The State Capture Inquiry has heard how a R1bn housing project in the Free State was ‘completely irregular’. Free State Human Settlements head Nthimotse Mokhesi, giving evidence before the commission yesterday, told of an application he brought on behalf of the department to review its prepayments scheme to suppliers.

The application before the Free State High Court (Bloemfontein) sought to review and set aside 106 building contracts, says a News24 report. Mokhesi told the inquiry that he believed the scheme was fraudulent.

But he also added that: ‘Perhaps I must also be very careful because not everything that looks like fraud is fraud.’

He said the sole purpose of the affidavit he submitted to the court was to try to persuade the court to give them a favourable judgment in order to recover the money. Mokhesi said his department had made an advance payment of more than R500m before anything was done. And the ultimate loss for the department was estimated in the region of R400m.

The commission also heard that contracts were unlawful because the department did not follow any lawful procurement processes.

The total allocation for the housing project in the province for 2010-11 was R1.42bn and the plan was to build more than 21 000 low-cost housing units, but that was not achieved.

Evidence leader Advocate Paul Pretorius said the project 'was completely irregular'.

Laying the foundation for evidence on the matter, Pretorius said while the legal team did not wish to rehash the entire investigation, ‘we would like to focus on the issue of accountability and why certain people were not held accountable’.

‘What is clear from the start is that neither contractors nor suppliers of materials to contractors were subject to any competitive bidding process which as we’ve dealt with in the asbestos matter, it is clearly unlawful and inexcusable,’ Pretorius is quoted as saying by News24.

Mokhesi told the commission that he did not know who selected the contracts for the housing project. But Pretorius told Deputy Chief Justice Raymond Zondo that a disqualified contractor was ‘indeed appointed’ and according to a report, the contractor ‘performed miserably’.

Pretorius also told the commission that each contract and arrangement should be investigated. He said there were some allegations of links between illegitimately appointed contractors and officials.

‘And of course, whilst all of that was happening a number of relatively junior employees get disciplined and dismissed and those who should be held accountable aren't,’ Pretorius said.

He added that those who qualified in terms of the bids and those who were disqualified, including those who were declared incompetent to build, were all put on the database and certain officials, including then MEC Mosebenzi Zwane, merely selected who they wanted to do the work.

Full News24 report