Venerable child welfare organisation under scrutiny

A sanctuary for children without families and homes, that has been around for over 100 years, and throughout its existence has provided solace to many children from impoverished families and many who are orphaned and in desperate need of a home. This is how those who are familiar with the Johannesburg Child Welfare (JCW) have come to know it over the years.

It is, however, the subject of a recent investigation into allegations of maladministration and abuse of resources. Further allegations of insufficient food rations for children at one of its centres also surfaced during the probe.  

A whistleblower approached the Gauteng department of social development back in 2013 for assistance after compiling a dossier of accusations, they claimed, were aimed at correcting the conduct of the JCW’s director of over 20 years, Lyn Perry. The department is the point of authority for NGOs working in the space of social development and also has oversight powers over them. The whistleblower came to Corruption Watch at the beginning of 2014.

Perry is at the centre of the probe, which was first initiated in 2013 and conducted by private firm Grant Thornton. The probe was at some point halted due to difficulties the department encountered in accessing certain information from JCW’s officials. Corruption Watch eventually received a redacted version of the audit report in November last year from social development’s director of risk management and compliance, Natalie Reddy-Singh. The initial investigation was to be conducted by the provincial department of finance, but in the end Reddy-Singh’s unit opted for a private firm in the form of Grant Thornton.

The broad allegations against Perry include the mismanagement of the NGO’s funds; the flouting of supply chain procedures; and the abuse of its resources for her own personal gain.

Children are the ones who lose the most

The JCW has two centres that cater for orphaned and vulnerable children. One is a day centre that provides lunch meals for children after school at a budget of R2.38 per child. The other is a home which caters for all meals throughout the day at a daily budget of R8.43 per child. The meals budget for the two centres has been at the centre of a dispute among JCW senior managers, some of whom argue that too little is spent on the children’s nutrition. “The JCW has a sustainability fund which could fund [this project] singlehandedly for more than two years,” the whistleblower told Corruption Watch. However, continued the claim, she [Perry] may not want to touch that.

Corruption Watch contacted social development spokesperson Thebe Mohatle for clarity on the department’s plans following the conclusion of the investigation, but at the time of publishing Mohatle had not responded to attempts to get a statement.

The summarised report in Corruption Watch’s possession states that officials from the finance department, which initiated the investigation, had trouble getting some of the information they required to conclude their probe.

“In April 2013 Corruption Watch received a response from the [department of social development] acknowledging our letter and confirming that a forensic investigation by the Gauteng department of finance was commissioned by them,” explained Corruption Watch's head of legal and investigations, Leanne Govindsamy. “We were also informed [at the time] that the investigation began on or around August 2013, but was halted at the insistence of JCW lawyers for reasons that were not stated in the letter.”

Govindsamy added that in March 2014 another letter from the department confirmed that the investigation recommenced in 2014 and that external service providers [Grant Thornton] were appointed to conduct the investigation.

Denial of allegations

When initially contacted by Corruption Watch in December 2014 regarding the allegations made against her, Perry said nothing came of the investigation, nor of the allegations against her. “Your [Corruption Watch’s] complaints, coming as they do from an anonymous source, are in general and unspecific terms and I am unable to respond to them.”

In recent correspondence from Perry’s lawyers, there is a categorical denial of the allegations in the department’s report and questions are raised about the purpose of the investigation.  Perry’s lawyers state that although Grant Thornton was requested to provide a mandate for their investigation into JCW and Perry, such mandate was never provided. 

According to the department’s report and our whistleblower, Perry is alleged to have:

• Continuously used the company vehicle and petrol card for personal trips, without keeping a logbook of these trips for official use;
• Kept an iPad and iPad cover donated to the organisation for her personal use;
• Flouted supply chain management policy by appointing a relative as a contractor, a contravention of the JCW constitution.

Other allegations include :

• Payment of exorbitant salaries to members of staff who were not qualified for the positions they were appointed to;
• Intimidation of staff members who go against Perry's decisions for the organisation;
• Provision of inadequate supplies to one children’s centre that is run by the JCW;
• Unconstitutional change to the name of the organisation.

In an initial response, Perry singled out the allegation relating to the inappropriate use of the company vehicle and petrol card, stating: “I can say that I have had a company car and a petrol card for business and personal use since I was appointed as director of JCW during 1992. My letter of appointment provides that all related costs, including petrol, comprehensive insurance and maintenance of the vehicle will be covered by JCW. The information you have received was clearly wrong.”

Perry’s lawyers have added that Perry reconstructed a log book for all her completed travel for tax purposes and that “there was no question of her attempting to fabricate a log book.”

In relation to the allegation that Perry flouted supply chain management procedures by appointing a relative’s company, her lawyers confirm that such interests were declared to JCW’s board of management. In regard to the allegation about the iPad and iPad cover, Perry’s lawyers have indicated that she has never used the items.

Perry’s lawyers also refuted allegations about her intimidating and victimising staff, stating that there is no substance to such allegations and that apart from staff grievances which were dealt with two years ago; there have been no complaints in this regard.

In regard to the allegation about the inadequate provision of supplies to one children’s centre, Perry’s lawyers state that this allegation is unclear and that insofar as there are alleged to be other sources of funding, Perry is not responsible for and has no control over funding from such sources. 

The final report by social development concluded that:

• Perry did not keep a logbook for the use of the [company] vehicle and used the company petrol card for personal use. It further stated that the director asked employees to fabricate petrol logs on her behalf, for submission to Sars;
• The iPad and iPad cover meant for JCW use were taken by Perry without any payment being recorded;
• The procurement of stationery did not follow the applicable policy. Perry had direct interest in instances where JCW made use of [her relative’s] company to supply stationery, a contravention of section 5.19 of the JCW constitution;
• A consultant [whose name is known to Corruption Watch] was appointed to a position they did not have the required experience for;
• There appears to be a culture of intimidation and victimisation of employees at JCW;
• The amount of R2.38 appears to be insufficient for the needs of the children [at the centre] to maintain a nutritional diet. The funds that could help rectify this were available;
• JCW did not comply with the NPO Act, section 19, as it did not forward a request to the national department of social development to have the organisation’s name changed.

Providing vital services

According to its website, the JCW provides services to more than 40 000 beneficiaries every year. “In carrying out our caring, advocacy and protection activities, we are proud to say that our organisation is run according to the highest corporate governance parameters,” reads a comment on the site, under a section that describes what the organisation does.

To help sustain its various services, the JCW relies partly on public donations for its various projects. One of the more prominent benefactors is the popular M-net investigative journalism programme Carte Blanche.

Executive producer of the show, George Mazarakis, told Corruption Watch that its Making a Difference Trust funds feeding schemes for the JCW. He asserted, however, that his team is unaware of “anything untoward” and can therefore not comment on the matter.

“[We] cannot comment on anything until we are officially informed of allegations following thorough investigation. Our dealings with the leadership of the organisation have been exemplary thus far,” he said.

To date, Corruption Watch has not received information from the department about any further steps to address this matter. Alarmingly, we have been advised by Perry’s lawyers that the department has not yet provided a copy of the audit report to JCW or Perry. Corruption Watch will continue to follow up on this matter and on the steps being taken by the department.

Below is a summary of the response by Perry and JCW:

JCW and Mrs Perry deny in the strongest terms that there has been any misconduct of the nature alluded to. Neither the board of JCW nor Mrs Perry has seen the report prepared by Grant Thornton and, until approached by Corruption Watch, was not aware that such a report existed.

The allegation that the forensic investigation by the Department of Social Development has been “halted by JCW lawyers” is not correct. Grant Thornton was requested to provide JCW with its authority to carry out its investigation, as confidential information would be revealed; none has ever been provided. Furthermore, throughout the course of the investigations by the DSD, going back more than 18 months, various allegations have been made against JCW or Mrs Perry. Not all of them have been proceeded with and in some cases the allegations relating to the conduct have changed.

The allegation concerning the use of the company vehicle by Mrs Perry is unfounded. She has never attempted to fabricate a log book. Mrs Perry has had a company car and use of a petrol card for business and personal use since being appointed as the director of JCW in 1992. When Mrs Perry was advised by her tax consultant to prepare a detailed log book for her personal tax purposes, she requested a member of JCW’s accounting staff to assist her with the calculations based on a diary of entries which she had made.

The allegation concerning the use of an iPad is without merit. The iPad was donated to JCW and it has never been used by Mrs Perry.

In terms of the procurement of stationery, Mrs Perry does not handle the stationery orders for JCW and has never influenced any staff members to enter into transactions for a particular supplier. Mrs Perry’s interest in relation to her husband’s company was disclosed to JCW’s board and was recorded in the minutes of a board meeting held on 30 March 2000. The board was aware of the arrangement and approved it.

 Mrs Perry cannot comment on the allegations concerning intimidation and victimisation as she has never received any details of alleged instances referred to and as far as she is aware, there have never been any complaints of this nature to the board.