The official opposition wants Gauteng's Blue IQ agency to be investigated from top to bottom, as it suspects corruption has taken over the entity.
Blue IQ, an agency of the Gauteng Economic Development Department, was established in 2003 to spur economic growth in key sectors in the province, including business tourism, high value-added manufacturing, logistics and ICT.
However, the agency has been dogged by controversy. In January, Gauteng economic development MEC Firoz Cachalia promised a turnaround after expressing disappointment when a report by the auditor-general (AG) revealed irregularities and financial transgressions in its technology holdings.
In the agency's latest annual report for the 2008/9 year, Cachalia wrote that the “most concerning questions are obviously the ones that arise from the auditor-general's audit opinion”.
The AG indicated insufficient evidence was provided for audit purposes; there was unauthorised, irregular and fruitless expenditure; and the agency did not comply with legislative, regulatory and internal controls.
“These findings suggest systemic weaknesses in financial management, inadequate oversight by the board, and governance failures relating, in particular, to the lack of accountability in Blue IQ subsidiaries,” wrote Cachalia.
Overspending
Yesterday, it was revealed that board members are paid excessive fees and two members were overpaid by R700 000, which the Democratic Alliance (DA) is concerned may not be recovered.
Cachalia responded that the Blue IQ chairman receives R25 000 a meeting, and ordinary board members get R20 000 a meeting. In addition, board members also get paid R7 500 for special meetings, and R937.50 an hour for “consultation” meetings.
Bloom says there is massive rot in the agency, and all its projects need to be investigated. “Blue IQ has their fingers in many pies... We need to get to the bottom of the rot here. A huge amount of money has been wasted, and I suspect corruption,” he says.
According to Cachalia's response, the board members are being paid excessive amounts when compared with members of other agencies. In total, board members were paid R4.2 million during the 2009/10 financial year.
Compared with other entities, such as Eskom and the Gauteng Economic Development Agency, Blue IQ board members are being drastically overpaid. The chairman of the Gauteng Economic Development Agency, for example, earns R2 500 a meeting.
“The huge fees paid to the Blue IQ board members are outrageous, especially since it is admitted that they did not perform well and wasted huge amounts of taxpayers' money on fruitless projects,” says Bloom.
He alleges that Blue IQ is a “cosy club of comrades who set their own remuneration, while not performing their duties. They enriched themselves at public expense.”
Bloom says Cachalia needs to dig deeper with forensic audits that could lead to criminal prosecutions and recovery of wasted money, such as R700 000 that was overpaid in board fees.
Top-level failure
Cachalia says, in a statement, that he had requested a review of the board remunerations as payments to members should be “appropriate for a public entity, which is not a profit-generating corporation”.
His statement indicates that CEO Amanda Nair told him the issue of remuneration of board members should be considered as part of the process of reviewing and rationalising the Gauteng Economic Development Department's agencies, which he agreed made sense.
Earlier this month, Business Day reported that Gauteng premier Nomvula Mokonyane wanted to trim the number of agencies under the department to three: growth and employment, tourism promotion and industry regulation.
The department is responsible for the Gauteng Economic Development Agency, the Gauteng Tourism Authority, the Gauteng Film Commission, Blue IQ and the Gambling Board.
Cachalia says consultants from the department concluded that the agency has “demonstrated a significant lack of good corporate governance, which points to systemic failure of the executive teams and boards of directors”.
He says the fee structure should be revised downwards, but the agency also needs to be able to attract board members with the appropriate skills and experience, since the department has decided to retain a rationalised agency structure.
Recoverable?
In addition, Cachalia confirms that two of the agency's board members are employed in other government departments, but were paid for sitting on the board.
He says there was an overpayment of R700 000, because these members should not have received extra pay for their work at Blue IQ, but he is doubtful whether this amount can be recovered.
Cachalia says that, in terms of treasury directives, public servants cannot receive additional payments. “If the directives are legally enforceable, steps will have to be taken to recover overpayments.”
The MEC's office did not respond to a specific question as to what was being done to rectify the situation at Blue IQ.
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