A sworn statement details alleged discrepancies between contractual payments and figures recorded on the national housing subsidy system.
XJR Construction director Paul Mthabela accuses Mpumalanga human settlements officials of using altered subsidy schedules in housing agreements. Picture: iStock
The contractor embroiled in the R470 million Mpumalanga RDP housing payment dispute has opened a case of fraud, accusing senior provincial government officials and an MEC of manipulating nationally approved housing subsidy figures.
The Citizen can reveal the case was opened at the Pretoria Central Police Station on 1 September and, on 30 September, Colonel Kedibone Ndala, the head of detectives, wrote to the department with a list of demands for information and documents as part of the criminal investigation.
Contractor alleges manipulation of housing subsidies
XJR construction director Paul Mthabela detailed in a sworn police statement how the provincial department of human settlements used doctored subsidy amounts in contractual agreements dating back to 2014, while reporting different figures to national government’s Housing Subsidy System (HSS).
Mthabela claimed the department repeatedly presented provincial figures as nationally approved subsidy quantums, despite these allegedly being substantially lower than the amounts promulgated by the minister of human settlements.
In June, the Mpumalanga High Court in Mbombela granted Mthabela an order to attach assets worth R470 million from the department.
The writ of execution was, however, stayed after the department lodged an urgent application to have the judgment rescinded and halt the execution.
The matter was set to be heard on 31 August on the unopposed roll, but was thrown out of court after the parties failed to appear.
Disputed subsidy amounts date back to 2013
According to the affidavit, XJR was initially appointed in 2013 to construct 400 RDP houses at a price of R64 666 per 45m2 unit.
The contractor said the amount was subsequently increased to R103 000 per unit, excluding geotechnical allowances, following an appeal to the department.
However, he claimed in the affidavit that the nationally approved subsidy quantum at the time was R164 136 per unit.
The contractor accused the department of misrepresenting the national figures and using manipulated subsidy schedules in its agreements with the company.
According to Mthabela, the department had acknowledged the disputed subsidy figures during a provincial executive council meeting, but presented the altered amounts as a solution to the contractor’s complaints about underpayment.
He said this practice continued under successive departmental administrations.
Alleged discrepancies in national housing system
One example cited in the affidavit concerns a May 2024 appointment for 119 housing units at R183 257 per unit, allegedly despite the national subsidy quantum having increased to R209 072 in April 2022 and R271 166 in April 2023.
Mthabela also alleged the department reported inflated payment figures to the national HSS.
While the company was allegedly paid R103 000 per unit, the department reportedly recorded payments of R110 947 per unit in the system.
The affidavit puts the resulting discrepancy at more than R39 million across 2 566 housing units constructed by the company in areas including Kinross, Bethal and Embalenhle.
The contractor said this statement effectively represented that R51 500 per unit had been paid for geotechnical work.
However, XJR maintained the actual contractual amount for geotechnical services was R15 450 per unit.
The contractor said supporting agreements, payment certificates and invoices demonstrate the difference.
Police investigation and department’s response
Police spokesperson Captain Tintswalo Sibeko said “investigations are ongoing”.
The department spokesperson, Freddy Ngobe, said they were unaware of any active criminal investigation.
But he said the department was previously approached by the police in connection with matters relating to the dispute and that the department had provided the information sought, together with its account of the relevant transactions and circumstances.
“The department understood the explanations provided had satisfactorily addressed the concerns raised and that no further criminal investigation requiring the department’s participation was being pursued,” Ngobe said.
