EDITORIAL: Housing agency is derelict due to unstable leadership
Under Lindiwe Sisulu, the Housing Development Agency has been a revolving door of bad decisions
The leadership turbulence at the Housing Development Agency over several years requires human settlements, water and sanitation minister Lindiwe Sisulu to explain what is going on in the organisation that falls under her watch.
With it being a small state-owned entity, the constant upheaval at the agency has largely taken place under the radar.
Sisulu’s choice of its leadership has left a lot to be desired with, over the past three years, the agency being placed under administration three or four times, having six or seven CEOs or acting CEOs, and several interim boards. No organisation can be run properly with such a high turnover at the top and this was apparent in the qualified audit report the Housing Development Agency received on its 2019/2020 financial statements, a regression from previous reports.
The agency, which was supposed to play an important role in the rollout of the temporary residential unit programme aimed at de-intensifying informal settlements during the Covid-19 pandemic to achieve social-distancing, is also responsible for acquiring land and project-managing housing developments at national, provincial and local level. It derives most of its funding from the fiscus.
Sisulu admitted that the agency’s performance in the de-intensification project, costing several hundred million rand, has been less than satisfactory, and provincial MECs have also complained about it. Few of the planned units have been delivered.
The extent of the Housing Development Agency’s financial malaise is made apparent by R132m of expenditure of its total revenue of R352m in 2019/2020 deemed irregular, fruitless and wasteful by the external auditor. Meanwhile, the salary bill amounted to R191m with the CEO, until January 2020, earning R6.6m. During that year the agency only achieved 56% of its targets.
In the 2019/2020 report, the auditor was obliged under the Auditing Profession Act to report an irregularity to the Independent Regulatory Board for Auditors. It allegedly involved a reduction in the amount of a contract entered into without the approval of the bid adjudication committee, and the non-delivery of the full number of houses that should have been built.
The irregularity related to the reduction in the scope of work to construct 63 housing units from R40m to R10m for the same number of units due to duplicate or overpayments made on a previous project. The supplier received payments covering the reduced contract amount but only 12 houses were delivered.
The audit report noted that the Housing Development Agency lacks adequate systems for identifying and recording all irregular, fruitless and wasteful expenditure. Effective steps were not taken to prevent irregular expenditure as required by the Public Finance Management Act.
The audit report also noted that the agency had raised a provision for bad debts of R59m against project receivables in which work was done without agreements in place with the provincial departments and municipalities. Expenditure was also incurred without an approved budget.
In the latest twist in the management instability and a further example of the minister’s interference in the affairs of the agency, at the end of January Sisulu made acting CEO Mikki Xayiya chair for a few weeks until the end of the term of the interim board and appointed COO Nkululeko Poya — who has a cloud over his head from his time as CEO of the railway safety regulator — as acting CEO.
Sisulu also dismissed CFO Brian Mosehla a few months ahead of the expiry of his contract. The board reinstated him on February 3 then, in late February, Sisulu dismissed the interim board and placed the agency under administration until a new board is appointed by the cabinet.
It is this persistent ministerial interference that Sisulu needs to justify to parliament’s human settlements, water and sanitation committee. Unless the Housing Development Agency can be established on a sound, durable and stable footing to fulfil its mandate, it might be better that it be closed down.
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