The Gauteng Department of Social Development Has Appointed a Controversial Auditing Firm

The Gauteng Department of Social Development has acknowledged that its recent appointment of a controversial auditing firm, Open Water Advanced Risk Solutions, was irregular.

 

Open Water was appointed in March to investigate the department’s school uniform project at a cost of R8.5 million, bypassing the standard supply chain management protocol. Matilda Gasela, the Head of Department at the time, made this decision on 12 March, 19 days before the end of the 2023/24 financial year. This was one of several multi-million-rand funding decisions she approved in her last few months in office.

 

The spokesperson for the Gauteng social development MEC, Themba Gadebe, confirmed to GroundUp that the appointment was irregular. He stated that the MEC, Mbali Hlophe, has instructed the department to restart the appointment process.

 

Open Water has a controversial history, being accused of covering up the role of former Free State Premier Ace Magashule and his allies in the Free State’s R1 billion housing scandal. Hlophe, who was Magashule’s personal assistant and spokesperson while he was Secretary-General of the ANC, has been described as an ally of Magashule. Magashule is currently on trial for corruption, theft, fraud, and money laundering.

 

Gasela, who approved the appointment of Open Water, left the department at the end of April when her contract ended. She previously served as the Head of the Free State Department of Social Development under Magashule and left the Gauteng department amid corruption allegations dating back to her tenure at the Gauteng Department of Human Settlements. The Special Investigations Unit has recommended criminal prosecution against her.

 

When asked about any association between MEC Hlophe’s connection to Magashule and the appointment of Open Water, Gadebe denied any wrongdoing, attributing the accusations to an agenda against Hlophe. He emphasized that Hlophe acted immediately upon learning of the irregular appointment and instructed the department to follow due process in line with Treasury Regulations.

 

Open Water was mandated to investigate the department’s school uniform programme, which provides free uniforms to children in need and is valued at about R190 million. However, the programme has faced numerous issues, including unpaid sewing cooperatives. The department claimed rogue officials instructed the cooperatives to make the uniforms while another contractor had already been appointed. Open Water was tasked with identifying these officials.

 

Gadebe also noted that Open Water’s selection was questionable due to the availability of lower bidders, although the application document, signed by Gasela, indicated Open Water was the only bidder. The investigation’s budget covers five months and 1,880 hours of work, including substantial salaries for various roles.

 

Open Water’s history includes allegations of covering up key aspects of the Free State housing scandal and other contentious investigations, raising further concerns about its appointment by the Gauteng Department of Social Development. The MEC has directed the department to restart the appointment process due to the high costs and irregularities associated with the initial selection.