Road Accident Fund (RAF) CEO Collins Letsoalo, implicated by the Special Investigating Unit (SIU) in possible wrongdoing in a R79m property lease deal, might have misled the National Treasury and the fund’s board about the transaction.
The Sunday Times reported last weekend that the SIU investigations into the RAF named Letsoalo as having been involved in awarding the 2020 deal to Mowana Properties — despite it having been a losing bidder in the tender.
RAF documents leaked to the Sunday Times suggest that Letsoalo and his team withheld crucial information about the appointment of Mowana Properties. This contradicts Letsoalo’s claims at a media conference this week, where he insisted that he had done everything by the book. The major discrepancies are:
- The RAF did not tell the Treasury about an alleged material irregularity that led to the original recommendation by the bid evaluation committee (BEC) being overturned and the lease being awarded to Mowana;
- The RAF failed to inform the Treasury that a tender process had been completed and SKG Properties was the recommended bidder;
- The RAF only mentioned to the Treasury seven failed bid attempts and not the successful bid by SKG; and
- Letsoalo describes Mowana as a government entity because the Public Investment Corporation (PIC) holds a 100% shareholding, but Mowana is a private company operating outside the scope of the Public Finance Management Act (PFMA).
The National Treasury this week confirmed that the RAF did not give it full reasons for requesting a deviation from normal tender processes to appoint Mowana. The Treasury was unaware that Mowana was a losing bidder.
Neither the auditor-general (AG), Tsakani Maluleke, nor the Treasury was informed of the alleged material irregularity found by an official in Letsoalo’s office, Prudence Manyasha.
“The National Treasury responded to a request for deviations based on the reasons provided by entities,” the Treasury said in a statement to the Sunday Times.
“If there were reasons for deviation other than the reasons provided in the application, RAF ‘may’ have misrepresented the information. However, this new information would require verification before coming to that conclusion ... If it is found that RAF misrepresented information in their application, the matter will be reported to the AGSA and national department of transport for consideration.”
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 SKG Properties as recommended by the BEC. As a result he instructed Manyasha to scrutinise the evaluations.
According to the SIU, Manyasha reported back that she found irregularities but she never put these in writing. Letsoalo regarded her findings as reason enough to switch the lease to Mowana, which the SIU said was “tantamount to overturning the decision of the BEC, which is at odds with the legal prescripts”.
Mowana Properties operates as an independent legal entity outside the scope of the PFMA
— PIC
A memo from RAF’s supply chain management (SCM) to the bid adjudication committee said “changed circumstances” meant SKG would not get the tender after all. The memo lists the seven failed attempts to award the tender and the health risks of working in Marble Towers, an office block in central Johannesburg.
“The RAF after consultation with the National Treasury undertook another approach of acquiring Johannesburg office space by means of deviation from normal procurement process,” reads the memo.
The bid cancellation was approved in February 2020 by John Modise, the acting SCM general manager at the time.
When Letsoalo arrived at the RAF in September 2019, the tender process had already started. The same SCM memo requesting cancellation stated that a team led by Manyasha had already identified an alternative building at 10 Junction Road. It was managed by Mowana Properties.
Letsoalo and his team cited the poor conditions at Marble Towers to secure a deviation from the Treasury and approval from the board for the tender cancellation.
At his media briefing, which he called to respond to the Sunday Times article, Letsoalo said the RAF had followed the law in appointing Mowana. He insisted that Mowana was effectively a public entity as it is 100% owned by the Government Employees Pension Fund (GEPF) through the PIC.
But Mowana is a private company with its own board of directors and is not subject to the PFMA. This means Mowana cannot be audited by Maluleke’s office as it is not a public entity.
“Mowana Properties is a privately held (Pty Ltd) property management company,” the PIC told the Sunday Times.
“On behalf of the GEPF, Pareto Ltd, a South African property investment company in which the PIC is invested, is the 100% shareholder in Mowana. Mowana Properties operates as an independent legal entity outside the scope of the PFMA.”
Mowana declined to comment, stating that it had nothing to do with the RAF’s tender processes.
The RAF and Letsoalo declined to respond to detailed questions from the Sunday Times relating to remarks he made at the media briefing and to his interaction with the Treasury.
The RAF CEO told the media briefing: “The PIC said to us, ‘go to Mowana Properties, they are the people that manage our property portfolio’. You must know that PIC manages assets on behalf of the GEPF … The lease will show you who the landlord is, it will say GEPF, then it says Mowana represents the landlord and that is it.
I hear it’s a progressive move to continuously have my name in the media for wrong reasons
— Collins Letsoalo, Road Accident Fund CEO
“You want to create an atmosphere of this corrupt CEO — mina, you can accuse me of anything, not that part,” Letsoalo said.
He said he was “unperturbed” by the allegations. “We are very clear that we followed the law as we know it.”
Letsoalo claimed there was a conspiracy to ensure that his contract is not renewed when his term ends in August. “I hear it’s a progressive move to continuously have my name in the media for wrong reasons.”
President Cyril Ramaphosa issued a proclamation in 2021 allowing the SIU to investigate the RAF. A whistleblower then lodged a complaint with the public protector, accusing Letsoalo of reversing decisions made by the BEC so Mowana would get the the contract.
Letsoalo and the RAF have described the whistleblower as a disgruntled former employee who left the entity after being charged with sexual harassment. The whistleblower has challenged this version in emails to the RAF, the transport minister, the SIU and parliament’s standing committee on public accounts.
When Letsoalo was asked this week about the sexual harassment claims, he declined to comment.
The AG’s office said this week it had not been told of any irregularities around the Mowana deal. “No material irregularity was reported by the accounting authority of the RAF in relation to the procurement of its Johannesburg office lease,” said spokesperson Harold Maloka.
“We are not in a position to conclude whether the reasons for the cancellation were appropriate or if there was any material irregularity as our audit scope did not extend to cancelled tenders.”
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