allied Workers’ Union complaint about procurement at CSOS, and falls within the ambit of the Nexia investigation. 

Mkhize was allowed to resign after allegations were made in a Nexia draft report about unlawful interference in Hlahla’s appointment. It was claimed that instructions were given that he be shortlisted for the position, and that changes were made to the panel set up to interview candidates for the role. At the time of his resignation, Mkhize told the Sunday Times he was leaving for personal reasons.

This week, he said it was “unfair” and “a violation” of his constitutional rights to expect him to respond to “issues” from two years ago without his having had the benefit of seeing the final report. 

He refused to discuss his friendship with Khumbulani Ndebele, why it was not declared, and why he did not recuse himself, saying: “I don’t consider it appropriate to answer to personal and private information.”

“I would be involved in some procurement only at [the] award stage, without going through the detail of evaluation, which is undertaken at levels below me. This means I would not see things like details of proposals or submissions or evaluations. I therefore wouldn’t know who is a director where, or who is related to whom, [and] neither would I have details of the appointments you are referring to at the present moment,” he said. 

I would be involved in some procurement only at [the] award stage, without going through the detail of evaluation, which is undertaken at levels below me. This means I would not see things like details of proposals or submissions or evaluations 

—  Boyce Mkhize, CSOS former accounting officer 

When he was asked what he had done when it was reported to him that a service provider — namely, Nomsa Khumalo — had tried to apply for a job at CSOS, he did not answer.

Nomsa Khumalo was not the only service provider linked to Khumbulani Ndebele to benefit from CSOS apathy. 

A CSOS audit of work Miyacom did on sectional title scheme verification found the company had claimed for incomplete work. However, instead of trying to recoup the money from Miyacom, it allocated it even more work. 

Miyacom was hired as part of a panel of three companies that was tasked with tracking down and verifying new complexes not registered with CSOS. They were meant to populate a spreadsheet that would be used by compliance officers to register and start collecting levies from them. The companies were expected to provide an address, a photograph and GPS co-ordinates for each complex, as well as contact numbers for the individuals responsible for it. 

For this they would be paid R200 to R350 a scheme, depending on how much information they provided. Each was initially allocated 5,000 schemes. 

Verification by CSOS compliance and enforcement officers found that in some instances Miyacom had copied and pasted phone numbers, or entered false ones, so they could claim the full R350 for the scheme. They recommended the money be recovered from Miyacom, but the company was instead allocated even more schemes to verify.

Nokukhanya Khumalo denied being “associated” with Mkhize, adding that her husband never attended any meetings at CSOS on behalf of her company. This is despite the Sunday Times confirming, through internal documents, that Khumbulani Ndebele attended the dispute resolution meeting. 

“All three companies were given more schemes by CSOS, which is proof that the allegations that Miyacom was not performing is false. Second, it is false that CSOS claimed any money from Miyacom. We challenge your sources to provide you proof of that false claim,” she said. 

“We are handing these issues to our lawyers [so that they can] look into [them]. We have been co-operating and assisting you to do your work because we have nothing to hide, and there has not been any wrongdoing on our part,” she added.

In a previous call, Nokukhanya, who shares the same address in Waterfall as Vashma, pretended to be Nomsa Khumalo’s PA and confirmed during the same conversation that Nomsa was the owner of Alpha HR, a company CSOS hired after it became clear Vashma’s appointment and payment were irregular. 

Company records, however, show that Alpha has one director, Sibongiseni Ndebele, who is believed to be a relative of Khumbulani Ndebele. When she was confronted about this fact, she denied ever speaking to the Sunday Times, even though records of the call exist.

Sibongiseni Ndebele once used the same address in Waterkloof as Khumbulani Ndebele, Nokukhanya Khumalo, and Nomsa Khumalo; was previously a director at Vashma and Miyacom; and denied knowing these individuals or the other companies. 

“I am not in a position to respond to questions regarding other companies which I am not part of or involved in. I must also say that I feel you disrespect and undermine me as a woman. It seems you think that a woman can only be a PA, not employed, or a front to men,” she said.

“These are the words you have used to describe me both in our telephone conversation and in your previous e-mail. [It] is very unfortunate if that is how you view us as women — that we must always be below the capabilities of what men can do, and therefore in your mind I do not have the capability to have a business of my own.”

CSOS is no stranger to controversy. In late 2017, its top management were implicated in a scheme that saw the entity investing R100m in the now-defunct VBS Mutual Bank, which was liquidated in 2018, without permission to do so from the National Treasury. To date, only R20m has been recovered. 

CSOS insiders also spoke of how senior officials who blew the whistle on irregularities or refused to follow unlawful instructions were intimidated by being suspended or removed from their posts. 

The Sunday Times has learnt that in 2023 the head of the CSOS legal department, Lihle Ntombela, was charged and suspended for a 2020 incident a day after she submitted a report to the board citing irregularities, overcharging, and fruitless and wasteful expenditure in the procurement of legal services. Meanwhile, board audit and risk chair Julia Ramataboe was removed from her post as chair of the subcommittee after she shared a copy of the report with the auditor-general and the National Treasury. 

Ntombela secured a labour court interdict preventing her disciplinary hearing from going ahead, with Judge AJ Ngwenya finding that her being charged was an occupational detriment linked to her being a whistle-blower.

Ngwenya ordered that the internal disciplinary proceedings against her be interdicted and held before an external arbitrator.

When contacted for comment, Ramataboe and Ntombela referred all questions to the CSOS leadership. 

Minister of human settlements Mmamoloko Kubayi said Ramataboe was removed by the CSOS board as ARC Chair and the board doesn’t have to get permission on the working of their committees. The board, upon enquiry by Minister, said Ramataboe acted alone and without the board, and did not share the report with Kubayi’s office or the department.

“I don’t get consulted when board changes the committee,” she said.

“I appointed a board at CSOS, and she [alone] is not the board ... If you pick up that other board members are doing things wrong, surely the first point of contact [should be] me.”

The board said it was “seized with these matters” and an internal process was under way to deal with the report “within the prescript of the policies of CSOS and the laws of the country, without fear or favour and without prejudice.”

Editor's note:

The introduction has been edited to reflect that Mkhize does not own any of the companies CSOS awarded contracts to. We regret the error.