Gangster State

Several FSHS sources told me there were ‘zero tender processes’
followed for any of these contracts. They claimed that, through
Operation Hlasela, Magashule would hand-pick contractors like Els
and ensure that their companies were given RDP contracts. In later
court proceedings, the department itself would label the contracts
signed in late 2010 and early 2011 a ‘fraudulent scheme’.^19
When the national department and National Treasury got wind of the
FSHS’s radical expenditure drive, they warned that the ERP was a bad
idea. Their main concerns were that the department intended making
large advance payments to companies before any work had been done
and that the new contracts were signed without following proper
procurement processes. They urged the FSHS not to proceed with the
ERP, but it pressed ahead anyway.^20
Between November 2010 and March 2011 , the final months of the
financial year, the FSHS hastily splurged more than R 1 billion, or 90
per cent of its entire budget, on payments to companies appointed for
new RDP projects. These projects, awarded to more than 100
contractors, were supposed to have delivered nearly 15 000 houses.^21
Together with contracts signed earlier in 2010 , the department now had
to deliver around 21 000 houses at a cost of just under R 1. 5 billion.^22 It
was a massive undertaking, and it would soon become evident that the
department had bitten off more than it could chew.
The plan could have worked if the department had been capable of
monitoring the rapid increase in expenditure. However, what ended up
happening was that the FSHS simply emptied its coffers at an alarming
rate without putting in place the necessary checks and balances to
ensure that the new contractors actually delivered. Of the more than R 1
billion the department spent in the last five months of the financial