The Special Investigating Unit (SIU) has denied responsibility for leaking a preliminary report that allegedly implicates Road Accident Fund (RAF) chief executive Collins Letsoalo in procurement irregularities related to the lease of the RAF’s Johannesburg regional offices.
“The report was not leaked from our side,” said SIU spokesperson Kaizer Kganyago.
This comes after the Sunday Times reported that an interim SIU report accuses the RAF of tender irregularities involving millions of rands. Among those implicated is Letsoalo (pictured), who is alleged to have interfered in the awarding of a R79-million lease for the RAF’s Johannesburg offices located at 10 Junction Avenue in Parktown.
According to the report, Letsoalo rejected a nine-year lease recommended by the Bid Evaluation Committee (BEC) and instructed a senior RAF official, Prudence Manyasha, to re-evaluate the process.
The SIU’s preliminary findings, as reported, state that Manyasha cited irregularities – although none were formally documented – as the reason for cancelling the original lease recommendation. The lease was subsequently awarded to Mowana Properties, which manages properties on behalf of the Public Investment Corporation (PIC).
Letsoalo pushed back strongly against the allegations during a media briefing on 14 April.
“Now, interesting – Moana Properties. I don’t even know them, by the way. I don’t know who leads that organisation. I know nothing about it,” Letsoalo said.
He described the media reports as “misleading” and part of a concerted effort to besmirch the RAF’s name, its management and board “in the form of so-called whistleblower’s reports”.
In a media statement released that same day, the RAF claimed the allegations stem from a former employee who was suspended and later left the organisation following charges of sexual harassment and gross misconduct, including engaging in sexual activities at the RAF’s Johannesburg office.
“Once confronted with these charges, the employee then embarked on a smear campaign, masquerading as a whistleblower. This took the form of reporting these so-called allegations to different platforms, including the Public Protector. All these allegations were responded to, and evidence has been adduced to that effect,” the RAF said.
The RAF also criticised the leak of the preliminary findings, calling it “quite distasteful”.
“This is because any preliminary findings must be discussed with the RAF functionaries, evidence submitted, and final findings made before any public pronouncements,” it said.
Kganyago confirmed to Moonstone that the SIU was not behind the leak. He said the investigation is ongoing and declined to comment further. He also emphasised that the findings are preliminary, noting that “preliminary findings can change”.
In response to the latest allegations, the RAF stated it is prepared to co-operate with the SIU under the terms of the engagement letter signed by both parties.
“They must investigate without fear, favour or prejudice, including the things we did, of course. Some of us are unperturbed. I sleep nicely at night. Even if police pass, there’s a siren, I sleep nicely. I know there’s nothing,” Letsoalo said.
A fishing expedition?
This is not the first time concerns have been raised about procurement and tender irregularities involving RAF office leases.
The SIU launched its investigation in 2021 and, in December 2023, briefed Parliament’s Standing Committee on Public Accounts (Scopa) on what it described as a “lengthy and complex” probe into issues at the cash-strapped RAF.
At the time, the SIU’s interim findings pointed to procurement flaws in the rental of the RAF’s head office in Centurion. Chief national investigations officer Leonard Lekgetho told Scopa it appeared the RAF had “gone to great lengths” to secure the building.
He confirmed that the lease for the Johannesburg office was also under investigation, saying there were multiple deviations and that “preliminary findings point to this contract possibly having been awarded irregularly”.
Read: SIU recovers R317m in duplicate payments to lawyers from RAF
Letsoalo joined the RAF as acting chief executive in September 2019 and was permanently appointed to the position in August 2020. Before that, he was chief financial officer at the Department of Transport and held senior roles at state entities, including PRASA and the Road Traffic Management Corporation.
During the media briefing on Monday, Letsoalo criticised the recent coverage of the leaked SIU report, calling it a fishing expedition “camouflaged” with statements that “don’t necessarily correlate and are unrelated”.
“But those are not the real issues, as it were, and I’m not surprised… my contract is coming to an end in August. So, we are going to see all these funny things, rehashing things of 2021, something that happened in 2020. We are going to see the rehashing of the 2023. I hear that it’s a progressive move to make sure that continuously, every other week, my name will be in the media for the wrong reasons.”
He said there was an attempt to paint him as “this arrogant guy who does not listen and does as he wishes”.
“He sends his stooges to do his dirty work. Imagine me saying to someone, just go and look for a building. When you find it, come back and then let’s procure that building. What kind of a CEO would that be?”
Letsoalo dismissed the idea of a chief executive singlehandedly controlling complex procurement decisions, saying such claims would not hold up to scrutiny.
“I’m unperturbed, because I knew it was going to come. Now, when you go and take R36 billion away from people, you were expecting it’s going to come. Turning around the RAF is not for sissies. And I’m sure that you must ask our predecessors, they will tell you, because anything you are going to do – as long as it does not benefit lawyers, medical schemes, actuaries, doctors – you are not going to be liked.”
What happened in 2020 with the RAF’s Parktown lease?
With the SIU remaining tight-lipped while its investigation continues, only the RAF’s version of events is currently on record.
At the media briefing, Letsoalo explained the aim was to find a suitable, single-tenant building for the regional office, which was previously housed in Marble Towers in the Johannesburg CBD.
Since 2013, the RAF had been in contact with the Office of the Chief Procurement Officer (OCPO) at National Treasury to secure new premises. The initial plan was to secure a lease for nine years and 11 months. By 2018, after seven failed public tender attempts, the OCPO gave the RAF the green light to approach two state entities – PRASA and Transnet – to source office space.
However, the RAF later reported to the OCPO that the limited bidding process had been followed but did not produce any results.
“Transnet did not respond to the RAF request for provision of office accommodation. PRASA responded. However, it was not a positive response, as they advised that they are busy looking for a tenant who will also renovate their building. The response from PRASA was not a desirable one to the RAF, as it would have cost the organisation a lot of money,” the RAF told National Treasury.
When Letsoalo joined the RAF in 2019, the Johannesburg regional office was still based at Marble Towers.
“I found it strange. I asked questions. ‘Why are we still in this building?’ Below the floors that were occupied by RAF, and above those floors, it was just lawyers, and so lawyers had found themselves in Marble Towers.”
He raised concerns about clients being misdirected to lawyers.
“The aim was to get into a building that we were the single tenant in, and where we would not get claimants being moved around, whether coming out of our offices or doing that, or stealing, or whatever that the case may be, of those claimants and the way they were misguided. Others don’t even know, as they get there, they think that that building belongs to RAF, and they ended up in lawyers’ offices. We know that,” said Letsoalo.
He added that Marble Towers also had occupational health and safety issues at the time.
“So, I come, and I am told this, and I said, let’s set up a team, a special project. We need to move people out,” he said.
According to the RAF, in addition to engaging with Transnet and PRASA, it approached a third state entity – the PIC, which owns several property portfolios, including Mowana Properties.
“PIC referred the RAF to Mowana Properties, who managed the PIC’s property portfolio. Mowana then indicated that they had various buildings which they managed on behalf of the PIC, the former BP head office in Parktown being one such building.”
In a letter to the OCPO dated 13 February 2020, the RAF requested approval to deviate from the normal procurement process for acquiring office space for the Johannesburg regional office for a five-year lease.
Annexure A, which accompanied the letter and outlined the RAF’s motivation for the request, stated that after consultations with National Treasury, the RAF explored alternative ways of sourcing office space beyond the prescribed procurement process.
“Appointed officials comprising of Facilities Management, JHB Project Manager, and GM Special Projects, as well an official from SCM, formed a delegation to look for vacant buildings in the JHB area. A standard criteria to assess buildings was developed and used for this purpose. The latest SAPOA (South African Property Owners Association) report was used to benchmark the proposed rates, as well as confirming the building grades.”
The assessment criteria for three properties are set out in Annexure A: 112 Oxford Road in Rosebank, 10 Queens Street in Parktown, and 10 Junction Avenue in Parktown. The latter was recommended “through a deviation process”.
The RAF noted that negotiations with the prospective landlord focused on key cost drivers, including square metre rental rates, parking rates, storage, and tenant installation costs. Although the SAPOA report provided benchmarks for office rental rates, parking costs had to be negotiated separately because they were not covered in the report.
In addition to meeting standard criteria, the recommended building met critical requirements such as: being ready for occupation before 31 March 2020, allowing sufficient time for ICT installations to be completed before that date, and accommodating the time required for relocation and moving equipment.
According to Annexure A, the total monthly rental for Marble Towers in 2020 was R1 449 496.33, while the estimated monthly rental for 10 Junction Avenue was R917 500.
The RAF calculated that moving to 10 Junction Avenue would result in savings of about R17m over five years, with a monthly saving of about R500 000. It would be paying an estimated R11 010 000 annually, subject to a 6% annual escalation, the document stated.
A letter from National Treasury, shared by Letsoalo, acknowledges receipt of the RAF’s letter “dated 13 February 2020, received on 17 February 2020”.
In a surprisingly quick turnaround, acting chief procurement officer Estelle Setan signed the response on 21 February 2020. The letter states that the reasons provided for the deviation are “justifiable” and confirms that National Treasury “supports the deviation”.
According to the RAF’s statement, the procurement then followed all internal processes and procedures until a lease agreement was signed for the building.
“This was then executed through the above-mentioned project team. The aforementioned arrangement was a state entity to another state entity transaction. Subsequently, this was audited by the Auditor General SA (AGSA) and there were no findings that supported the allegations being peddled in the media,” the RAF stated.
But as the public – and the SIU – are left to untangle claims of smear campaigns and allegations involving a whistleblower with an alleged chequered past, one key question seems to be overlooked: with the five-year lease at 10 Junction Avenue nearing its end, what will happen next?
