Allegations of the Lesotho Highlands Water Project being ‘captured’ by politically connected businesses are gaining ground with a year-long delay in construction – and South Africans will be paying for rising costs

Water Affairs and Sanitation Minister Nomvula Mokonyane is set to be grilled by the Public Protector’s office this week in connection with her involvement in the attempted “hijack and capture” of the binational Lesotho Highlands Water Project by a politically connected business entity and senior politicians from the landlocked country.

Public Protector Thuli Madonsela’s office confirmed the meeting, as did Mokonyane’s spokespeople, who said she was cooperating and had “given a date to engage with the Public Protector”.

The minister is said to have personally intervened to delay the project by a year to enable the involvement in the lucrative project of LTE Consulting, a company with which she has a long-standing relationship and which is a generous funder of the ANC.

City Press has established that LTE has made donations to the ANC amounting to R3.5 million in the past two months.

The R26 billion project is aimed at building a massive dam and tunnels to ensure the continuous supply of fresh water from Lesotho to Gauteng. It is overseen by three delegates per country comprising high-level officials who form the Lesotho Highlands Water Commission, a binational structure.

Lesotho Highlands Water Project
The R26bn Lesotho Highlands Water Project involves the construction of a 165m dam, a 38km tunnel and the generation of hydroenergy. The project, which will be constructed inside the borders of Lesotho. South African taxpayers will fund the entire project and Gauteng water users will pay royalties to Lesotho. The scope of the project is estimated to be equal to 100 Nkandla renovations.

Commencement of work on the project has now fallen a year behind because of the delay that Mokonyane ordered.

The year-long delay of Phase Two – the first phase was in the 1980s and 1990s – means the project will only be completed in 2025 instead of 2024. As a result, the original price tag of R22 billion has surged to R26 billion.

Senior officials on both sides of the border say the delay was a deliberate ploy by Mokonyane to buy time for LTE to get involved.

It is not clear how much LTE stood to gain from the project, but the standard fee for consultants is usually 10% of the total cost.

LTE is already the beneficiary of R5 billion worth of projects from the department. Some of these are the subject of a special investigating unit probe, following President Jacob Zuma’s issuing of a proclamation to probe the company in April.

Between last year and this year, the South African and Lesotho governments fired officials who were seen as obstacles to enabling the deal with LTE by senior politicians and replaced them with favoured officials. City Press can today reveal that:

•    In March 2015, Mokonyane’s director-general, Margaret-Ann Diedricks, demanded that Dr Zodwa Dlamini – South Africa’s chief delegate to the water commission – halt the project’s procurement processes, offering no reasons for this.

•    LTE boss Thulani Majola met with Lesotho officials to demand tenders, freely dropping Mokonyane’s name in the meetings.

•    In October, Mokonyane removed Dlamini – who has 10 years of experience in water mega-projects – from the project, offering no reasons for this. She was replaced by Gauteng’s former MEC for infrastructure development Bheki Nkosi, who served under Mokonyane when she was Gauteng premier, and worked alongside her in ANC provincial structures.

•    In April 2015, Maseru’s government removed Charles Putsoane, its most senior and experienced official from the project, citing “incompetence and insubordination”.

•    Dlamini and Putsoane were removed after meeting with LTE Consulting and refusing to give the company tenders without going through the formal process.

•    Masupha Sole, who served time in jail for corruption in Phase 1A of the project has been roped back in as adviser to Mokonyane’s Lesotho counterpart Ralechate Mokose.

•    Madonsela is now investigating the circumstances surrounding Dlamini’s removal from the project.

The department of water affairs and sanitation denied any wrongdoing by Mokonyane, saying allegations of an improper relationship between her and LTE bosses “are false, malicious, speculative and calculated to discredit and damage her good name”.

The department said her sudden halting of procurement was prompted by the need to incorporate transformation objectives ensuring that black people, women, the disabled and poor communities benefited.

It added that both parties agreed to amend procurement policies to address transformation that would benefit black emerging companies in both countries. The office would not comment on Dlamini’s axing as this was before the Public Protector.

On December 1 2015, Mokonyane wrote to her counterpart Mokose, informing him that she was removing Dlamini from the project and that communication with her “has to cease with immediate effect”. Mokonyane gave no reasons for doing so.

On the same day, she wrote another letter, notifying Mokose that Nkosi, who was acting CEO of the Gauteng Gambling Board at the time, would replace Dlamini.

Dlamini refused to comment, but a source at the water commission said Dlamini’s woes and fallout with Mokonyane began in March last year, when the commission issued prequalification tenders for the design of the dam and tunnel.

The source, a senior administrator, said director-general Diedricks wrote to Dlamini, instructing her not to proceed with the tenders.

The letter read: “You are hereby advised that the RSA government is concerned about the proceeding of the tender adjudication procedures until such time as RSA has had an opportunity to engage with the government of Lesotho on this matter. It would therefore be appreciated if the bid documents received remain sealed and in safe custody until the two countries have had an opportunity to discuss and agree on how to proceed with the tender adjudication process.”

This was followed by visits to Lesotho by Mokonyane in August and October to meet with Mokose. On both visits, she stressed the need for South Africans and Basotho to benefit from the project.

According to a Lesotho official, in the August meeting with the Lesotho Highlands Development Authority (LHDA) and Mokose, Mokonyane said she felt that the South African government was “too far” from the project.

“She said she sees things happening and reads the newspapers. You could see that she wanted something and that Dlamini was a stumbling block,” he said.

Minutes of her October visit show Mokonyane proposed that two “senior politicians” from both countries be appointed to the LHDA board as representatives. The department claims both ministers (Mokonyane and her Lesotho counterpart) agreed at the meeting that transformation objectives were not reached.

By that time, Lesotho’s Prime Minister Pakalitha Mosisili had axed that country’s chief delegate to the commission, Putsoane, an engineer with 31 years of experience, and replaced him with Tsiu Khathibe as acting chief delegate.

Mosisili’s April 23 dismissal letter to Putsoane reads: “Your performance on the implementation of the Lesotho Highlands Water Project has not expedited smooth implementation of the project. As a result, your contract of employment is terminated.”

Putsoane went to court and was granted an R8 million settlement.

In August, Putsoane wrote a letter to his former boss, water affairs director-general Tau Khomoatsana, putting on record that he had previously asked him to appoint a firm of auditors to investigate “exactly what had gone wrong with the management of the project”.

He added that he was concerned that “the situation is being deliberately confused and manipulated to accommodate corrupt activities. This is déjà vu. Some of us saw this modus operandi before, during Phase 1A.

“It doesn’t give me joy to see corruption once more being perpetuated with impunity in this project, as is the case now. I could not pretend that I enjoy seeing the project turned into a money-making machine for some individuals corruptly, with impunity,” Putsoane wrote.

A senior official in the water commission said the way Dlamini and Putsoane were axed, and replaced with less knowledgeable people, showed the ground was being laid for the “capture” of the project.

“They also want politicians to represent both governments on the board – why? Is that not capture?” the official said.

The department denied “politicians” would be appointed to the board, saying “officials” from both countries’ departments would be assigned to ensure “prompt reporting to their respective departments”. It said Sole’s co-option was raised with the Lesotho government and was subject to discussion between the countries.

But the official claims the deployment of the convicted Sole was a clear indication of both countries’ politicians’ intentions.

An executive at the water commission told City Press that LTE boss Majola paid the delegates from both visits at different times, trying to convince them to give his company tenders.

“During the visits he ensured that he mentioned Lesotho’s deputy prime minister, Mothetjoa Metsing, and South Africa’s Mokonyane. On these visits, Majola was instructed to identify companies in Lesotho, as well as global companies, that he could form joint ventures with – and

[that he should] present solid proposals and bids as the criteria were stringent,” said the executive.

Another senior executive at the commission told City Press that a senior politician in Lesotho later facilitated a meeting between LTE and Putsoane. “Majola visited Putsoane on his own, and asked him for tenders. Putsoane gave him a list of all upcoming tenders and told him to submit his bid. Majola said he was not interested in submitting a bid and that he would approach Mokonyane. So when the initial rejection from the water affairs department in Pretoria arrived [of the prequalification of bids for the design of the dam and tunnel], Putsoane was not surprised. He was expecting it,” he said.

LTE did not respond to City Press’ inquiries.

The senior official said following Diedricks’ instruction to Dlamini to stop the procurement process, Mokonyane’s department rejected the companies which the LHDA had initially shortlisted. They were instructed to re-advertise. “During the first round of the tenders, LTE did not tender. The second time they were there, but they presented a very poor tender,” the official said.

Another senior official at the commission, who was present when LTE’s bid was evaluated, confirmed it was poor.

“They had two engineers in a project that requires between 10 and 15 highly qualified engineers with experience in dam design and construction. Those two cannot even build a farm dam and think that they can build a 165m dam. What a joke.”

The official said there were little changes to the companies that had been prequalified during the first round. “About 95% were the same companies that had been prequalified during the first round.”

Professor Mike Muller, former water affairs director-general, said the axing of Dlamini and Putsoane had weakened the commission and warned that it would be impossible to complete the project.

“Without a good team of technically sound managers, the ability of people to make small changes in the project, which could run into millions, is very real. We need a technically sound team at the commission. What we are seeing now are efforts to capture the commission and weaken the team,” he said.

Gauteng water users would eventually pay for the cost overruns.

“The capture of the commission will push up the costs of the project because of possible corruption,” he warned.

Source: Nomvula Mokonyane’s Watergate | City Press