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IN THE LABOUR COURT OF SOUTH AFRICA, CAPE TOWN

                                                                                                            Not Reportable

Case no: C288/17

In the matter between:

MBULELO NGXONONO                                                              Applicant

And

PASSENGER RAIL AGENCY OF SOUTH AFRICA                     First Respondent

COMMISSIONER JOHN M BROWN    N.O.                                 Second Respondent

COMMISSION FOR CONCILIATION, MEDIATION

AND ARBITRATION                                                                      Third Respondent

Date heard: October 10 2019

Delivered: 31 January 2020

JUDGMENT

RABKIN-NAICKER, J

[1]     This is an opposed application to review and set aside an award under case number WECT9864-16. The second respondent (the Commissioner) found that the applicant’s dismissal was substantively and procedurally fair.

[2]     The applicant was employed by the first respondent (PRASA) as its Management Accountant. In September 2013, he was promoted to the position of Senior Finance Manager. He faced disciplinary proceedings after the Auditor-General found that the extension of a contract for the supply of rental cars, “the KE Daniels contract”, was not approved by the regional Manager and the Group Executive Officer in terms of the first respondent’s Supply Chain Management Policy. The Auditor –General also found that although the contract of KE Daniels expired on 6 May 2014, services were still being rendered by KE Daniels to the First Respondent after the expiry of the initial contract and the total amount paid exceeded the contract value in the amount of R5 520 945.77, which had not been approved, and should be recognized and disclosed as irregular expenditure in accordance with the Public Finance Management Act, Act 29 of 1999 (PFMA).

[3]     On the 2 June 2016, the applicant was found guilty at a disciplinary hearing of the following ten charges of misconduct:

          “Charge 1

          Gross misconduct in that during the period of 01 October 2013 – 05 November 2013 you failed in your duty to confirm that sufficient funds have been allocated for the procurement of services relating to short-term vehicle rentals.

          Charge 2

          Gross dereliction of duty in that you failed in your duty to effect reasonable amendments to the budget to provide for both the procurement of the short term vehicle rentals and the projected adjustment to the revenue figures in order to prevent wasteful and irregular expenditure resulting from the appointment of KE Daniels.

          Charge 3

          Gross dereliction of duty in that you failed in your responsibility to ensure that a budget reprioritization exercise is undertaken in order to create a line-item against which expenditure relating to KE Daniels may incur.

          Charge 4

          Gross misconduct in that you failed to act with fidelity, honesty, integrity and in the best interest of the company by failing to uphold PFMA regulations relating to the establishment and maintenance of an appropriate procurement and provisioning system which is fair, equitable, transparent, competitive and cost-effective.

          Charge 5

          Gross misconduct in that during the period of 01 October 2013-05 November 2013 you condoned and/or recommended and/or approved a procurements process that led to the appointment of KE Daniels for the supply of short-term vehicle rentals without ensuring that funding is secured for the process.

          Charge 6

          Gross misconduct in that on the 05 November 2013 you confirmed the appointment of KE Daniels for the supply of short-term vehicle rentals without ensuring that funding is secured for the project.

          Charge 7

          Gross misconduct in that during the period of 16 November 2013 – 18 November 2013 you requested authorization for “ENGAGEMENT OF SHORT TERM VEHICLE RENTALS” as well as “to effect monthly payment of envisaged invoices from the appointed services provider” from the CEO AFTER the process have finalized.

          Charge 8

          Gross insubordination in that on the 18 November 2014

a.    You disregarded an instruction from the CEO to ensure budget provision BEFORE the process is engaged.

b.    You further disregarded an instruction from the CEO to ensure the process is reviewed within 6 months.

c.    You failed in your duty as chairperson of the RTPC to ensure that the extension of the contract of KE Daniels is approved by the Regional Manager and the GCEO.

Charge 9

Gross misconduct in that during the period of 01 October 2013 – 05 November 2013

a.    You failed to exercise the exercise of utmost care to ensure reasonable protection of the assets of the company.

b.    You failed to act in the best interest of the company in managing the financial affairs of the company.

Charge 10

Gross misconduct in that you failed in your duty to take effective, reasonable and appropriate steps to prevent irregular, fruitless and wasteful expenditure.”

[4]     The applicant submits that the decision by the Arbitrator was unreasonable and entirely disconnected to the evidence and the material that properly served before him. Further that the Arbitrator failed to consider that dismissal was a harsh sanction under the circumstances.   This is a review in which there is a voluminous record and the affidavits focus on the factual issues arising from the evidence at arbitration. For this reason I first record the Commissioner’s ‘Analysis of Evidence and Application’ below:

          “219 The Applicant as the Senior Financial manager admitted that he was accountable and oversaw the activities of the SCM Department and was familiar with SCM policy and was aware that an operational budget was required for the procurement of KE Daniels services.

          220 Likewise the Applicant conceded that at no stage did he advise the Bid Evaluation Committee (BEC) or Regional Tender/Procurement Committee (RTPC) that there was in fact no budget or funds for the provision of KE Daniels vehicles rented and services.

          221 The crux of the Applicant’s defence for not making specific budget provisions for the K.E. Daniel’s vehicle rental contract is based on his contention that the Prasa Head Office had instructed a national instruction that there would be no budget provision made for short-term rental service.

          222 Surely the Applicant had a duty as the Senior Financial Manager, to alert both the BSC and RTPC that there was no dedicated budget for the short-term rental service.

          223 I further find that Mr Mofi, the Respondent’s Group CEO, on 18 November endorsed writing the RTPC approval of the KE Daniels six months vehicle rental contract subject to the Finance Department finalising the Budget for same.

          224 I find that the Applicant failed in his basic duty to budget for the KE Daniels, short-term vehicle rental contract as it was incumbent on his on the Service Financial Manager to do so.

          225 I accordingly find the Applicant guilty of Charge No.1

          226 The Applicant admitted that he had not followed Mr Mofi’s instruction as he could not do so as there was an alleged prohibition on budgeting for short-term on vehicles issued by Prasa Head Office.

          227 However, the Applicant failed to explain why he did not attempt to exercise his inherent powers to re-allocate funds within the “Leases” expense time item.

          228 Mr Gquma, the Applicant’s own witness’s testimony confirmed that the Applicant had the prerogative to reallocate funds within the same expense time category such as leases. In this regard it is instructive that thre were sufficient funds that could have been re-allocated to cover the vehicle rentals stipulated in the KE Daniel’s contract.

          229 The Applicant failed to adduce any written evidence that the Respondent’s Budget Policy (Pages 1-4 of the Combined Bundle) regarding changes for the approved budget prohibited any reallocation of funds within an expense category.

          230 Mr Booysens on the contrary testified that the Budget Policy dates from 2002 was applicable to the Respondent’s Western Cape region as in terms of ISO 9001 certification enabled it to do so. Indeed, both the Applicant’s witnesses Mr Guma and Mr Swartz confirmed that a budget allocation was possible.

          231 I find that the Applicant as the Senior Financial Manager was duty bound to provide funding by making a budget re-allocation within the 2013/2014 budget and to seek special budget provision for the 2014/15 budget as the KE Daniel’s vehicle rental contract would run over two financial years during the first six months. Budget to accommodate the KE Daniel’s vehicle rental contract.

          232 I find the Applicant failed in his duty as set out above and is consequently guilty of Charge No.2.

          233 I find that Charge 3 is in substance a duplication of Charge 3 (sic) albeit as it relates to the failure of the Applicant to reallocate the Respondent’s 2013/14 budget to accommodate the KE Daniel’s vehicle rental contract.

          234 As regards Charge 4 the Applicant contended that he effectively recused himself from the tender process when the RTCP committee members deliberated on the appointment of KE Daniels (Pty) Ltd whilst the Respondent’s representative submitted otherwise.

          235 The Applicant sworn testimony in this regard was fully corroborated by Mr Duncan Lamb. I find that Respondent has not discharged it’s onus of proving on a balance of probabilities that the Applicant was guilty of Charge 4.

          236 I find that the substance of Charge 5 is effectively a duplication of Charge 1.I find that Charge 6 is in substance the same as Charge 2.

          237 I find that as regards Charge 7 it was common cause the KE Daniel’s short-term vehicle rental contract was concluded on 5 November 2013 whereas on the 18 November 2013 both the Applicant submitted and supported a request for authorization to fund the contract to Mr M Mofi.

          238 However, the authorisation form stipulates on paragraph 2 thereof that “the region has submitted a request to CEO to approve the short-term procurement of vehicles to transport staff to work.

          239 I find that the Respondent has discharged its onus of proving on a balance of probabilities that the Applicant is guilty of Charge No.7.

          240 The Applicant contended in regard to Charge 8(a) that he did not comply with the instruction to provide budget for the KE Daniels short-term vehicle rental contract because it was nonsensical and unreasonable that could not be complied with due to various reasons.

          241 The Applicant was adamant that he could not comply with Mr Mofi’s instruction because he was prohibited by Prasa Head Office from doing so.

          242 I find that the Mr Mofi’s instruction was not unreasonable as the Applicant could have reallocated funds with the 2013/14 approved budget and by making fresh provisions for same in 2914/15 budget.

          243 I find that the Respondent has discharged it onus of proving on a balance of probabilities Charge 8(a).

          244 As regards Charge 8(b) I find that the Applicant failed to conduct any review of extension of the K.E. Daniels contract on or before 4 May 2014 when the six months KE Daniels contract expired. I find that the extension of the KE Daniels contract was not referred to the RTPC for consideration prior to its being extended as it (sic) required by the Respondent’s SCM policy and confirmed by Ms B Sehloho and Mr Maseko.

          245 I find the Applicants sworn testimony that he was not even aware of the extension of the KE Daniels contract contradicted by both Mr Booysen and Ms Fergusen. I accordingly find that the Applicant is guilty of Charge 8(b).

          246 I find that Charge 8(c) is substantively the same as Charge 8(b). I further find that charge 9(a) and (b) is an unnessesary duplification of the substance of Charges 1, 2 & 6.1. I find that Charge 10 is in substance a duplication of Charge 2.

247 I further find that Mr Swartz allegation that the Applicant was a victim of a vendetta, Mr Richard Walker, his successor waged against him and the Applicant was not materially substantiated.

Evaluation

[5]     From the above, it is evident that the decision by the Arbitrator that the sanction of dismissal was fair, was on the basis of his findings of guilt as regards to Charges 1,2, 7, and 8(a) and (b).

[6]     In his supplementary founding affidavit the applicant includes the following key allegations:

          “…….on or about 5 February 2013 (after the budget had already been approved in 2012) and, at that stage, could not be amended), Regional Executive Committee (“REXCO”) held a meeting attended by all Heads of Department including myself. It was decided at that meeting that there was a need to hire short term vehicles because, at that point in time, the First Respondent had not yet purchased its own vehicles. Therefore, on 16 November 2013, the Regional Tender Procurement Committee (“RTPC”) sent a memorandum to the CEO requesting approval of monthly payment to be made for services to be supplied in respect of the leasing of short term vehicles. The CEO subsequently approved the request for monthly payments subject to income budget being made in respect of short term vehicles on 18 November 2013. The Head Office processed the monthly payments as per the approved request. Therefore, as the request for monthly payments had been approved by the CEO, there was no necessity to endeavor to source the payments from elsewhere. It was the understanding of the CEO and Heads of Department that the KE Daniels Contract would be self- funding and would therefore pay for itself from the revenue generated. The 2014/15 budget had already been submitted on 25 September 2013. I testified that at this stage the region had already exceeded the year to date income budget by more than R10 000 000.00 (ten million rand). It is to be noted that the request for monthly payments for the hiring of short term vehicles was not my decision alone but that this was, in fact, a unanimous decision by all members of the RTPC supported by the then regional manager.” (emphasis mine)

[7]     It should be noted that the said approval of the CEO referred to by the applicant, is contained in a document which was part of the arbitration record. The CEO approved the Memorandum whose purpose is recorded as follows:

          “1.1 To apprise the CEO of PRASA Rail Division of contractual issues relating to normalizing short term vehicle rentals to the region.

          1.2 To request authorization to fund the short term vehicle rentals relating to payment of services to be provided by KE Daniels (Pty) Ltd”.

[8]     The Memorandum also included the following statements in Clause 2.5 and 2.6:

          “2.5 The region has not budgeted for this cost hence this request for the approval of the CEO to incur these costs.

          “2.6 The region has been able to recover all expenditure to be incurred as indicated by performance on fare revenue collection to date. The risk though is that non approval of this request can compromise these initiatives and reverse all gains made in terms of staff discipline in observing operational hours.”

[9]     The approval by the CEO was recorded as subject to the following handwritten condition: “Subject to budget provision made and finalization of the overall fleet procurement plan. This intervention should be reviewed in 6 months”.

[10]   The phrase ‘subject to budget provision made’ is submitted by the applicant to mean ‘subject to income budget’. The definition of an income budget is “an operational budget based upon achievement of specific income levels. Often used by governments that base departmental budgets upon taxes and other revenue sources.”[1] In other words it is a part of an operational budget showing projected income.

[11]   In his evidence in chief at the arbitration, the applicant was asked about the Memo and the phrase in question:

          “MR MAJARE: Now the charge says that you failed to, you disregarded the CEO’s instruction to say that you must, to ensure that the budget provision before the process is engaged. Rather before the K.E Daniels contract was engaged under the services.

          MR NGXONONO: Okay, if you read what the CEO wrote here, there is no before here. The CEO says subject to budget provision made, okay. And we are saying in 2.6, the region have been able to recover all the expenditure to be incurred as indicated by the performance of fare revenue collections. You cannot say that we must go and do a provision for budget. One if you look at the date, can I continue, when this, remember in November it was about eight months into….”

[12]   It seems to me that in order to accept the applicant’s submission as to the meaning of the phrase ‘subject to budget provision’, it must be read as meaning that authorization of the payments to K.E. Daniels was given subject to there being a surplus in the operational income budget. The memo to the CEO stated that funds were available. If the applicant’s interpretation was correct there would have been no need for the CEO to note the condition. The following proposition put to the applicant in cross-examination and his answer thereto bears recording:

          “MR VAN WYK: I put it to you that his condition which is attached to the approval of the CEO is that you or finance or someone in your department needs to make budget available for the payment of K.E. Daniels. Can you respond to that?

          MR NGXONONO: My response is that we could not have done that. That, if that was the instruction, that was an instruction that actually did not make sense because at the time budget has already been done, submitted for 2012 and for, budget 2013/14 financial year as well as 14/15 financial year.

          MR VAN WYK: And do you agree that [indistinct] principle reallocation of budget can be done after the budget has been approved?

          MR NGXONONO: The reallocation could be done but in this case there was a strict instruction that no budget should be made for short term vehicles.

          MR VAN WYK: And you have a strict instruction from the CEO to make budget provision, not so?

          MR NGXONONO: That is what it says, it says subject to budget provision made.

          MR VAN WYK: Sir is it your case that you ignored this instruction in favour of another instruction that you say you received, is that what you are saying?

          MR NGXONONO: This instruction did not, this condition could not be complied with because head office said no budget.”

[13]   The applicant was also asked to comment on the contents of the minutes of the Western Cape Regional Tender and Procurement Committee Meeting held on the 5 November 2013. He was present at the meeting. The following recommendation is included in the said minutes:

          “4.1        Region: Provision of the short term vehicle rentals 894/2013/CTN/SCM

WCRTPC after deliberation on the matter concurred in the awarding of a contract to K.E. Daniels (PTY) Ltd for an amount of R1 125 000.00 Incl. Vat. For a period of 6 months and that the following matter be dealt with.

·         Finance to finalize budget.

Proposed : Mr. R. Maseko

Seconded: Mr. L Mzukwa”

[14]   It was put to the applicant that this recommendation corresponds with the CEO’s directive on 18 November. The applicant’s comment was the following:

          “ MR NGXONONO: It was a self-funding. We have highlighted to the CEO where the money is actually going to come from. They have given us, remember budget there is both income budget as well as an expense budget. The income budget was there, more than enough to pay for these things, okay. And we have also told the CEO that we have already collected money which we then pay for K.E. Daniels, which is a fact.”

[15]   The notion that payments could simply be made out of income surplus to that projected in the income budget, without specific budget allocation of these monies, was repeated by the applicant a number of times. He defended the position that payments to K.E. Daniels were merely recorded as ‘sundry’ and that no specific budget allocation was made in respect of the payment in either the 2011/12 or 2013/14 budgets.

[16]   Another proviso handwritten by the CEO when he signed authorization for the payments was that the intervention, i.e. the rental of the cars, be reviewed in six months. The applicant conceded that this was not done after six months but insisted rather that the review was done continuously:

          “MR NGXONONO: The review was done continuously.

          MR VAN WYK: I am asking you a question, did you do as the CEO asked you to do after six months to review this intervention, did you do that?

          MR NGXONONO: The review was done as from day one.

          MR VAN WYK: I put it to you that you did not. I put it to you also that you will not answer yes because then you would have to acknowledge that you knew that the contract had expired. That is why you will not say yes.

          MR NGXONONO: That is your version.”

[17]   The Arbitrator noted that there was no written document recording the alleged instruction from Head Office not to budget for short–term rentals which the applicant repeatedly relied on. In any event, it is evident that the applicant disregarded the CEO’s instructions as per the conditions set out by the latter in the Memorandum.

[18]   I am satisfied having considered the record of evidence before the arbitration, that the findings of the Commissioner in this matter in relation to Charges 1,2,7, 8a and 8b, set out above, are reasonable. There is no basis to conclude that he misconstrued the nature of the enquiry before him or made material errors of fact that render the Award reviewable.[2] The Commissioner found no grounds to interfere with the sanction of dismissal despite the fact that the applicant had a clean disciplinary record. In this respect he records in paragraph 251 of his Award that:

          “The Applicant was the most senior employee in the respondent’s Finance department who was vested with overall responsibility for the sound management of the Respondent’s financial affairs, procurement department and customer services department and the Applicant was guilty of a number of charges relating to his failure to carry out his duties in regard to K.E. Daniels (Pty) Ltd short–term vehicle rental contract.”

[19]   Given the gravity of the charges, as well as the senior position occupied by the applicant, the decision by the Commissioner not to interfere with the sanction imposed is reasonable and I find no basis to set this aside. In the result, I make the order set out below. I make no order as to costs. I do not find any exceptional circumstances exist to find that costs should follow the result.[3]

Order

1.    The review application is dismissed.

_________________

H. Rabkin-Naicker

  Judge of the Labour Court

Appearances:

Applicant: Bongani Khanyile Attorneys

First Respondent: Con Joubert SC with Mandlakazi Ngumbela

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