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Concerns raised over irregular appointment & contracts at SA air traffic service

Amabhungane has revealed the saga started in 2016 when Mthiyane appointed a security company, whose director Barney Mpanza, was a close friend.

Plane. Picture: Supplied.

JOHANNESBURG – Questions have been raised about integrity and the safety of aircraft crossing South Africa’s skies after allegations that the air traffic and navigation services irregularly appointed two men with links to intelligence networks and former president Jacob Zuma.

Amabhungane has revealed that ATNS CEO Thabani Mthiyane appointed one company in 2016 called Concept Risk Solutions and then another firm, African Estimate, but failed to disclose his relationship with two men linked to these organisations and their association to Zuma.

ATNS covers 10% of the globe's airspace and the turmoil revealed raises serious questions about the efficacy of the agency responsible for the safety of any aircraft crossing South African skies.

Amabhungane has revealed the saga started in 2016 when Mthiyane appointed a security company, whose director Barney Mpanza, was a close friend.

He also added another company to the books, African Estimate, who's director Mulangi Mphego, is also an acquaintance.

Both Mpanza and Mphego have been linked to dodgy intelligence networks and to Zuma.

Mpanza and his company had access to sensitive flight records and air traffic data.

When the ATNS board discovered the irregular appointments and tried to discipline Mthiyane, they faced unexplained resistance from the deputy minister of transport, Sindiswe Chikunga, who allegedly did everything she could to derail the disciplinary process.

Both Mpanza and Mphego have featured in amaBhungane articles linking them to shadowy intelligence networks and former president Zuma.

Mthiyane contracted Mpanza and Mphego in violation of supply chain rules and later defied his managers and his board to keep Mpanza on, leading to an exodus of directors and senior managers that has left the air traffic agency reeling.

ATNS covers 10% of the globe’s airspace and provides services to nine South African and 12 regional airports.

Astonishingly, when the ATNS board discovered the irregular appointments and tried to discipline Mthiyane, the non-executive directors faced unexplained resistance from the deputy minister of transport, Sindiswe Chikunga, to whom ATNS reports.

Chikunga demanded that the board not take any action without her approval, despite a forensic report from audit firm Ngubane & Co. finding that Mthinaye should be charged – a recommendation later endorsed by an outside law firm.

Shortly after Chikunga's intervention, the chair of the board resigned.

When the deputy minister feared the board might indeed proceed with suspending and charging the chief executive, Chikunga summoned her supporter on the board, Edwin Mphahlele, out of a board meeting to a private meeting with her.

Mphahlele, a controversial lawyer who has been declared a vexatious litigant arising out of his role in the attempted hijacking of a company, refused to disclose to the rest of the board what was discussed in his meeting with the deputy minister.

When the board later persisted in pursuing charges against Mthiyane, the then minister, Joe Maswanganyi, appointed Mphahlele as the chair of the board, leading to the resignation of four board members in protest.

Now the ATNS board is limping along with only three directors, including the tainted chair and chief executive, while a slew of senior managers who challenged Mthiyane or Mphahlele have left or are on suspension, including the chief financial officer, William Ndlovu.

Mthiyane in the meantime has apparently appointed Mpanza as a full-time executive at the company in charge of security, raising questions about why Mpanza seems so untouchable.

Recently lawyers for Ndlovu, the suspended CFO, have also written to the new minister of transport, Blade Nzimande, alleging that Mthiyane has used Mpanza to conduct an illegal witch-hunt against him, calling on the minister to intervene.

A statement issued on behalf of Chikunga noted: “The Deputy Minister is due to brief the new Minister on the performance of the ATNS and other related matters. We are therefore not in a position to comment further on this matter. It must also be noted that some of the issues raised in your inquiry are still under investigations. We are therefore not at liberty to comment on these issues.”

ATNS, responding on behalf of the company, the CEO and the chair, said: “ATNS is committed to conducting its business in an ethical, honest and transparent manner... We will follow the mechanisms created in terms of our internal policies to address the findings made in the Ngubane Report.”

DODGY CONTRACTS

The saga started in October 2016 when a tip-off was received on the ATNS whistle-blower line alleging that Mthiyane had appointed CRS, co-owned by his friend Barney Mpanza, as a security service provider to ATNS without following company procurement processes. The tip-off was conveyed to the ATNS board which then engaged auditors Ngubane and Co to investigate the allegations.

The Ngubane report found that CRS had been working for ATNS for more than a year without anyone on the executive or the board knowing about it, other than the CEO.

The contract with CRS signed by Mthiyane in July 2015 only came to light in July 2016, when Mthiyane made a submission to the executive committee to appoint Mpanza on contract as chief security specialist for ATNS.

This was after the candidate selected for the advertised position decided not to take the job.

Mthiyane argued that Mpanza could be seconded on the basis of an existing contract with CRS.

ATNS agreed to the appointment, but according to minutes of an executive committee meeting, ATNS would re-advertise for a permanent employee in that position. In the meantime, Mthiyane was supposed to provide documents relating to the initial appointment of CRS.

There were now two CRS contracts with ATNS – the initial one and the one for secondment of Mpanza – which would have created a duplication of roles, and payments, for the same service provider, and would have placed Mpanza in a conflicted position as the person steering ATNS security while his company provided related services.

In an affidavit, Ndlovu claimed that Mthiyane kept the contracts with CRS to himself and that “most of the invoices for CRS were either signed by the CEO or a manager in the CEO’s office.”

Ndlovu says that when the CEO’s office ran out of budget to pay CRS, Mthiyane was forced to turn to the CFO’s office for approval to pay out CRS for the termination of its initial contract, which would cost R232,560.

According to Ndlovu’s affidavit, he insisted on first seeing the contract. He said that the Mthiyane repeatedly stalled for time and eventually tried to argue that the contract was confidential.

According to Ndlovu’s testimony, Mthiyane eventually agreed to show him the contract after it was made clear to the CEO that he had no grounds to withhold it.

Ndlovu said that he then released the funds in good faith, on the understanding the CEO would give him the contracts. However, the CEO never honoured that promise despite attempts by Ndlovu to follow up.

AmaBhungane has seen the CRS contracts, which refer in vague and ominous terms to monitoring those involved in “anti-ATNS actions”, as well as uncovering of leaks.

It also gave Mpanza and his company access to sensitive flight records and air traffic data.

What Mpanza and CRS were up to at ATNS went largely under the radar. Staff were surprised to see a security contractor suddenly appearing in high-level meetings and pointed to the irony of the security specialist himself not having gone through security vetting – something confirmed by the Ngubane report.

Mthiyane exposed himself further when he told Ngubane and Co that a board member, since departed, had signed off on the original contract with CRS, producing a copy of a memo to this effect.

The forensic report notes: “The memo reflects that the approval was granted by the chairman of the previous Audit and Risk Committee on the 21 of July 2015.”

But the former director told investigators that she did not recall CRS being discussed with her, she was not at ATNS on the date when she purportedly signed the memo, and she would not have signed as she was not authorised to approve the appointment of service providers other than those who provided audit services.

YET ANOTHER CONTRACT

The Ngubane report also details another dubious security contract, this time awarded to a company called African Estimate.

African Estimate was commissioned, at the behest of Mpanza, to draft a security strategy document at a cost of R900,000.

This created a duplication of efforts and meant that CRS was effectively outsourcing a role it was supposed to perform.

Referring to the security strategy document, one former board member described it as a crude “copy and paste job” that was “not relevant to ATNS”.

According to the contract – signed by Mthiyane on 25 August, the day after the second CRS contract – African Estimate was to report directly to Mpanza.

When asked what the justification was for ATNS bringing on security contractors and level of enhanced security, ATNS referred amaBhungane to its status as a national key point – a site designated as strategic and therefore requiring enhanced security – and the threats posed by terrorism and cyber-crime.

“It is therefore important to create a coherent security architecture that is able to identify and develop processes to optimally act and react to the perceived threats,” the company said.

In his submissions to the Ngubane investigators, Mthiyane also said CRS would provide a direct line to state security.

As a state-owned entity and a national key point, it is unclear why ATNS would not already have sufficient access to the state’s security services and why it would have to rely on private security contractors for that.

The Ngubane report points to potential cronyism in Mthiyane’s decision to procure the services of the two contractors.

It states that Mthiyane failed to disclose his relationship to both Mpanza and African Estimate’s director and CEO, Mulangi Mphego, the former head of crime intelligence.

In Mthiyane’s own account to the Ngubane investigators he acknowledged that Mphego was an acquaintance of his and that he knew Mpanza “socially” before the contracts were awarded.

To complete the triangle, Mpanza and Mphego were also in business together – both were co-directors alongside two others in a company called H5 Security from 2015.

The company is in the process of being deregistered.

ATNS sources who met Mpanza say that Mthiyane introduced him as someone who worked in the presidency – something Mthiyane mentions in own testimony to the Ngubane investigators.

Mphego evaded direct questions, asking rhetorically why any private company would want to disclose the nature of its business relations with its clients.

He said that “It is very clear from your questions that you are poised to infer without any basis whatsoever that there is some unethical or impermissible relationship between ourselves, Mr Mpanza and the CEO of ATNS. This is as annoying as it is untrue.”

“I bought equity and served with Mr Mpanza and two others in the board of H5 Security at some stage but we have never been partners as much as we are not friends. For the record, H5 Security is deregistered. The allegations that I am a friend to the CEO of ATNS is nothing more than a fertile but twisted imagination. I have zero relationship with the fellow.”

He failed to respond to follow up questions when the details of the Ngubane report were put to him.

Mpanza also offered an obfuscating response, side-stepping detailed questions.

He denied that there was anything improper in the awarding of the CRS contract and tried to claim that the board had rejected the findings of the Ngubane report. He would also not be drawn into questions concerning the CEO.

ATNS said in a statement to amaBhungane: “Appropriate actions will be taken in accordance with the relevant company policies and legislative framework, if warranted... Both service providers’ services were procured for different reasons and in pursuance of the company’s integrated security strategy.”

The Ngubane & Co. investigators certainly believed action against the CEO was warranted. Their report contains a laundry list of other instances of potential wrongdoing, including that some payments to CRS could not be reconciled, a lack of supporting documents for contractors, and that some investigations conducted by CRS were beyond its mandate.

The investigators' conclusion was unequivocal: disciplinary action should be instituted against the CEO for multiple breaches of procurement policy.

But it didn't happen.

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