NHLS Welcomes Court Ruling Against Former CEO Joyce Mogale, Recoups R22 Million in Governance Victory

by Selinda Phenyo
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By Karabo Marifi

The National Health Laboratory Service (NHLS) has announced its satisfaction with a Labour Court judgment against its former Chief Executive Officer, Joyce Mogale, and her co-applicant, the estate of the late Chief Financial Officer (CFO), Sikhumbuzo Zulu. This ruling marks a critical milestone in the NHLS’s pursuit of accountability and good governance after significant financial losses were incurred due to negligence and irregularities during their tenure.

On Friday, 13 September 2024, Judge Connie Prinsloo of the Labour Court dismissed the unfair dismissal claims brought forward by Mogale and Zulu’s estate. In addition to affirming the fairness of their dismissal, the court also ordered Mogale to repay R22 million to the NHLS. This amount reflects the losses suffered by the state-owned entity as a direct consequence of her unlawful actions while serving as CEO.

A Victory for Governance

In a media statement released on 16 September 2024, the NHLS celebrated the judgment as a victory for governance, stating, “The judgment is a victory for governance and recoups losses which the NHLS has suffered as a result of the conduct of its most senior employees.” The entity emphasized that this ruling demonstrates the importance of accountability within public institutions, particularly regarding financial management and adherence to legal processes.

Judge Prinsloo, in her ruling, criticized the former executives’ conduct, describing it as “severe negligence and incompetence.” Mogale, in particular, was found to have “dismally failed to carry out explicit Board resolutions” and to have “blatantly disregarded the limitations contained in the delegation of authority.”

Key Irregularities Leading to Dismissal

The Labour Court ruling highlighted several irregularities that occurred during Mogale and Zulu’s tenure, ultimately resulting in their dismissal. These include three significant contracts that led to financial mismanagement and non-compliance with procurement policies:

1.  Afrirent Vehicle Leasing Contract: Mogale was found to have approved a contract worth R72 million, which was far beyond her delegated authority and without the approval of the NHLS Board. This contract was later increased to R79 million without proper procedural oversight, further inflating the cost. Judge Prinsloo ruled that Mogale’s actions in this matter were a direct violation of both the Public Finance Management Act (PFMA) and the NHLS’s own policies. As a result, the court ordered her to repay R22 million to the NHLS.
2.  Blue Future IT Equipment Contract: In another breach of protocol, Mogale authorized the procurement of IT equipment worth R83 million, far exceeding the Board-approved amount of R25 million. The court found that Mogale had bypassed competitive tendering processes and had procured goods that were not related to the tender’s specifications. This resulted in substantial financial losses for the NHLS.
3.  DV8 Wide Area Network Contract: The third irregular contract involved the addition of R63.5 million to an existing contract, again without following the required tendering process or clearly specifying the goods being procured. The court noted that such actions left room for potential malfeasance and created an environment ripe for corruption and financial mismanagement.

The Court’s Strong Rebuke of Mogale’s Conduct

Judge Prinsloo did not hold back in her criticism of Mogale’s leadership. In her ruling, she referred to the former CEO’s conduct as “astonishing,” highlighting her inability to take responsibility for her actions. “Mogale was unable to acknowledge her role in creating her misery – she was constantly shifting the blame, even onto the media,” the judge stated. This lack of accountability, coupled with a failure to exercise due diligence and care, further cemented the court’s decision to dismiss her unfair dismissal claim and impose financial penalties.

The court also emphasized that Mogale and Zulu’s actions violated several critical governance frameworks, including the PFMA, the NHLS Supply Chain Management Policy, and their employment contracts. Such violations not only exposed the NHLS to financial losses but also severely undermined the entity’s ability to fulfill its public health mandate during their tenure.

NHLS Board’s Role in Addressing Irregularities

The NHLS Board became aware of these irregularities as early as 2017 and swiftly took action to address them. Mogale and Zulu were suspended shortly thereafter, and in 2019, following a thorough disciplinary hearing, both executives were dismissed.

In a statement following the Labour Court ruling, NHLS Board Chairperson Prof. Eric Buch expressed his relief that justice had been served. He noted that, at the time of their suspension, the NHLS owed over R800 million to suppliers, a debt that exceeded the organization’s available cash balance. Under new leadership, the NHLS has since turned its financial situation around, with significant reserves now in place and stable annual tariff increases kept below 5%.

“This judgment is salient as it provides further evidence of the probity and diligence of the Board and its efforts to hold those responsible to account, however long it takes,” Prof. Buch remarked.

Ongoing Legal Battles

While this Labour Court ruling brings some closure to the NHLS’s lengthy legal battle against Mogale and Zulu, further legal proceedings are still underway. Mogale, alongside several other former NHLS officials, is currently on trial at the Specialised Commercial Crimes Court in Palm Ridge for additional charges related to fraud and corruption.

These individuals, including former Head of Supply Chain Management Graham Motsepe and Contracts and Tender Compliance Manager Mthunzi Mthimkulu, face charges of tender irregularities related to the Afrirent, Blue Future, and DV8 contracts. Blue Future’s owner, Kapai Pierre Petersen, has already been convicted of fraud related to his tender submission to the NHLS and is awaiting sentencing.

Prof. Buch remains hopeful that further accountability will be achieved, stating, “I remain optimistic that those responsible will also be charged on the Afrirent and DV8 matters.”


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