Gauteng non-profit organisations reject findings of province’s forensic probe

Non-profit organisations whose funding by the Gauteng Department of Social Development has been withdrawn say they are being unfairly punished for “frivolous” and “flimsy” findings made by forensic auditors.

Among the organisations concerned are women’s shelters, drug rehabilitation centres and organisations that provide meals and social work services to homeless people. Many say they have no choice but to scale down their services and even close their doors.

Only seven in-patient drug rehabilitation centres, out of 13 that received funding last year, will be receiving funds for the first two quarters of this financial year, the department confirmed to GroundUp on Wednesday. Six rehabs are under investigation, the department said. 

A manager at a children’s home told GroundUp earlier this week that they had to send a teenager struggling with substance use disorder back to their family because there were no state-funded in-patient drug rehabilitation centres available in the West Rand.

Forensic auditors were appointed by the department in 2023 to probe allegations of maladministration and fraud in the non-profit sector. The department’s budget for non-profit organisations is R1.9-billion for 2024/25, but Gauteng premier Panyaza Lesufi has promised it will be increased to R2.4-billion. Fourteen department officials have been suspended based on findings of forensic audits, the department has said.

The forensic audits were supported by outgoing MEC Mbali Hlophe. Hlophe has claimed several times that non-profit organisations in the province were “stealing from the poor” and that there has been extensive corruption in the sector.

A report provided by the department to the Gauteng Care Crisis Committee last week, on the orders of the Gauteng High Court, contains a list of 53 organisations that are under investigation, out of several hundred funded by the department.

Among the organisations on the list are Daracorp and Beauty Hub which received millions of rands in subsidies for training, while others have had their budgets cut.

But while organisations such as these have received large amounts of funding under questionable circumstances, the department has not provided evidence that this applies to all organisations on the list.

In May, almost two months into the new financial year, organisations flagged in the investigations started receiving letters informing them that they would not receive funding due to the findings made by the auditors. Some only received the letters in June.

When they requested clarity from the department, some received details in writing. But others were only given reasons for the suspension of their funding during a meeting with the department’s lawyers on Wednesday.

GroundUp spoke to representatives of five organisations who attended Wednesday’s meeting. They said the findings they were presented with on Wednesday were minor issues that should have been picked up by the department’s own monitoring and evaluation teams and would have been quickly resolved. They said they did not understand why a forensic audit was necessary.

The organisations have not received any funding from the department since the end of the financial year in March, and are battling to keep going.

“Flimsy and frivolous”

Derick Matthews, CEO of the Freedom Recovery Centre, which until March was funded for 52 beds for in-patient drug rehabilitation, told GroundUp that the allegations against the centre are “flimsy” and “frivolous”.

Matthews was told at Wednesday’s meeting that Freedom Recovery Centre had not submitted audited financial statements for 2022. GroundUp has seen evidence that he submitted the audited financial statements.

Matthews said the department had never before raised concerns about the organisation’s compliance with legislation. He said every quarter the department’s monitoring and evaluation officials would check the centre’s financial statements and that no concerns had ever been raised.

The auditors also found a “high turnover of security personnel” at Freedom Recovery Centre which was causing “instability in the organisation”. Matthews explained that this was because the security staff are employed from the centre’s skills development programme, through which a person who has been sober for a year works for three to six months at the centre.

“They are paid salaries from DSD funding. Our security is not working directly with the residents so they cannot impact the stability of the centre,” Matthews said.

The third finding against Freedom Recovery Centre was that staff members were being given “loans”. Matthews explained that sometimes when the department paid subsidies late, the centre would pay part of staff salaries from the tuck shop’s funds, which would later be deducted from their salaries.

Matthews says that they are in the process of discharging their last state-funded patients. “Both government-funded centres that we have been told to send people to during this crisis are full, they can’t help us. In the last week, I’ve received about 12 phone calls of people that needed urgent help and we can’t even help or intervene,” he said.

Representatives of other organisations GroundUp spoke to had similar concerns about the findings against them but did not want to be named for fear of victimisation.

They also raised concerns that their meeting on Wednesday was with only one department official and the department’s lawyers, while the organisations themselves did not have lawyers present.

They were told they have until Monday to provide evidence to dispute the allegations against them.

At the meeting on Saturday convened by Gauteng Premier Panyaza Lesufi, it was agreed that the organisations would receive an interim service-level agreement from the department by Monday, which would be finalised once the organisations were cleared. But not one organisation GroundUp spoke to has received an interim service-level agreement. Then on Wednesday they were told they will receive the agreements next week.

One organisation under investigation, Child Welfare Tshwane, was finally paid by the department last week after Gauteng High Court Judge Ingrid Opperman issued a directive that the organisation be paid to prevent harm to the beneficiaries.

GroundUp sent detailed questions to the Gauteng Department of Social Development, but we were told that the department will not be responding to media queries relating to the non-profit sector until further notice.

This article was first published by GroundUp.