Exposed: There's rot in the roof of SA realty
Public protector will look into maladministration and corruption claims at estate agencies' regulatory body
The Estate Agency Affairs Board appears to be in shambles – and now the office of the public protector is having a closer look.
A revolving-door policy in senior management, negative forensic audit outcomes and a number of ongoing investigations have seemingly left the board in disarray.
On Friday the office of the public protector confirmed to Times Select that it had decided to investigate the EAAB, after the office received a written complaint from UDM leader Bantu Holomisa to look into possible maladministration and corruption at the organisation.
Spokesperson Oupa Segwale said the investigation was "still in its early stages".
The estate agent’s regulatory and controls body, which manages a R600-million fidelity fund on behalf of the industry, is also facing internal complaints from employees and whistle-blowers alleging nepotism, fraud and theft at the institution.
The office of the public protector is now assessing a written complaint from UDM leader Bantu Holomisa to investigate possible maladministration and corruption at the EAAB.In the past eight years alone the EAAB has gone through three different CEOs and three different CFOs, and in June 2016 a new board was appointed following a damning forensic report which resulted in the sacking of four senior managers and employees.
Some of the complaints brought against them included:
• Irregular registration of estate agents;
• Receiving cash from estate agents in return for favours; and
• Acting as estate agents without proper consent.
A December 2017 forensic report by auditors Grant Thornton found that a suspense account, with R28-million in funds deposited by estate agents, had not been properly reconciled for five years.
The report concluded that poor controls and IT support resulted in various unauthorised staff accessing the account and performing transactions, but could not determine the amount of the financial losses incurred as a result of the “looting”.It pointed the finger for the negligence at former CFO Silence Mmotong, who resigned in June last year, and later recommended that civil prosecution be brought against him and former CEO Bryan Chaplog.
The GT report described the leadership culture under Mmotong and Chaplog as “autocratic, command and control” characterised by “absolute fear of top management”.
But Mmotong, who claimed to have resigned in June because of a breakdown in his relationship with certain board members, dismissed the report’s conclusion as “ridiculous”.
“In the first place I am the one who commissioned the report,” Mmotong said.
“I also kept the CEO and the executives informed at all times. I find the GT report curious and malicious as it appears to suggest that I am accused of hiding anything instead of having acted on corruption. This is ridiculous to say the least.”
Chaplog, who held the positions of CEO and CFO at different times during his employment at the EAAB, denied any wrongdoing and said the GT report had been completed “without proper fact checking”."The GT report does not hold any credibility since it is based on one sided lies," he said.
Despite being sent tracts of the report by Times Select pertaining to his conduct, Chaplog said: “My lawyers advised me not to respond since I do not have the full context and or the report in question.
"The extracts of the GT report that you sent me makes incorrect conclusions based on untrue statements and incorrect findings as it was clearly done to reach a specific concocted conclusion."
Mmotong also denied whistle-blower allegations that a recruitment agency owned by his wife was used to employ people at the EAAB, or that he was involved in any fraudulent activity – which he estimated to be R150,000 – during his time there.
“I am aware that there were certain fraudulent activities that had happened in the [suspense] account,” Mmotong said. “I then appointed Sizwe Ntsaluba Gobodo to do a full forensic audit to uncover all those fraudulent activities.
“I was never involved in the fraudulent activities taking place in those accounts. Why would I start the investigation in the first place if I was involved?”
EAAB board spokesperson Bongani Mlangeni said the suspense account had since been reduced in an effort to clear the account, and that the board had increased the budget to overhaul the agency’s IT system.
“[The board] has also devised and is updating the institution’s policies, which include delegation of authority. The company secretary has assigned the recommendation of Grant Thornton for implementation and oversight to various board committees,” he said.
No action had been taken against Mmotong or Chaplog, and Mlangeni said the board was still “processing” the GT report and its recommendations.
He said a R53-million deficit recorded at the EAAB last year, and also present in the report, was “attributable to funding the pension fund conversion”.
But that did not mean it was not picked up by the National Treasury, which said it was aware of the deficit and “certain irregularities” at the EAAB.“National Treasury has raised concern about the financial position of the EAAB to the Department of Human Settlements in relation to increased operating costs, the accounting deficit and the audit opinion related to internal controls, financial and non-financial activities, governance and leadership, etc.,” it said.
The spokesperson for the Department of Human Settlements, which the EAAB reports to, Xolani Xundu, said that Minister Nomaindia Mfeketo was aware of the issues at the EAAB and took them “very seriously”.
“The process of verifying these allegations to make sure that mismanagement and corruption is rooted out of the EAAB has not been completed as yet, and once this is done the board will inform the minister of Human Settlements who will then apply her mind on the recommendations provided,” he said.