Stag’s saga resurrected by public protector

GEORGE NEWS - It’s three years down the line and the R350-million Old Mutual Wealth investigation debacle that seemed to compromise DA Councillor Stag Cronjé, is still hitting headlines.

Cronjé was subsequently exonerated by the Minister of Local Government as well as the NPA, but a report by Public Protector Adv Busisiwe Mkhwebane and Deputy Public Protector Adv Kholeka Gcaleka released on Monday 28 February, states otherwise.

The PP found that George Municipality did invest municipal funds with Old Mutual irregularly; that the conduct of the municipality was “improper” and that the conduct of the officials and councillor [Stag Cronjé] involved were also not up to scratch.

“We further found that the municipality’s systems, processes, internal control measures and checks and balances governing its investment of public funds were not entirely efficient and provided inadequate checks and balances to prevent the improper investment of municipal funds,” reads the report.

This comes three years after the leader of the Good Party, Patricia de Lille, approached the public protector's offices in Cape Town on Thursday 4 April 2019, with a stack of documents she claimed provide proof of corruption within the George Municipality.

She named the former chief financial officer, Keith Jordaan, and former portfolio councillor for finance, Stag Cronjé, as key role players in a kickback scheme in the DA-led municipality (read more about the investment further down the article).

At the time, provincial government had already reported the matter to the Hawks in George and a council investigation was underway, as well as disciplinary processes against the CFO. Jordaan was dismissed and left office in July 2019.

Public Protector Adv. Busisiwe Mkhwebane

Council investigation

Meanwhile the focus shifted to DA Councillor Stag Cronjé and Council appointed a special committee to investigate his involvement in the matter.

Almost a year ago, on 25 March 2021, Cronjé was fined one month's salary for breaching the code of conduct for councillors by not declaring his interest. However, he never needed to pay a cent. Cronjé’s appeal was upheld by Minister of Local Government Anton Bredell in June 2021.

Bredell did not concur with the finding of the George Council and set aside the fine. This finding was in agreement with the National Prosecuting Authority’s decision in April 2021, that it could not find sufficient grounds to prosecute.

Good’s happy dance

With the release of the Public Protector’s report on Monday, Good Party MP Brett Herron said the DA must “stop pussy-footing around corruption in its ranks and dump its senior George Councillor DL Cronjé”.

Herron said although the PP restricted its remedial action to the municipality, the report is still a “damning indictment of Cronjé’s and governing DA’s integrity”.

Read the full statement here: Statement by Good MP Brett Herron

Acting Municipal Manager Michele Gratz said remedial steps commenced in 2019 and were completed in 2021, which were mostly in line with those indicated by the Public Protector: “The council and administration of George Municipality has done everything in its power to prevent a recurrence of this very unfortunate incident which took place four years ago under the previous municipal manager and previous mayor.”

Good MP Brett Herron

No money lost

Gratz said that all officials involved in this irregular investment process in 2017 were disciplined and the then chief financial officer was dismissed. “A second official is no longer working at the George Municipality. The municipal manager at the time is also no longer in service. The full sum of R350-million invested, was retrieved with no loss of interest income to the George Municipality. A report on any additional remedial matters will be included in a report to the council in May 2022.”

George Mayor Leon van Wyk said none of the current members of the audit committee served during 2017/2018 when the incident took place. “The chairperson of Council also investigated the matter, and the council sanctioned the councillor concerned.”

Read their full statement here: Media Statement George Municipality

Cronjé appalled

Cronjé said he is appalled by the contents of the report introduced by Public Protector Adv Busisiwe Mkhwebane and Deputy Public Protector Adv Kholeka Gcaleka. He said he was already exonerated by Bredell and that the NPA already declined to prosecute in April last year. Cronjé expressed his outrage at an article published in The Cape Times today, 1 March, calling for the DA to act against him as councillor. “I have today launched a campaign to recover my substantial cost in consequence of false accusations and wrongful procedures,” said Cronjé.

Read his full statement here: Mkhwebane finds improper conduct by George Municipality in R350m Old Mutual investment

The investment

The case relates to a R350-million investment at Old Mutual Wealth in 2017. The choice of the financial institution came under scrutiny for "not being on the list" of institutions where municipalities may invest money.

At the time Stag Cronjé, who held the position of portfolio councillor for finance, faced some heat since his son, a former agent for Old Mutual Broker Distribution, referred the municipality as a possible client to the financial services provider. A referral fee payable to the broker was the bone of contention.

In their sworn affidavits, both Cronjé and his son vehemently objected to allegations made against them, as stipulated in a report by FTI Consulting.

On 15 July 2019, George Council accepted a recommendation that the municipal manager at the time, Trevor Botha, and any other administrative official who might have been involved in the decision to invest an amount of R350-million at Old Mutual Wealth in 2017, would undergo a forensic investigation.

In addition, an investigation into the allegations regarding Cronjé's involvement was set to follow.

At the same meeting, Council took note of the outcome of then chief financial officer Keith Jordaan's disciplinary hearing, in which he was found guilty on three of four charges. Jordaan's dismissal was recommended by the presiding officer. Jordaan vacated his office on 8 July 2019.

Former George Municipality CFO Keith Jordaan.