Defence Department faces backlash over R5 million St George's Hotel lease scandal

The Department of Defence has come under fire for failing to take action against officials that entered into a lease agreement of St George’s Hotel at a cost of R5 million a month without following procurement processes.

DA MP Chris Hattingh said it was unacceptable that no one has been held accountable.

“If no one is held to account, it tells officials they can push big, pricey deals through a friendly foundation and get away with it. That breaks the checks and balances, discourages honest procurement staff, and makes a joke of the Auditor-General’s effort to stop irregular spending,” Hattingh said.

He made the statement after Defence Minister Angie Motshekga confirmed, when asked about measures taken against the officials responsible for the irregular expenditure, to use the hotel to house the headquarters of the SANDF Defence College and the SA War College.

Motshekga said the lease agreement was terminated last year, and the hotel has since been acquired by the department.

“No consequence management measures have been instituted against any officials while pending finalisation of the investigation,” she said in her written reply to parliamentary questions posed by Hattingh.

Motshekga also confirmed that no monies have been recovered to date in connection with the St George’s Hotel lease agreement.

“Recovery, if warranted, will be initiated once the investigation determines whether there was a loss to the State and the amount to be recovered,” she said.

This was despite former defence minister Thandi Modise indicating at the time that then Secretary of Defence Sonto Kudjoe and Chief of SANDF Lieutenant-General Rudzani Maphwanya had been ordered to correct what went wrong with the lease agreement for the training of senior officers and also take action against responsible officials.

The irregularity was picked up by Auditor-General Tsakani Maluleke when she found that there was no evidence of the approval of the National Treasury deviation before the St George’s Hotel lease.

Maluleke had also found that there was no evidence that the chief of logistics was delegated at the time to conclude the lease agreement on behalf of the department.

Motshekga said her department has since implemented remedial measures.

“The progress made towards compliance and rectification is: a policy has been promulgated stipulating the process to be followed for leasing,” she said.

Hattingh said figuring out the loss incurred by the department was simple.

“It does not need years and years of a never-ending board of inquiry.”

He also said the DA will push for the Standing Committee on Public Accounts and the Defence committees to move in to compel disclosure, recovery, and sanctions until consequence management is done.

Meanwhile, Motshekga disclosed that R108,026,400 in costs were incurred since entering into the lease from February 2022 until the lease was terminated in January 2024.

She added that the department did not incur direct costs during the lease period for maintenance and facility management utilities, as they were the responsibility of the landlord.

“Post-termination, the department paid R1,924,547.22 for maintenance and facility management to ensure continuity of services while internal capacity was being established.

“The total cumulative cost of the lease and associated services since the commencement, up to termination in January 2024, is R109,950,967.22.”

mayibongwe.maqhina@inl.co.za