RAF head in firing line over R79m office lease

A preliminary report of the Special Investigating Unit (SIU) has implicated Collins Letsoalo, CEO of the Road Accident Fund (RAF), in possible wrongdoing involving   a R79m lease for the fund’s Johannesburg regional offices.

The SIU investigation arose from a President Cyril Ramaphosa proclamation in 2021.

Subsequent to that, a whistleblower lodged a complaint with the office of the public protector, in which he accused Letsoalo of reversing decisions made by the bid evaluation committee (BEC) so that a losing bidder, Mowana Properties, ended up winning the contract. The lease agreement is for five years.

The SIU’s preliminary findings confirm the whistleblower’s allegations of malfeasance amounting to millions of rands in awarding leasing, cleaning, security and legal services tenders.

Letsoalo has defended his decision to go with Mowana Properties, which manages a property portfolio owned by the Government Employees Pension Fund, saying it made economic sense because rental payments would go back to the state.

Letsoalo said the RAF had been struggling to secure new office space for more than five years before his arrival in September 2019.

The Sunday Times has had sight of the SIU’s preliminary findings and the whistleblower’s complaint to the PP and has spoken to several reliable sources. about the issue.

Other RAF tenders and financial outlays under investigation include: 

• R19m spent over six years on a cleaning and security contract that had been extended irregularly;
• a R313m tender, as part of the “Siyenza” project   to reduce RAF’s claims backlog of 37,734, which was awarded unlawfully;
• an office furniture tender that was allegedly illegally amended, resulting in costs escalating from R36m to R40m; and
• R5.3m spent on a sale and leaseback contract for 56 vehicles, on which the service provider is alleged to have failed to deliver.

Some of the cases predate Letsoalo’s arrival at the RAF.

In its preliminary findings, the SIU found Letsoalo allegedly interfered with supply chain processes in the appointment of Mowana Properties. According to the SIU, Letsoalo was not in favour of a nine-year lease with a service provider recommended by the BEC.

As a result he instructed a senior official in his office, Prudence Manyasha, to scrutinise the evaluations.

“The newly appointed senior official indicated that she found irregularities in the evaluation,” said SIU head Andy Mothibi in the preliminary findings. “Such irregularities were not reduced in writing. These irregularities appear to be the basis for the RAF CEO to call for the cancellation of tender.

“The action of the RAF CEO and that of the newly appointed senior official find no expression in the RAF supply chain management policies and procedures applicable at the time nor on any procurement prescripts,” the report says.

In essence, the actions of the RAF CEO and [Manyasha] are tantamount to overturning the decision of the BEC, which is at odds with the legal prescripts

—  SIU report 

“In essence, the actions of the RAF CEO and [Manyasha] are tantamount to overturning the decision of the BEC, which is at odds with the legal prescripts.”

RAF spokesperson McIntosh Polela said the allegations against Letsoalo on the property deal were not new and were “peddled” by a disgruntled male employee who had been fired after accusations of sexual harassment against him.

“Once confronted with these charges, the employee embarked on a smear campaign, masquerading as a whistleblower. This took the form of reporting these so-called allegations to different platforms, including the public protector. All these allegations were responded to, and evidence has been adduced to that effect,” said Polela.

The RAF had engaged Transnet, the Passenger Rail Agency of South Africa and the Public Investment Corporation to find suitable office accommodation. Transnet and Prasa were unable to assist, but the PIC referred the RAF to Mowana. The RAF assembled a team made up of a project manager from Letsoalo’s office, regional managers and facilities management to find the most suitable building.

“The team then made a recommendation, and the RAF approached the office of the chief procurement officer for approval to deviate from normal procurement processes that had previously failed,” he said.

“The approval was granted. The procurement then followed all internal processes and procedures until a lease agreement was signed for the building. Subsequently, this was audited by the auditor-general and there were no findings that support these allegations.”

Mothibi updated parliament last month on the status of the investigation into the RAF. The SIU found Letsoalo’s memo to the Treasury requesting a deviation on this contract did not state what irregularities had been uncovered.

The Sunday Times has established that Manyasha worked with Letsoalo at the transport department.

“She was instructed to look for a building in Johannesburg and that when she finds a building she likes, to procure it for Johannesburg regional office accommodation,” said the whistleblower in the complaint to Gcaleka. “This led to a parallel process to procure a building and to the undermining of the tender process.”

Polela said due process was followed in hiring Manyasha. “[She] was a deputy director when she was seconded from the department of transport to the RAF.

She subsequently applied and was appointed to GM in the office of the CEO. Mr Letsoalo was not part of the panel that recruited Ms Manyasha.”

On the cleaning and security contract for four RAF premises, the SIU found it had been irregularly extended for six years, and R19m had been spent on it during this period.

“It is only recently that the RAF contends that the information pertaining to this tender is allegedly said to have been affected by a ransomware attack,” Mothibi said.

In the Siyenza project, contracts were   awarded to two service providers at a cost of R313m without following correct procedures.

“There were also issues of performance as one of the service providers was given 2,472 files and only successfully completed 96. One of the contracts was awarded to a consortium in which one member fell off during the contract, and the RAF internal audit conducted a verification on the broad-based BEE only relating to the full standing of the consortium,” said Mothibi.

Polela said the RAF itself had done a forensic probe of this contract, which was awarded in 2014 before Letsoalo took up his post,   but the findings were inconclusive and the fund was now awaiting the outcome of the SIU investigation.

Polela said the RAF supported the SIU in its work, but was unhappy with the “distasteful” leak of preliminary findings. “This is because preliminary findings have to be discussed with the RAF functionaries, evidence submitted and final findings made before any public pronouncements are made.”

The RAF has been at loggerheads with auditor-general Tsakani Maluleke for three years over Letsoalo’s insistence on unilaterally changing the entity’s accounting standards.

Maluleke has argued Letsoalo’s standards are making it difficult to audit the state entity.

Letsoalo recently suffered a setback in the Supreme Court of Appeals, which turned down his application to appeal against a high court judgment in favour of Maluleke.

Transport spokesperson Collen Msibi said the ministry had seen the SIU’s preliminary findings and was awaiting the final report. He said Manyasha had resigned from the RAF in December 2020 at the end of her secondment.