Hlaudi, Mrs Mbalula off house-fraud hook

SABC strongman Hlaudi Motsoeneng and Fikile Mbalula's wife, Nozuko, are off the hook after the Free State government backtracked on plans to sue contractors implicated in a "fraudulent" housing scheme.

The scheme left poor citizens homeless despite millions paid to build RDP houses.

An official in premier Ace Magashule's office - who gave an interview to the Sunday Times but later asked that the comments not be attributed to him - said the government would recover only the money paid to material suppliers, and not the contractors, as stated earlier in court papers.

The pair were cited as respondents in a case before the High Court in Bloemfontein. The case blew the lid on how the department wasted about R600-million in a fraudulent housing scheme in 2010 and 2011.

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The Free State government said Motsoeneng and Mbalula were cited as interested parties .

The official said Motsoeneng and Mbalula would not be sued for money paid to them for 450 houses they were to build in Bloemfontein and Virginia.

He said that the trusts in which Motsoeneng and Mbalula are trustees would not be asked to pay back any money because they were not paid upfront.

However, the Sunday Times has seen a document from the provincial department of human settlements which shows one of the trusts was indeed paid upfront.

Department spokeswoman Senne Bogatsu said she could not comment.

Motsoeneng and Mbalula were cited as trustees of the Imbuma Trust and the MM Development Trust, which were contracted in what is now referred to as a fraudulent housing scheme.

The department would not say how these trusts qualified for the contract.

The Sunday Times reported that a progress report of the department from October 2011 showed that no houses were built by the two trusts.

Motsoeneng said he could not comment. Mbalula could not be reached.

Further scrutiny has found that SABC group executive of human resources Mohlolo Lephaka, who was also cited as a trustee, has been identified as the brains behind the contracts.

Last month Lephaka called parliament a "kangaroo court" for investigating the SABC .

He is close to Motsoeneng. Both worked at the SABC in Bloemfontein. He could not be reached for comment.

SABC spokesman Kaizer Kganyago said full-time employees needed permission to have outside businesses.

"I do not want to comment on an individual case because it is before the courts ... but if you are a full-time employee you have to declare your businesses," he said.

It is unclear whether these trusts were still doing business with the state.

A contractor cited in the court papers has said the court action instituted last month was a smoke screen to protect those who benefited from political connections.

Chris Nel of Pearl Construction said the court action was a façade. He said it was meant to show that the department was trying to pursue those who benefited improperly, but that this was not the case.

He said the department listed 106 suppliers and contractors as respondents to prove to the Special Investigating Unit (SIU) that it was acting on the unit's report that found the housing scheme to be riddled with fraud.

"They are going after people that did deliver what they were paid to do, so that it seems like they are trying to recover the money.

"What about those suppliers and contractors who were paid in advance but are not listed as respondents? Why are they being protected?" he asked.

Nel said the department was misleading the courts and the provincial legislature because it was not serious about recovering the money, as instructed by the SIU.

Brick manufacturer Corobrik, which was cited in the court papers as a supplier, told the Sunday Times through its lawyers that the company had reconciled the amount it was paid upfront. It was never involved in any fraud, it said .

The company said it treated the allegations mentioned in the department's court bid seriously. It has yet to file responding papers.

hunterq@sundaytimes.co.za