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This is an OPEN-BOOK examination




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Question One. Whistle-blowing [40 marks]

Please read the Case Study below and answer the following questions.


Diary of a whistleblower

corruptionwatch.org.za Jun 7th 2012

While Solly Tshitangano fought a lonely two-year battle, sometimes fearing for
his life, the real victims in the sorry saga of Limpopos textbooks are the
schoolchildren who have lost out half-a-year of education and will struggle to complete the year
successfully. View the full timeline of events here.

Solly Tshitangano is a hero; he helped to stop the rot infesting the Limpopo Education Department. He
blew the whistle as early as 2010 on a questionable multimillion-rand textbook contract awarded to
a company called EduSolutions, which has connections to heavyweights in the ruling party.

When our hero blew the whistle, his claims were disregarded; he was seen as a troublemaker and
booted out of his job. But, he did not give up. He was finally vindicated in a legal opinion, given to the
state in January 2012, that the tender was invalid. It was cancelled on 26 April 2012 and in mid-June
2012, EduSolutions failed in an application to North Gauteng High Court to have its contract reinstated
but by this stage Tshitangano had lost his job, and the provincial education department had bled dry.
It was placed under administration in early December 2011.

The real victims, though, are the children of Limpopo, who have lost six months of schooling. And
while the legal and political battles rage, with blame thrown around with abandon, they are the ones
with the most to lose. One wonders whether Limpopo learners would have received their learning
material on time at the beginning of 2012 if the relevant authorities had heeded Tshitanganos
warnings earlier.

A brave mans tale, in his own words

Speaking to Corruption Watch this week as investigators and newspapers tried to get to the bottom of
the story, Tshitangano explained that he joined the Limpopo Education Department in June 2009 as
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the general manager of finance, reporting to the chief financial officer (CFO). In 2010, he was asked
by the then CFO of the department, Ian van der Merwe, to oversee a book unit.

At the time, textbooks were procured directly from publishers, and the state received a 30%
publishers discount. Van der Merwe left the department at the end of February 2010, and from 1
March until 31 August 2010 Tshitangano was acting CFO. It was in this position that he witnessed the
questionable awarding of the EduSolutions tender.

Around April 2010, Limpopo Education Department head Benny Boshielo told me that a decision had
been made to outsource the procurement of textbooks. It was shocking news to me. The book unit
was reporting to me. Therefore, if I wanted that function to be outsourced, I should have done a cost
benefit analysis to see if the government would benefit from the outsourcing. After this analysis I would
have been obligated to write a letter to the head of department, either recommending or advising
against outsourcing.

The following month, the tender notice to outsource textbook procurement was advertised in the
Sowetan newspaper and in the government tender bulletin. But as acting CFO, I wasnt involved in
the development of the specifications. On 27 July 2010, after the bid adjudication committee met, a
document indicating the preferred bidder was referred to me to consider The document indicated
that EduSolutions met all the criteria.

ANC connections

Since then, media reports have pointed to strong connections between EduSolutions directors and
ANC heavyweights. City Press revealed in January 2012 that EduSolutions was a subsidiary of African
Access Holdings, whose directors include Mogopodi Mokoena, a former Gauteng director-general, and
Joy Matsebula, a former acting director in the office of the Presidency during Thabo Mbekis term, as
well as other former top government officials.

Another director is Moosa Ntimba, the former CFO of the Government Printing Works, and its chief
executive officer, Shaun Battlemann, has strong links to President Jacob Zuma as a champion of
Zumas RDP Education Trust. Seth Phalatse, its non-executive chairperson, is the former chairperson
of the states Strategic Fuel Fund and was a shareholder in the controversial Sondolo IT company.

Tshitangano said: After it was decided that the tender would go to EduSolutions [in July 2010], I was
given a two-page document stating the outcome of the bid adjudication committee and a note to say
that EduSolutions had met the relevant criteria. I had a serious problem with this for one, I couldnt
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see on this two-page document I was handed, where the states discount would come in and why
should I consider things that should have been considered before the bid was advertised. I requested
a meeting with the bid adjudication committee to raise my concerns.

In early August 2010, he met the head of department and a bid adjudication official and told them of
his concerns. The head of department said I should not worry about such concerns they would be
sorted out later in the service level agreement. I disagreed with this.

On 12 August 2010, the department head called a meeting to ask Tshitangano when the contract with
EduSolutions would be finalised. I said to the department head on that date, as I had already told him
before in written documents, that the Limpopo Education Department should rather get an opinion
either from the Treasury or state law advisers so that they could review the awarding of the tender to
EduSolutions. I wanted this so I would know that the deal was above board and the decision to
appoint EduSolutions was defendable in any court of law.

Turning to the Treasury

After this meeting, Tshitangano wrote to Nerulal Ramdharie, the head of the Limpopo Treasury, asking
that it appoint a team to review the tender. First, on 15 August 2010, Ramdharie agreed to assemble
a team to investigate, but then a day later, the Treasury withdrew its offer I didnt know why.

Around this time, Tshitangano sent out emails to all senior personnel in the education department
advising them against the tender. His appointment as acting CFO ended on 31 August 2010, and he
no longer had dealings with the deal. In August, I reported the matter to the public protector and in
November 2010 the public protectors office requested supporting documents from the education
department but these were not given to the office until May 2011.

In December 2010 in my capacity as the general manager of finance, I was asked to release R19.7-
million to EduSolutions as an advanced payment. I asked for the agreement stating that EduSolutions
should get an advanced payment; when I looked at the conditions and the requirements of the tender
there was no mention of an advanced payment.

The conditions and requirements of the bid must be put in the service level agreement (SLA), but
when Tshitangano was given a copy of the SLA, he saw that there were a lot of terms in it that were
not part of the bid. He wrote to the head of department and the bid adjudicating committee indicating
his unhappiness with this, and the head of department signed in recognition of this. Corruption Watch
is in possession of copies of these documents.
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Then, around 28 December 2010, the head of supply chain management at the Limpopo Education
Department wrote to the head of department about other advertised tenders. It was recommended that
those tenders should be cancelled and the material should be acquired using the EduSolutions tender.
In other words, they were giving EduSolutions additional tenders through the back door. The CFO
agreed cancelling other tenders and giving the job to EduSolutions.

Questions around the discount

Around February and March 2011, invoices started coming in to me from EduSolutions. The first was
for R108-million the discount calculated was R32-millon, which the state [would] keep if it was the
old system. But now this discount had to be shared; the state would keep around R10-million and
EduSolutions would get R22-million of it.

Also around this time, Tshitangano began corresponding with the public protector, who was following
up on his report of August 2010. On 13 April 2011, his offices were locked and the old locks were
changed. He was not given access again, and worked from home.

At that stage I wrote several letters to Limpopo Premier Cassel Mathale, the Limpopo education MEC,
and the Presidency, telling them that I had compiled a dossier of information on the questionable
EduSolutions tender and asked that the allegations be investigated. The general response was that
these bodies would look into the matters I had raised.

I officially received my letter of suspension from the education department on 6 May 2011, although
there were no reasons given in this letter for my suspension.

Then, on 19 July 2011, the head of the education department appointed the forensic audit company
Neo Africa to probe his allegations. Its forensic investigation cost the department R2.2-million, and
reported that Tshitanganos allegations were unfounded. The issues I raised were that [in terms of the
Constitution, the Public Finance Management Act and Treasury regulations] when an institution of
state procures, it must use a system that is fair, transparent, equitable, competitive, and cost-effective.
The EduSolutions deal was not in keeping with this.

The truth will out

Some vindication has come Tshitanganos way, though too late for this years schoolchildren: On 16
January 2012, the national Department of Education requested opinion from advocate senior council
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Pat Ellis. He queried why the state was allowing EduSolutions to keep the discount, and he also
mentioned the name Tshitangano. Ellis said it would be irresponsible of the state not to interview this
whistleblower.

Tshitangano added: When I heard this statement of Elliss, I felt I was vindicated. I met with the then
Limpopo education administrator, Dr Anis Karodia, on 14 February 2012. Karodia said there were two
things he wanted to tell me that Elliss opinion that the EduSolutions tender was invalid was exactly
as I had advised the Limpopo Education Department in 2010, and secondly, Karodia told me that the
Neo Africa report said all my allegations were unfounded.

Despite Mostshekga assuring EduSolutions on 2 April 2012 that the state would honour its contract,
Karodia terminated the agreement on 26 April 2012. In mid-June 2012, EduSolutions failed in an
application to North Gauteng High Court to have its contract reinstated.

This has been a very long and painful journey, Tshitangano ended. This all started in April 2010
and it was only two years later that everybody began seeing what I was seeing. Before that I felt like a
psychiatric patient seeing things that other people couldnt see. Two years later, the truth is out.

It has been a difficult two years: There were times I feared for my life, Tshitangano admitted.


1.1 State the definition of 'disclosure' as described in the Protected Disclosures Act 26, of 2000, and
elaborate on how the disclosure made by Mr Solly Tshitangano is consistent with section 1 (b)
or section 1 (a) the Act. (5)

1.2 State the objectives of the Protected Disclosures Act, 26 of 2000. (5)

1.3 As per your understanding of the facts in the above case study, indicate how the disclosure by
Mr Solly Tshitangano became a protected disclosure in terms of the Act. Include in your answer
details of specific persons or bodies outlined within the Act, to whom a disclosure must be made
for it to be deemed a protected disclosure. (10)

1.4 Comment on the roles of (a) National Treasury official, Nerulal Ramdharie, who initially agreed
to assemble a team to review the tender and a day later withdrew his offer; and (2), Neo Africa,
the 'forensic audit company', which found Tshitangano's allegations to be unfounded. (5)

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1.5 Comment on whether the Edusolutions discount term is an ethical practice having due regard to
the previous arrangement with suppliers, and provide an opinion on the effectiveness of the Bid
Adjudication Committee. (5)

1.6 It is apparent that EduSolutions secured the contract with the Limpopo Education as a result of
its relationships with highly placed corrupt politicians and officials. Outline how corruption
impacts on the interests of society, and illustrate which stakeholders have been affected in this
case. (5)

1.7 Section 3 of the Protected Disclosures Act, 26 of 2000 is clear. It states that, 'no employee may
be subjected to any occupational detriment by his or her employer on account, or partly
on account, of having made a protected disclosure. The Protected Disclosures Act, 26 of
2000, was enacted, recognising that, 'criminal and other irregular conduct in organs of
state and private bodies are detrimental to good, effective, accountable and transparent
governance in organs of state and open and good corporate governance in private bodies
and can endanger the economic stability of the Republic and have the potential to cause
social damage.
Elaborate on the weaknesses of the Protected Disclosures Act. (5)



Question 2. Fraud and Corruption [25 marks]

Read the Case Study hereunder and answer the following questions.

Manase Report: R19m for councillors who did business with eThekwini

by Paddy Harper, citypress.co.za July 23rd 2013 9:50 PM

Ten Durban councillors including ANC chief whip and exco member Stanley Xulu raked in more
than R19 million from doing business with the eThekwini municipality, according to the Manase
Report.

The report was finally released to City Press by the KwaZulu-Natal Cooperative Governance and
Traditional Affairs (CoGTA) MEC Nomusa Dube today following an application in terms of the
Promotion of Access to Information Act (PAIA). Dube appointed the inquiry into maladministration,
corruption and unauthorised expenditure by the council on April 1 2012.
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The 7 051 page report found that seven contracts were awarded to councillors companies, a direct
contravention of Municipal Supply Chain Management Regulation 44.

It found that a further 46 contracts valued at R5.4 million were awarded to council officials and an
additional 124 contracts valued at R45.5 million were given to companied owned by civil servants
employed by other government departments.

According to the report, the council had disciplined 38 employees for doing business with the city and
should investigate 123 others and take similar action.

Xulu, who was fined half a years salary over the city contracts held by his Igagasi Lolwandle Trading
had made a total of R12 million from doing business with the city.

The report said Xulu had told investigators he had been warned by then city manager Mike Sutcliffe
that he should resign from any companies which had city contracts, which he says he subsequently
did.

Fellow councillor Mthembeni Shezi was involved in two companies, Chatsworth Cleaning Services and
Khethezakhe Cleaning Services, which cleared R4.1 million from city contracts.

The report recommended investigations against a further 15 councillors to ascertain whether
information they had provided was correct as time constraints had prevented the Manase team from
properly investigating them. END.


2.1 Define Fraud and Corruption in terms of accepted international definitions or South African Law.
(5)

2.2 CorruptionWatch, a South African organisation, reported that the audit by Manase and
Associates was undertaken after a finding by the Auditor-General, Terence Nombembe, in his
2009/2010 report of irregular spending by Ethekwini of R532 million. The full report has not been
made public after the ANC - through its Chairman Sibongeni Dhlomo - felt that it would be unfair
to the parties involved in the findings of Nombembe's report, and would endanger the interests of
the municipality.
Comment on the decision of the ANC Chairman, having due regard to the ethical values of
integrity, trust, transparency and good governance. (10)
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2.3 The Chief Whip and Exco member Stanley Xulu, and other Councillors raked in R19 million from
doing business with the eThekwini municipality. After a disciplinary hearing he was fined half his
salary and still retained his job. Explain how despite statements of policies and procedures,
publication of ethical Values, and hotlines for all organisational members, corruption remained
endemic at the Ethekwini municipality because greed. opportunism, party and political interests
override a commitment to service delivery and the public interest? In your answer elaborate on
the approach of Immoral Management and its corresponding organisational characteristics, and
show whether decisions, actions, and behaviour of the management at the eThekwini
Municipality imply a positive and active opposition to what is moral (ethical).
(10)


QUESTION 3. The Natural Environment as a Stakeholder [20 marks]


Acid Mine Drainage

South Africas (Non) Solution to acid mine
drainage

politicalanalysis.co.zaSep 18th 2012

Acid mine water on the West Rand goldfields
Photo by: Photo: Henk Coetzee

Acid mine drainage is the result of water oxidising
with sulphide mineral iron pyrite and acid water being formed. This acid water has been found
approximately 600m below the surface but is rising at a rate of 0.6 to 0.9m daily. The city of
Johannesburg and surrounding areas have experienced the most incidents of acid mine drainage.
A team of acid-mine drainage experts was appointed last year to address the many health risks risks
acid mine drainage posed to the Johannesburg public and the National Treasury set aside a total of
R443 million to deal with the problem.

They came up with various different solutions including the monitoring of water (including groundwater
and surface water), ways to decrease flooding and other immediate measures that will assist in the
improving of water quality. On 22 March, Water and Environmental Affairs Minister, Edna Molewa
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stated that government takes the issue of acid mine drainage very seriously and is committed to
alleviating the problem. However, it still remains unclear where the funding for the solution to the
problem will come from. As of June 2012, the amount of funding required for a more sustainable and
permanent solution rose to R2.2 billion.

The Water and Environmental Affairs ministry insists that South Africa would need to spend R67 billion
on the quality of its water over the next ten years. The National Treasury response to this was that
there was no extra money for such an operation and the only possible funding available is budget
reprioritisation in the Water and Environmental Affairs ministry.

The main function of the department was to create, repair and maintain water infrastructure and
therefore budget reprioritisation would have put at risk other important functions of the department. It
was his contention that as it was the mine owners who caused the pollution it should be them who are
held liable for their actions in the form of fines of their businesses. While there are arguments over
where the finance for the solution will come from, the problem itself is not taken as seriously as it
should be.

Acid mine drainage is harmful both to human beings as well as animals and plants. If the problem
persists and the acid water finds itself in the agricultural sector, dire consequences could result. The
United Association of South Africa (UASA) has put together an initiative called H2O for Life aimed at
educating the entire country of these consequences. It is evident that such an initiative is necessary to
invoke a sense of urgency in government, judging by the fact that the water pumping in the
Witwatersrand is only scheduled to take place next year.

The UASA demands that government take action immediately before Johannesburgs water supply
becomes a health risk and is flooded with acid water. It is evident, however, that government does not
realize the matter of urgency as shown by Trevor Manuels jovial comment that South Africans should
not panic, the situation will not become so bad that we will need gumboots to walk in the streets of
Johannesburg tomorrow. We, as a republic, can only hope that action is taken sooner rather than
later.



3.1 With the aid of your current prescribed textbook and the above case study, illustrate the impact
of acid mine drainage on the Natural Environment and the consequences of not dealing with the
current crisis. (10)

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3.2 It is imperative that current mining companies have transparent and comprehensive sustainable
strategies to protect the natural environment. Outline the Ceres Principles as an effective model
for business to express and practice environmental sensitivity. (10)




Question 4. Corporate Citizenship, Social Responsibility and Performance [15 marks]

4.1 Outline the drivers of Corporate Citizenship and detail the benefits of Corporate Citizenship.
(10)

4.2 A variant of the multiple-bottom line perspective is popularly known as the 'triple-bottom line'
concept. The phrase triple -bottom line has been attributed to John Elkington. Explain this
concept. (5)

END.



EXAMINERS:
FIRST: MR AR MAHARAJ
EXTERNAL: MS L ANNANDALE



UNISA 2013