Answers on a media enquiry sent by OFM News to the Lejweleputswa District Municipality (LDM) revealed that the Lejweleputswa Development Agency (LDA) was indeed a private company before and then seemingly became an entity.

According to a search on the website of the Companies and Intellectual Property Commission (CIPC), it confirmed that a company - with the exact name – was registered in 2005 and is still active. The information about the chairperson of its board and directors are exactly the same as the information on the website of the entity. On the website of the entity, it states that the entity was also formed in 2005 and that it is “a wholly owned entity of the LDM” (municipality).

It further states that “the LDA went through an inception phase in its early years, where focus was on setting up the company, putting systems and processes in place. This was followed by a stabilisation phase, which saw the agency acquire office space and recruit key personnel”.

The entity – according to its website – “has been established as an economic development propeller for the Lejweleputswa District Municipality which is the second largest region in the Free State”.

So is it a private company or an entity?

This is not clear at all from the company/entity’s annual report for 2019/20, as published on its website. The Chairperson’s foreword states that LDA is "a state-owned company, established under Section 84 of the Local Government: Municipal Finance Act No.56 of 32 of 2003, and Section 86C of the Local Government: Municipal Systems Act No. 32 of 2000…”

Further in the document, under the heading: Governance Structures, the report states that the “LDA is wholly owned and established by the Lejweleputswa District Municipality…" LDA is registered as a Private Company under Registration 2005/011144/07.

OFM News learned that the term of this board members ended late last year and the municipality then only registered the company as an entity. This is while millions were transferred to this company since 2005 with the highest amount – more than R14,7 million in the 2019/20 financial year – according to an answer on written questions. The transfers have been increasing steadily since 2005.

The long standing relationship between the company and the municipality is evident as the current Municipal Manager, Palesa Kaota, and the Chief of Staff in her office, Tranzer Mntebele, were both former CEO’s of LDA. The district municipality also confirms that at the time when Mntebele was the CEO at LDA, he was on the municipality’s payroll. It's not yet known how many of the other staff’s salaries were paid by the municipality. The entity (in its new form) is now being run by an acting CEO, Motlatsi Makhetha. According to sources there is no council resolution - which is a requirement for an entity of a municipality - for his appointment.

In the same annual report, the organisation indicated that it has a staff compliment of nine people and R4,3 million was spent on personnel cost. The report states that most of the projects, of which feasibility studies were conducted over the years, were not implemented, except for one – a Game Farm in Tokologo (municipality).

“LDA managed to successfully implement one project during the (2019/20) financial year. This was the Revitalisation of Township Economy, sponsored by SETA in December to the tune of R3,3 million.

DA MP George Michalakis says there are a few issues that raise more questions than answers. If this is an entity wholly owned by the municipality, why was it not created as such from the start?  He says the apparent link between the ANC and the directors of this company are also a source of concern.

“The board is not accountable in the same way as the municipal council for its decisions and this opens the door for corruption. Apart from their apparent links with the ANC, what qualifications do these board members hold and what powers have they been given?” Michalakis asked.

He says the company/entity still operates with taxpayers money and the same accountability should apply here. “MOEs around the world are notorious for being danger zones for corruption and the Free State is not a corruption-free zone, on the contrary,” he says.

OFM News