The Labour Court has dismissed a claim for unfair dismissal brought by former National Health Laboratory Service (NHLS) CEO Joyce Mogale against the NHLS. It further ruled that she must pay the public entity more than R22-million in light of irregularities in procurements made while she was in charge.
Mogale was fired from the NHLS in 2019, along with former CFO Sikhumbuzo Zulu, after the conclusion of a disciplinary hearing. At the time, it was reported that they had been charged with irregularities and failure to fulfil their duties concerning three procurements totalling about R200-million.
“The NHLS always felt that the dismissal of Mogale and Zulu was absolutely fair and warranted, and we’re very pleased to know that Judge [Connie] Prinsloo has confirmed not just the fairness of the dismissal, but she [also] made some very strong statements about Mogale and Zulu in the judgment,” said Prof Eric Buch, chairperson of the NHLS board.
“It vindicates the efforts and the commitment to clean governance and to holding people accountable for what they’ve done. It’s very important that public entities don’t make deals with mutual settlements and non-disclosure... when faced with situations like this.”
Although Zulu joined Mogale in her application to the Labour Court, he died before proceedings could begin and was substituted by Masello Zulu in her capacity as executrix of his estate.
The damages
In the judgment handed down on 13 September 2024, Mogale and Zulu’s estate were found to be jointly liable to pay the NHLS R342,545 due to their handling of a tender for the provision of Multiprotocol Label Switching wide area network services, awarded to the company DV8 Consulting CC in 2016.
According to the ruling, the NHLS board approved the awarding of a tender for the amount of R85,449,243 to DV8 Consulting CC. However, Mogale later entered into an addendum to the service level agreement, allocating an additional amount of R63.5m. This was not approved by the board. Zulu was found culpable for recommending the additional contract without any tender process.
The court ordered Mogale to pay an additional sum of R22,135,346 to the NHLS concerning a tender for the leasing of motor vehicles for the public entity, awarded to the company Afrirent (Pty) Ltd in 2016. Mogale reportedly entered into a service-level agreement of R79,691,269 with the company without taking the matter to the board for approval.
“Ms Mogale conceded that the Afrirent contract was not referred to the Board for approval but testified that she was asked by the SCM [supply chain management] to sign the agreement, not to submit it anywhere,” stated the court.
The NHLS made a third claim for damages in relation to a tender for the supply, maintenance and service of end-user computer hardware, awarded to Blue Future Internet and Surveillance (Pty) Ltd in 2016.
Mogale entered into a service level agreement for the amount of R83,902,000, despite the fact that the board had approved the tender for an amount of R25,985,921. However, the court noted that while there were “serious irregularities” in the Blue Future contract, no evidence was presented showing that the NHLS had suffered damages.
“This case shows how important it is to have skilled, competent and qualified people employed in key positions and how devastating the consequences are if a CEO or CFO is not up for the task,” said the court.
“... it has been demonstrated that during their conduct relating to each of the three contractors… Mr Zulu and Ms Mogale failed to perform their duties effectively, efficiently and professionally, and instead displayed severe negligence and incompetence, resulting in damage to the NHLS.”
‘Blind leading the blind’
In her judgment, Prinsloo noted that the irregularities in the three tenders painted a “concerning picture” of an entity where control and accountability were inadequate.
“The way in which Ms Mogale, Mr Zulu and their subordinates operated and advised, reminds this Court of the proverbial blind leading the blind,” she said.
Buch told Daily Maverick that Mogale and Zulu misled the board, including failing to bring procurements that were above their delegation to the body. He added that the NHLS was of the view that there was a group of executives and senior managers who were colluding to circumvent controls and procedures at the public entity during that time.
“These were in 2016, largely, and we picked them up early in 2017… Since 2017, the NHLS has moved to implement a range of interventions and control measures to prevent precisely the kind of weaknesses that the judge speaks about,” he said.
The NHLS was “very pleased” with the damages of R22-million, according to Buch, especially as, in these types of cases, there was a need to draw an absolute link between the irregularity and the losses incurred.
According to the judgment, Mogale testified that the criticism against her was unfair as she was “very thorough”. She reportedly said that she had been waiting for seven years to hear what she had done wrong, as her life had been “turned upside down” by the proceedings.
“Ms Mogale was unable to acknowledge her role in creating her own misery – she was constantly shifting the blame, even onto the media,” stated the judgment.
There is an ongoing criminal case against Mogale for alleged contraventions of the Public Finance Management Act in relation to her actions at the NHLS.
Mogale told Daily Maverick she was consulting her lawyers following the judgment. She pointed out that the NHLS’s initial counterclaim was R236-million rather than the R22-million awarded.
“I am categorically against the judgment. Having said that, I am still going to consult my legal representatives on the way forward. The difference between the initial R236-million litigation and the now R22-million should tell you something about this case,” she said. DM