A Gauteng Partnership Fund (GPF) report has made damning findings against a company closely linked to Deputy President Paul Mashatile, saying possible irregularities and no value for money marred a multimillion-rand state loan facility issued to it. 

At the center of the saga is Nonkwelo Investments, owned by Mashatile’s son-in-law, Nceba Nonkwelo, accused of using his political connections to benefit to the tune of R30 million from the Entrepreneur Empowerment Property Fund Program (EEPFP). 

Tabling the report on Monday, November 13, Gauteng Human Settlements and Infrastructure Development MEC Lebogang Maile said the investigation followed media reports implicating Nonkwelo Investments in wrongdoing.

According to official documents, Nonkwelo Investments participated in the loan scheme between 2013 and 2017. Mashatile became Gauteng Human Settlements MEC in 2017, only serving in the post for a year.

The fund aims to empower entrepreneurs within the property development space. The damning findings raise questions about the use of state funding institutions to benefit friends and relatives of senior politicians.

According to Maile, the investigation’s key findings include shortcomings in the project appraisal process and a lack of comprehensive due diligence before granting the loan facility to Nonkwelo Investments.

The approval of the developer’s participation in the EEPFP may have been irregular due to inadequate documentation.

“The invoices and vouchers availed confirm the total amount of R7,246,126.83 was disbursed as outlined by management. Documentation provided by management shows drawdowns wherein GPF deducted the equity for Nonkwelo Investments from its invoices rendered.

“The GPF paid for the difference between the purchase price and Nonkwelo’s investment equity of R500 000.00 as required with the first approval. No sufficient information was provided to confirm the payment of equity directly to the attorneys. Agreements do not specify the manner and/or form of the equity contribution required,” Maile said.

According to Maile, the investigation was conducted by Gildenhuys Malatji Incorporated (GMI), a law firm appointed by the GPF Board of Trustees.

The scope of the investigation included determining compliance with GPF policies and procedures, verifying changes in scope and cost overruns, assessing compliance with loan agreements, and investigating potential conflicts of interest, he said.

The report’s release follows months of media scrutiny into Mashatile’s lifestyle and allegations that he had used his political power to channel tenders and business opportunities to his family and friends. He has denied all the allegations.

According to media reports, Mashatile lives in a R30 million home owned by a relative who benefited from government tenders. After initially distancing himself from the mansion, Mashatile reportedly declared the home his own to parliament. 

Maile added that the investigation raised concerns about a change in the project’s scope from affordable housing to student housing because it was unclear whether Nonkwelo Investments or another company called Nonkwelo Strategic Investments requested the change.

He said the approval of the scope change and subsequent increases in the loan facility were also deemed flawed and irregular.

Maile said the investigation highlighted concerns about the viability of the project and the decision to approve a senior funding loan to Nonkwelo Investments. 

“Due to the material breach of the agreement, the GPF was entitled to recover its monies through already agreed security measures. The GPF decided to enter into a settlement agreement with Nonkwelo Investment instead of proceeding with the other securities.

“Mr. Nonkwelo signed the settlement agreement on behalf of Nonkwelo Investments, with Ms. Palesa Nonkwelo witnessing the same. The afore-mentioned settlement agreement was entered into on the premise that the monies owed to the GPF by the developer were R9,624,537.17 as per the certificate of balance dated June 24, 2020. There was indeed a scope change in respect of the project, which was not permissible and/or valid. The cost overruns pertaining to the scope change would likely be irregular,” Maile said.

Maile said the release of the investigation report aims to provide transparency and accountability to the public regarding the allegations and actions the GPF took.

He, however, stated that the report’s findings and recommendations would be subject to further scrutiny and review.

“While the findings are clear about the governance pitfalls, we are, however, of the view that the recommendations are not conclusive. Accordingly, we have asked the board to institute a process of reviewing them with the intention of strengthening the areas of weakness,” Maile said. “We take this opportunity to thank the GMI for the diligence and professionalism displayed during the investigation, albeit under enormous pressure from the fourth estate.”

Maile added: “On my instruction as the Executive Authority, the GPF Board of Trustees sought expert investigation services related to the GPF’s approval of the developer’s funding application and subsequent loans awarded in relation thereto.”

“The GMI issued the final investigation report on October 25, 2023, despite delays that were beyond our control; hence, we are here today to release the report for public consumption and scrutiny.”