Contractor opens fraud case over R470m Mpumalanga RDP dispute

A contractor at the centre of a R470 million Mpumalanga RDP housing payment dispute has opened a fraud case against senior provincial government officials, alleging that nationally approved housing subsidy figures were manipulated.

The case was opened at Pretoria Central Police Station on 1 September. According to The Citizen, Colonel Kedibone Ndala, the head of detectives, subsequently wrote to the provincial Department of Human Settlements on 30 September, requesting information and documents as part of the investigation.

XJR Construction director Paul Mthabela outlined the allegations in a sworn police statement, claiming that the department used altered subsidy amounts in contractual agreements dating back to 2014 while reporting different figures to the national government’s Housing Subsidy System (HSS).

He alleges that provincial figures were repeatedly presented as nationally approved subsidy amounts, despite being substantially lower than the amounts officially promulgated by the minister of human settlements.

R470 million in assets attached amid payment dispute

The dispute has already made its way through the courts.

In June, the Mpumalanga High Court in Mbombela granted Mthabela an order to attach departmental assets worth R470 million. However, the writ of execution was stayed after the department launched an urgent application to have the judgment rescinded and stop the execution.

The matter was scheduled to be heard on the unopposed roll on 31 August, but was struck off after neither party appeared.

Contractor questions housing subsidy amounts

According to Mthabela’s affidavit, XJR was initially appointed in 2013 to build 400 RDP houses, with each 45m² unit priced at R64 666.

The amount was later increased to R103 000 per unit, excluding geotechnical allowances, following an appeal to the department.

However, Mthabela claims the nationally approved subsidy quantum at the time was R164 136 per unit.

He alleges that the department misrepresented the national figures and relied on manipulated subsidy schedules in its agreements with the construction company.

Mthabela further claims that the department acknowledged the disputed subsidy figures during a provincial executive council meeting, but presented the altered amounts as a solution to the company’s complaints about underpayment.

According to the affidavit, the practice continued under successive departmental administrations.

Alleged discrepancies in national housing system

The affidavit also highlights a May 2024 appointment for 119 housing units at R183 257 per unit.

Mthabela claims the national subsidy quantum had already increased to R209 072 in April 2022 and R271 166 in April 2023.

He also alleges that the department recorded higher payment figures on the national HSS than the amounts XJR actually received.

While the company was allegedly paid R103 000 per unit, the department reportedly recorded payments of R110 947 per unit on the system.

Across 2 566 houses built by XJR in areas including Kinross, Bethal and Embalenhle, the affidavit places the resulting discrepancy at more than R39 million.

Mthabela claims the figures effectively indicated that R51 500 per unit had been paid for geotechnical work, while the company’s contractual amount for those services was R15 450 per unit.

He says agreements, payment certificates and invoices support the company’s claims.

Police investigation and department’s response

Police spokesperson Captain Tintswalo Sibeko confirmed that investigations were ongoing.

“The department understood the explanations provided had satisfactorily addressed the concerns raised and that no further criminal investigation requiring the department’s participation was being pursued,” Ngobe said.

Department spokesperson Freddy Ngobe said the department was unaware of an active criminal investigation.

However, he confirmed that police had previously approached the department in connection with matters relating to the dispute. The department had provided the requested information, along with its account of the transactions and circumstances.

The allegations have not been proven, and the police investigation remains ongoing.

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Source: citizen.co.za