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[2019] ZALAC 65
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National Institute for the Humanities and Social Sciences (NIHSS) v Lephoto and Another (JA36/2018) [2019] ZALAC 65; [2020] 3 BLLR 257 (LAC) (12 September 2019)

IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG
Reportable
Case
no: JA 36/2018
In
the matter between:
THE NATIONAL INSTITUTE
FOR THE
HUMANITIES AND SOCIAL
SCIENCES (NIHSS)

Appellant
And
KIBITI
LEPHOTO

First Respondent
THE MINISTER FOR
HIGHER EDUCATION
AND
TRAINING

Second Respondent
Heard:
15 August 2019
Delivered:
12 September 2019
Coram: Davis and
Coppin JJA and Kathree-Setiloane AJA
JUDGMENT
DAVIS
JA
Introduction
[1]
This case involves the Protected Disclosures Act 26 of 2000 (‘the

PDA’).  The preamble to the Act sets out its purpose to:
·
create a culture which will facilitate the disclosure of information
by
employees relating to criminal and other irregular conduct in the
work-place in a responsible manner by providing comprehensive

statutory guidelines for the disclosure of such information and
protection against any reprisals as a result of such disclosures;
·
promote the eradication of criminal and other irregular conduct in
organs
of state and private bodies.
[2]
In a constitutional state committed to the principles of transparency
and accountability, those exercising power, whether private or
public, must be subject to adequate scrutiny.  In this context,

the PDA fulfils an important objective in the vindication of these
commitments.   There is, however, a danger that the
Act
will be abused in order to justify wrongful conduct or malperformance
by a disgruntled employee, who seeks to fend off consequential

disciplinary action taken against him or her by way of recourse to
the Act.  This is such a case.
The
background
[3]
The appellant was established in terms of Regulation 2 of the
Regulations
for the Establishment of a National Institute for the
Humanities and Social Sciences.  The relevant regulations were
published
in terms of s 69 read with ss 38 A, 38 B and 38 C of the
Higher Education Act 101 of 1997
as amended.   On 5 January
2015, the respondent was appointed as Chief Financial Officer (‘CFO’)
of appellant.
His written contract of employment made it
clear that he was to report to the CEO and that his appointment was
for
a fixed period of five years and subject to a twelve-month
probationary period.   Appellant did not confirm
respondent’s
employment contract at the end of the probationary
period and consequently dismissed him after notice had been given to
him.
[4]
Respondent challenged the fairness of this dismissal before the court
a quo
.   In essence, respondent alleged that his
dismissal was triggered by a protected disclosure as contemplated in
the PDA;
that is the decision to terminate his employment constituted
an occupational detriment as defined in
s 1
of the PDA and was
consequently automatically unfair in terms of s 197 (1) (h) of the
Labour Relations Act 66 of 1995 (‘LRA’).
Respondent
claimed reinstatement to his position as CFO, alternatively
compensation, being the equivalent of twenty-four months’

remuneration.
[5]
On 22 November 2017, sitting in the court
a quo,
Mamosebo AJ
upheld respondent’s claim and ordered as follows:
‘
1.
The dismissal of the applicant [Mr Lephoto] was both procedurally and
substantially unfair.
2.
The applicant [Mr Lephoto] is re-instated with effect from 4 January
2016 being
the date of his dismissal.
3.
The first respondent, the National Institute Humanities and Social
Sciences,
is order to pay the applicant 12 months’
compensation, an equivalent of 12 months’ salary subject to
statutory deductions
payable within 30 days from the date of this
order.
4.
The first respondent is ordered to pay the applicant’s costs
which costs
shall include costs consequent upon the employment of
senior counsel.’
[6]
In justification of this order, the learned judge found that
respondent
made a protected disclosure and that there was a clear
nexus between this disclosure and his dismissal which had resulted in
an
occupational detriment as defined in the PDA.
[7]
The court
a quo
accepted respondent’s argument that he
made disclosures pertaining to what was referred to by him as ‘the
question
or relationship’ between the CEO and Mr Slingsby Mda
of Deloitte Consulting, a firm of auditors which had been contracted

by appellant to provide fund management services to it. The court a
quo also accepted the second justification as a protected disclosure,

namely that the CEO had undermined the rule of law by disregarding
her legal obligations relating to the supply chain management
of
appellant.  In this regard it placed emphasis on an extract of a
meeting between respondent, Mr Mda and two other members
of Deloitte
Consulting on 7 August 2015:
‘
I proceeded to ask
him (Mda) about the email that he had sent to the CEO in which I was
copied relating to the meeting that he had
with the CEO.  I
wanted to know whether the meeting was an isolated incident or
interaction or whether they did interact on
a regular basis.  Mr
Mda agreed that the email was the tip of the iceberg [and] that he
regularly communicated with CEO through
email, telephone meetings
that they were on a first name basis that he saw nothing wrong in the
relationship.‘
[8]
Furthermore, the learned judge placed emphasis on respondent’s
case,
namely that the manner in which the supply chain management had
been conducted was in breach of the provisions of the Public Finance

Management Act 1 of 1999 (‘PFMA’).  Significantly,
in her order, the learned judge found that both reinstatement
with
retrospective effect and compensation could and should be granted,
notwithstanding that this had not been the relief sought
by the
respondent.
[9]
With the leave of this court, the appellant contends on appeal that
the
court
a quo
fundamentally misconceived the true reason for
the dismissal, erred in finding that there was a protected disclosure
made in terms
of the PDA and was wrong in relation to a finding that
the PFMA had any applicability to the conduct of the CEO and hence
the disclosures
which had been made by respondent.
Appellant also contended that the court
a quo
had erred in
finding that both reinstatement and compensation could be granted.
[10]
In order to evaluate these arguments, it is necessary to briefly
outline the operation
of appellant and its structure.
The
structure of appellant and its relationship to Deloitte Consulting
[11]
The purpose of appellant is to “dynamise” the fields of
study for the humanities
of social sciences for South Africa’s
higher education system through enhancing scholarship, research and
the ethical practice
in these areas.  It is governed by a board,
albeit that the day to day running of appellant is conducted under
the supervision
of the CEO, who is accountable to the board.
[12]
On 27 September 2013 the Department of Higher Education and Training
(DHET) issued a request
for proposals regarding the management of
appellant’s funds.  Deloitte Consulting (‘Deloittes’)
was a successful
bidder.  Paragraph three of the request for
proposals provides insight into what was required by the successful
bidder, being
Deloitte Consulting:
‘
1
Under the general supervision of the Board of NIHSS and the direct
supervision
of the Director of NIHSS, the financial management
service provider will be responsible for providing support in the
various financial
management functions.  The scope of the work
and expectations for the appointed agency will among others include:
1.1
managing the budget of approximately R52 457 170 to support the
activities of the NIHSS;
1.2
maintaining an integrated accounting system for all approved NIHSS
activities, utilising
standard accounting procedures, which will
ensure full documentation and recording of sources and uses of funds.
1.3
preparing the Financial Management Reports and Financial Statements
for all the NIHSS activities;
1.4
Monitoring that financial management activities of NIHSS are
performed in line with the
PFMA, HE Act and Treasury Regulations.
1.5
Ensuring that funds for Programme implementation are disbursed in a
timely manner.
1.6
Reviewing and consolidating procurement requests and payment
applications to ensure correctness
and that they are in line with the
established format of presentation and all the government procurement
regulations.
1.7
Preparing quarterly financial reports (expenditure and revenue) for
the NIHSS and quarterly
Financial Management Reports for the DHET
budgetary control and input into NIHSS quarterly reports.
1.8
Reviewing and certifying receipts and cash transfer sheets regarding
Procurement of goods
and services in line with PFMA and Treasury
regulations.
1.9
Preparing interim unaudited reports for the NIHSS Board.
1.10
Verifying and ensuring the availability of funds before payment
approval is written to
NIHSS.
1.11
Managing NIHSS expenditure including personnel costs and ensuring
full compliance with PFMA, HE Act
and Treasury Regulations.
1.12
Reviewing receivables and payables and ensure prompt settlement of
payable to the NIHSS’s suppliers
and contractors.
1.13
Working with and supporting the NIHSS Board to co-ordinate logistical
requirements as and when the
funds are required.
1.14
Developing a handover report to the NIHSS management at end of
contract.’
[13]
As Mr Kennedy, who appeared on behalf of appellant, correctly noted
the contract for the
management of appellant’s funds was not
between appellant and Deloittes but rather between DHET and
Deloittes.
The contract provided that Deloittes was
‘under the general supervision of the Board of the NIHSS and
the direct supervision
of the director of the NIHSS’, being the
CEO.  The initial contract was for a period of twelve months but
this was extended
for a further period between 1 October 2015 to 30
May 2016.   The CFO was mandated to develop and monitor the
implementation
of the financial administration and accounting
policies, systems and processes of appellant.   He was also
responsible
for managing appellant’s budget in accordance with
the relevant prescripts.
[14]
On 11 and 18 August 2015, that is some eight months after respondent
was appointed, the
CEO consulted with Mr Anton Roskam, an attorney
acting on behalf of appellant, regarding her concerns about
appellant’s performance
and conduct.   She informed
Mr Roskam of a series of her concerns, which included the following:
a.
his failure to attend meetings
b.
his late submission of reports
c.
his failure to provide feedback to the CEO and act upon instructions
d.
his failure to bring important information to her attention
such as
the closing down of a bank account and the perilous state of the
organisations National Skills Fund account;
e.
his handling of the CEO’s disbursement claims;
f.
the manner in which he questioned his appointment as chair
of the Bid
Adjudication Committee for appellant’s office space tender;
g.
the nature of his participation in this process; and
h.
his role in the implementation of appellant’s payroll
system.
[15]
On 18 August 2015, following a second consultation conducted by the
CEO with Mr Roskam,
the chairperson of appellant’s Board,
Professor Ari Sitas, informed the CEO that he was in receipt of a
letter from respondent
in which the latter had alleged a series of
improprieties.  The document which was submitted to the Board
was headed ‘Disclosure
of Impropriety in terms of the
Provisions of the
Public Finance Management Act, Public
Service Act,
the Code of Conduct for Public Servants and other Prescripts’.
In this document respondent made two fundamental
allegations which,
in his view, constituted the disclosure of impropriety:
‘
1.
The CEO has a questionable relationship with Mr Slingsby Mda of
Deloitte Consulting,
a firm of auditors contracted to provide fund
management services to the NIHSS.
2.
The CEO is undermining the rule of law by disregarding her legal
obligations
relating to Supply Chain Management of the NIHSS.’
[16]
Upon receipt of this document, Professor Sitas sent an email to
respondent in which he
described respondent’s communication as
“baffling”.   As a result, he sought
clarification and better
particulars from respondent.  This was
followed few days later by an email generated by Professor Rosemary
Moeketsi, the chairperson
of the Board’s Human Resources
Committee, in which she requested that respondent: (a) substantiate
and provide evidence to
support his assertion that the CEO had a
questionable relationship with Mr Mda, (b) explain what was meant by
“questionable
relationship”, and (c) produce evidence in
support of respondent’s claim that the CEO was undermining the
rule of law
by disregarding her legal obligations relating to supply
chain management.
[17]
Respondent replied to this query by way of a document referred to as
“the explanatory
memorandum”.  In this document, he
referred to an email which he had received a copy of, relating to a
meeting between
Mr Mda and the CEO.  He noted that, as a result
of his response, Mr Mda ‘agreed that the email was the tip of
an iceberg,
that he regularly communicated with the CEO through
email, telephone, meetings, that they were on a first name basis,
that he saw
nothing untoward in that relationship, it was part of his
service offering to the client,  that at one stage he was asked
by the CEO to prepare a letter for the Board authorising the
utilising of the operating budget for projects expenditure and that

all that was in the spirit of helping the client.’
[18]
Respondent also referred to a proposal that the payroll function be
taken over from Deloittes
and brought “in-house” with
effect from 1 May 2015.  He noted that on 4 May 2015 the CEO
‘expressed her
disapproval of the proposal for the reason that
I did not first run it by her’.  He went on to say that,
‘she
(the CEO) said that the Chairman of the Board was not
happy about the decision to take over the payroll function from
Deloitte
Consulting …  I was surprised why a decision
which I considered to be operational would involve the chairman of
the
Board, why the Chairman would not want the CFO to carry out his
normal duties…’  He referred as well to a letter
of
20 August 2015 sent by Professor Sitas to Mr Mda confirming that the
Board had approved a temporary diversion of funds from
operations to
projects.  In his view ‘the letter raised concerns about
governance and relationships’.
In his document
respondent also set out what he considered to be the irregular
extension of the scope of the contract between DHET
and Deloitte
Consulting, as well as the irregular appointment of member of the
finance staff.  He concluded by referring to
the PFMA and said;
‘As part of my responsibility as the CFO, I have on numerous
occasions made the CEO aware of her legal
obligations as outline
above.   The CEO has steadfastly refused to allow the
implementation of supply chain management
in terms of the law’,
by which he clearly meant the provisions of the PFMA and National
Treasury Regulations which related
thereto.
[19]
On 20 August 2015 appellant’s attorneys advised that they
appoint a person to investigate
both the concerns that the CEO had
expressed regarding respondent’s performance and conduct
together with the allegations
of impropriety which respondent had
levelled against the CEO pursuant to the PDA.
The
appointment of Charles Nupen
[20]
The Board acted pursuant to this advice and appointed Mr Charles
Nupen to conduct an independent
investigation of the matter.
His brief was as follows:
‘
B.
Legal Opinion on the Way Forward to the HR Chair of the Institute
B1.
An Assessment of the Situation i.e. the relevant Facts
Firstly, is there an
irreconcilable breakdown of trust between Dr Sarah Mosoetsa (the CEO
of the Institute) and Mr Kibiti Lephoto
(the CFO of the Institute)
Secondly, the CFO sent a
“disclosure of impropriety” letter to the Board, alleging
serious misconduct by the CEO.
The Board responded by
requesting substantiation of allegation which elicited one such
submission to the Board.
Thirdly, the CFO refused
to authorise the payment of 127 service providers despite
instructions by the CEO to do so after the Board
authorised the
interim release of funds from its operational budget in consultation
with the DHET.   This led the CEO
(again after legal
opinion) to move towards serving a suspension warning of the CEO.
We would like the
investigator to listen to the respective allegations as well as
eliciting any other information necessary by speaking
to other
parties and inspecting any documentation of the NIHSS as necessary.
The investigator should then suggest a decisive
way forward.
B2.
Options that the Board must consider as necessary to the fulfilment
of the Institute’s
mandate.’
[21]
In conducting his investigation, Mr Nupen interviewed nine people,
including the CEO.
He also conducted one interview with
respondent. A second interview did not take place because, on 8
October 2015, respondent objected
to Mr Nupen, accusing him of not
being independent or fair and claiming that the Nupen investigation
focussed exclusively on respondent
and would not deal with the
alleged impropriety he had raised against the CEO.  He further
alleged that this had been made
clear to him in the manner in which
Mr Nupen had conducted the initial interview.   There was
also some dispute about
the fact that Mr Nupen had been described as
an advocate, when it was common cause that he was an attorney, a
point which was clarified
in a further email from appellant that this
description had been a mistake.  In this email which was written
by appellant’s
Nthabiseng Motsemme on 12 October 2017, she
summarised Mr Nupen’s career as a well-known member of the
labour legal community,
a highly experienced attorney with many years
of experience as a mediator, conciliator and arbitrator, the founding
Executive Director
of the CCMA, and previously a commissioner of the
Independent Electoral Commission in the 1994 elections.
Nonetheless,
respondent persisted with his contention that Mr Nupen
was not properly qualified, was not independent and was biased.
[22]
Mr Nupen’s report, notwithstanding the claim by respondent that
he was not interested
in dealing with the alleged impropriety, dealt
carefully with both questions, namely whether there was an
irreconcilable breakdown
of trust between the CEO and respondent and,
further the evaluation of the disclosures made by respondent.
Mr Nupen concluded
that there was clearly an irreconcilable breakdown
between the two parties.   The relevant passage of his
report reads
thus:
‘
Although
I did not have the opportunity of canvassing with the CFO his view on
whether there was an irreconcilable breakdown in
the trust
relationship with the CEO, he would be hard pressed to contend
otherwise having regard to the serious nature of the allegations

levelled against her.  The only reasonable conclusion that can
be drawn from them is that as far as he is concerned the CEO
has
acted in breach of the law and is therefore not fit to hold public
office.
In
my view interview with the CFO I put it to him that he was in effect
alleging that the CEO was party to an agreed with conduct
that was in
breach of the law.  He replied.
Yes
I am alleging that.’
[23]
Regarding the respondent’s disclosures, Mr Nupen used his
interview with respondent
to probe the meaning of respondent’s
phrase “questionable relationship”.  The relevant
section of his report
reads as follows:
‘
I was constrained
to ask him whether he was suggesting an improper personal
relationship between Mr Mda and the CEO and he answered
that he was
not suggesting that.  He said that questionable stands for the
fact that you would have something to measure it
against such as
rules standards and norms.  If it cannot be measured against
those it becomes questionable.  He said
the relationship was
questionable in terms of the
Public Finance Management Act (PFMA
).
He acknowledged that there was nothing in the contract between
Deloittes and DHET which stipulated that the relationship
should be
managed through the office.  He said that the CEO was finally
accountable for financial management but she carries
that
responsibility through the office of the CFO.   He referred
to National Treasury Regulations which he said stipulates
that.
His view was that the treasury regulations direct that a service
provider should report to the CFO and he reports to
the CEO.
I asked him if he would furnish me with a reference to the particular
section in the treasury regulations
that provided for this.  He
undertook to do so but this information was not forthcoming.
He did however refer me
to refer to s 38 and 45 of the PFMA in addition to the treasury
regulations.’
[24]
Mr Nupen then considered the provisions of the PFMA and concluded ‘as
the Institute
at all material times was not a listed Public Entity
the Treasury regulations do not apply to it and will not until such
time as
it is so listed.  The standards by which the CFO
assessed and determined that the relationship between the CFO and Mr
Mda
was questionable, are therefore not applicable.’
He went on to say that, even if the PFMA was applicable ‘I
can
find nothing in the law that suggests that the leader of a project
team from a service provider should not have a direct working

relationship with the CEO of a Public Entity.’
[25]
Turning to the question of the supply chain management argument of
respondent, Mr Nupen
concluded:
‘
As early as
February 2015 Board concluded that the SCM policy as presented by the
CFO needed further work.  The decision of
the Board at that
meeting was that the finance policies were accepted on condition that
a legal person reviews the documents.
External advice would be
sort from the Durban University of Technology, at no costs to the
Institute.’
[26]
Regarding the further allegations of Deloittes’ role in
producing opening balances
for the Annual Financial Statements, Mr
Nupen noted that this related to a ‘contractual issue between
DHET and Deloittes
and should be addressed by them…  What
is clear is that on this issue there is no evidence linking the CEO
with impropriety.
Her position on the matter was clearly set
out in her email of 9 July 2015; an email which was copied to the CFO
to the effect
that Deloittes should proceed ‘with the CFO’s
approval’.
[27]
After assessing the suspension of the CFO, in particular the notice
of intention to suspend
the CFO generated by the CEO on 27 August
2015, Mr Nupen found that there was an irreconcilable breakdown in
trust between the
two parties and that ‘the CFO had failed to
substantiate his allegations of impropriety against the CEO.
He has
impugned her character and professional standing without due
cause.’   In his view, there was
prima facie
evidence of serious misconduct on the part of the CFO in failing to
authorise payments on the basis of the unavailability of funds
in
circumstances ‘where he knew that the Board had approved the
temporary utilisation of DHET funds for project purposes’.

Mr Nupen concluded that, the CFO had undermined the intentions of the
Board and exposed the appellant to reputational and operational
risk.
He recommended that, before steps be taken to arraign the CFO before
a disciplinary enquiry, the latter should be invited
to comment on
this report.
Respondent’s
reaction to the recommendations
[28]
On 13 November 2015 the chairperson of the Board’s HR
committee, Professor Moeketsi
informed respondent that the Board
intended to take legal advice following this report and would
appreciate respondent’s
comments before it did so.
She requested that respondent indicate by 23 November 2015 whether he
wished to comment
upon the contents of the report.   A copy
of the report was attached to this email.  Respondent replied on
23 November
2015 that he wished to have an opportunity to comment
upon the report.  On 24 November 2015 Professor Moeketsi
requested respondent’s
comments by 27 November 2015.
At 08h17 pm on that day, respondent replied with an email in which he
stated ‘please
forward me a copy of the full report with the
cited exhibits and payment submissions for the period 5 January 2015
to 27 August
2015.’   Although he did not stipulate
what documents were missing, it appeared under cross examination that
he
could only refer to one exhibit (exhibit 1) which was missing,
namely the letter from Professor Sitas to Mr Nupen which set out
the
investigation’s terms of reference.  These however had
been quoted at the beginning of Mr Nupen’s report which

respondent confirmed he had received.
[29]
On 4 December 2015 appellant emailed respondent and informed him
‘that (a) the full
investigation report including the exhibits’
had been emailed to him, that it was again attached with the exhibits
to the
email; (b) the full investigation report had been couriered to
him; and (c) he was now required to provide his comments by 09
December
2015.   On 9 December 2015 at 03h14 pm, respondent
generated an email in which he stated ‘please forward me the

information I requested below in order to allow me to make meaningful
comments upon the report.’  On the same day, Ms
Motsemme
replied to the effect that she had already emailed the attachments on
04 December 2019.   She however resent
this email together
with the attachments.  Respondent did not comply with this
deadline for submitting his comments but on
10 December 2015 lodged a
complaint with the Auditor general.  On 11 December 2015 he
replied to Ms Motsemme’s email
in which he stated that he still
awaited the information requested in his emails of 27 November and 09
December 2015.
[30]
Under cross-examination, respondent was exquisitely vague as to what
documents were missing
stating only that appellant would clearly know
what was missing.  On 14 December 2015 Ms Motsemme sent
respondent a further
email confirming a telephone conversation which
she had with him on 11 December 2015 and recorded that, in response
to her query
about whether he would be submitting comments,
respondent advised that he was experiencing technical difficulties
and had not accessed
the exhibits.  She confirmed that the
exhibits had been couriered to him on 11 December 2015 but that the
courier had been
unable to deliver the documents to him for the
reason that he had relocated his home and not informed appellant of
his new address.
Again she attached the report and annexures in
an email.  On 16 December 2015 a request was sent to respondent
to attend a
meeting with Professor Moeketsi.  On 17 December
2015, by way of an email, he indicated that he refused to attend.
On
17 December 2015.  Ms Ayanda Zwane of appellant informed
respondent that he must now submit his comments by 18 December 2015

(the third deadline) and informed respondent that, if he did not have
any exhibits, he could collect them at appellant’s
offices
during the day.   Respondent did not comply with this
deadline and never submitted comments on the report.
As a
result, on 21 December 2015, Professor Sitas wrote to respondent in
which he confirmed the various attempts to obtain respondent’s

comments and concluded by requesting respondent’s written
representations by 27 December 2015 in order to respond to the

Board’s preliminary review that his probationary period should
be terminated.   On 27 December 2015 at 11h09 pm
respondent
requested an extension of this deadline because ‘he was still
awaiting certain resources including information
that (he) requested
from the NIHSS to prepare (his) response.’  He thus
requested an extension until 10 January 2016.
By now the Board
had taken the view that these delays were unreasonable and, on 30
December 2015, Professor Sitas sent respondent
a letter of
termination of his probationary period.
[31]
Significantly, on 28 April 2016 the Auditor General responded to
respondent’s complaint
stating that he had assessed the request
for an investigation and had found no irregularities in the 2015 –
2016 audit.
He concluded:
‘
Due
to the fact that the institute is not a registered public entity the
PFMA and treasury regulations do not apply thus compliance
relating
to procurement and contract management has not been assess.
Procurement
and contract management was evaluated based on the Supply chain
Management Policy.
No deficiencies have been identified
.’
(emphasis added)
Evaluation
[32]
As Mr Woudstra, who appeared on behalf of respondent, correctly
observed the first question
that has to be answered in the
affirmative in order for respondent’s case to be justified is
whether there was a protected
disclosure as defined in the PDA.
Before its amendment by the Protected Disclosures Amendment Act 5 of
2017, which amendment
does not apply to this case, s 1 of the PDA
defined a disclosure as follows:
‘
any
disclosure of information regarding any conduct of an employer, or an
employee of that employer, made by any employee who has
reason to
believe that the information concerned shows or tends to show one or
more of the following:
(a)
that a criminal offence has been committed, is being committed or is
likely
to be committed;
(b)
that a person has failed, is failing or is likely to fail to comply
with
any legal obligation to which that person is subject;
(c)
that a miscarriage of justice has occurred, is occurring or is likely

to occur;
(d)
that the health or safety of an individual has been, is being or is
likely
to be endangered;
(e)
that the environment has been, is being or is likely to be damaged;
(f)
unfair discrimination as contemplated in the Promotion of Equality

and Prevention of Unfair Discrimination Act, 2000 (Act No. 4 of 2000;
or
(g)
that any matter referred to in paragraph (a) to (f) has been, is
being
or is likely to be deliberately concealed.’
[33]
Given the disclosures by respondent, as I have set them out, it is
clear that only sub
paragraphs (a), (b) and (c) could possibly be
considered to be applicable in this case.  In
Radebe and
another v Premier Free State Province and others
[2012] 33 ILJ
2353 (LAC) Mlambo JP, on behalf of this Court, noted that s 1, that
is the definition of disclosure, contains the
following essential
requirements:   that the employee making the disclosure
must have “reason to believe’
that the information
disclosure “shows” or “tends to show” that an
impropriety as defined has been committed
or has continued to be
perpetrated.
[34]
The key question in the present case is whether respondent had a
reason to believe that
the so called questionable relationship
between the CEO and Mr Mda could or tended to show that a criminal
offence had been committed,
or that there had been a failure or a
likelihood of failure to comply with any legal obligations or that
there was or was a likelihood
of a miscarriage of justice.
[35]
To return to the court
a quo
, its essential finding was based
on the applicability of PFMA and the regulations to appellant and
consequently there was a reasonable
belief of the respondent that
these had been breached by the CEO.  It is clear from s 3 of the
PFMA that this legislation
is only applicable to a public entity, if
that entity appears in Schedule 2 or Schedule 3 to the PFMA.
Appellant is
not listed in either of these schedules. Therefore
as a matter of law, if appellant as a public entity, is not listed in
either
Schedule 2 or Schedule 3 of the PFMA, the Act is
inapplicable.  Contrary to the legally unsubstantiated
submission of Mr Woudstra
which, regrettably appeared to have
persuaded the court
a quo,
whatever a public entity might
believe about the scope of legislation does not confer upon it a
right nor an obligation to decide
whether the legislation is
applicable to it.  The legislation itself determines its own
scope, particularly when, in a case
such as the present, it is clear
that appellant was not listed in either of the relevant schedules
which were necessary for the
provisions of the PFMA to be applicable
to it.  Even ignoring the PFMA, it is clear that the CEO was
aware of the legal position
because she notified National Treasury
that appellant was not listed in Schedule 2 or 3 of the PFMA at the
time that appellant
was first established.  This notification
was pursuant to an engagement with National Treasury as to whether
appellant should
be listed in either Schedule 2 or 3.  Appellant
and indeed National Treasury knew it was not applicable and therefore
it is
hardly surprising that the Auditor General audited the
appellant on the basis that the PFMA was inapplicable to appellant.
[36]
Again, even assuming that there was a reason to believe that the PFMA
was applicable on
the part of the CFO, of which there is no evidence
to justify such an inference, as Mr Nupen correctly noted, there was
nothing
in this legislation which suggested that the leader of a
project team from a service provider such as Mr Mda should not have a
direct working relationship with the CEO of a public entity to which
the service provider was providing services. Indeed the contract

between the DHET and Deloittes provided expressly that the service
provider would operate under the general supervision of the
Board and
the direct supervision of the director, that is the CEO.
[37]
The evidence indicates compellingly that the complaint of the
respondent was, at core,
that he was being marginalised by the CEO.
This might, at best for him, constitute a problem to be dealt with by
the human resources
department of appellant or possibly the Board,
but certainly could not fall under any of the key components of the
definition of
disclosure, being a criminal offence, failing to comply
with any legal obligation or a miscarriage of justice.  The fact
that
the CEO increasingly was concerned about the CFO and his
performance, is evident from the various difficulties with his
performance
which she had expressed to Mr Roskam when she sought his
legal advice on 11 August 2015.
[38]
This conclusion is supported by the extremely vague content given by
respondent to the
notion of questionable relationship.  One
would have been entitled to expect that some allegation of an
inappropriate personal
relationship between the two parties which
somehow would have cast the judgment of the CEO into doubt.
But that was
never the basis of any allegation made by respondent.
[39]
Mr Kennedy was correct to describe the CFO’s averments with
regard to the CEO undermining
the rule of law as nothing more than
‘anaemic allegations’.   An examination of
respondent’s explanatory
document reveals a series of further
unjustified allegations on his part.   One illustration
concerns the question of
the handover by the Centre of Education
Policy Development (‘CEPD’) to Deloittes of a series of
its responsibilities.
It had been agreed that the CEPD
would provide the final opening balances of appellant’s account
by 23 February 2015, which
included a breakdown and detailed
understanding of each of these balances.   Despite a
request that a meeting on 17 June
2015, which was attended by
representatives of Deloittes and of appellant, including respondent,
it was reported that CEPD had
not provided the final opening
balances.   Deloittes suggested that it could assist in the
gathering of all the supporting
documents for the opening balances
and would put together a proposal which would be presented to the CEO
and the CFO for the additional
work.   Significantly
respondent later removed any reference to the CFO and hence his own
position from Deloittes draft
minutes of this meeting.  On 25
June 2015 Mr Mda sent the CEO an email stating that Deloittes would
like to assist in the
reconciliation of these amounts and finalise
the opening balances taken over of CEPD.   He said that
this would be done
subject to obtaining the CFO‘s approval.
On 9 July 2015 the CEO replied to Mr Mda copying respondent in this
email
in which she stated that Mr Mda should proceed with “Kinitis’
(respondent’s) approval”.  Ironically,
it was by
being copied in on this email that not only did respondent come to
know about Mr Mda’s email to the CEO of 5 June
2015, but then
arrived at the view that this email was a justification for the so
called questionable relationship between the
parties.
[40]
On 13 July 2015, four days after the CEO’s email to Mr Mda, Mr
Katende of Deloittes
sent an email to respondent stating that the CEO
had endorsed the commencement of the opening balance work, but his
email was clearly
not a correct reflection of the contents of the
CEO’s email of 09 July 2015.   The CEO had not been
sent a copy
of Mr Katende’s email and knew nothing about it.
It is difficult to see how, on the basis of these emails, respondent

could reasonably conclude that the CEO had marginalised him from what
was clearly an important issue for appellant.
[41]
A further significant aspect of the role of CEPD was that, in his
explanatory document,
respondent referred to the payment of monies
owing to CEPD.  On 25 March 2015 CEPD sent an invoice to the
DHET for the payment
of an amount of R5 616 000.00 for the management
of appellant’s finances from 4 June 2012 to November 2014.
On
7 April 2015 respondent provided the CEO with documents relating
to this claim, in which he concluded that the CEPD was owed R 4
440
323.37.   The CEO then sent documents to Ms Whittle at the
DHET.   Following her questioning these calculations,
it
was Deloittes which investigated the matter and concluded that the
CEPD was only owed R 909 8 33.73.   On 27 July
2015 the CEO
sent a letter to CEPD informing them of the Deloitte calculations and
the explanation therefor which CEPD accepted.
It was then paid
R 909 883. 73 as opposed to the R 4 440 323. 73 that it would have
paid, had the CEO relied on the CFO’s
calculations.
[42]
One final illustration shows how there could be no basis by which to
believe that the information
provided by respondent fell within the
definition of disclosure as I have analysed it.   During
the appellant’s
board meeting of 5 June 2015, at which
respondent was present, the first quarter report was discussed.
The CEO reported
that there was a significant challenge posed by the
late allocation of funds which affected the implementation of various
projects,
and therefor undermined the success of appellant’s
enterprise.    On 6 August 2015, on the advice of the
DHET,
the CEO wrote a memorandum to the Board, requesting approval to
move funds temporarily from operations to projects and scholarships.

On 11 August 2015 she generated an email to Mr Mda, which was copied
to respondent, an email which even he accepted he had received.

In this email she informed Mr Mda:
‘
As from tomorrow,
you will be receiving a total of about R 10 million of invoices to be
processed.  Please note that these
are indeed not operations
costs but projects and scholarship costs.  I have received board
approval to temporarily shift operations
funds to projects and
scholarships.  This is part of the solution as advised by the
DHET, as we await our NSF funds.’
[43]
On 17 August 2015 Deloittes sent an email to respondent requesting
authorisation of payments
pursuant to the Board decision.  This
letter which followed upon an earlier one of 12 August 2015, in which
the chairperson
of the Board, Professor Sitas, had written to Mr Mda
confirming the Board’s approval to temporarily move funds from
operations
to projects and scholarships.   However, on 20
August 2015 Deloittes was constrained to inform the CEO that some 127
invoices in this regard had not been paid because respondent had
refused to authorise these payments.  Under cross examination,

all that respondent could say was that Professor Sitas’ letter
did not constitute a proper resolution.  The evidence
clearly
justifies the following conclusion by Mr Nupen:
‘
On
20 August he (respondent) received a copy of the board’s letter
to Mr Mda.  In spite of all these advices and reminders
he
continued to refuse to authorise payment on the basis that funds were
not available.  I can only conclude that his email
of 26 August
to the CEO saying that he was not aware of the board resolution and
offering assistance was disingenuous.’
Was
the termination of the probation period justified?
[44]
It is abundantly apparent from the evidence that respondent’s
conduct, prior to his
suspension, revealed significant problems with
his conduct which had jeopardised the long term sustainability and
legitimacy of
the operations of appellant.   This is shown
in his refusal to endorse the urgent payment of 127 invoices (as
opposed
to 39 as found by the court
a quo
) to universities,
notwithstanding that he was aware that the Board had approved the
transfer of these funds for scholarships and,
notwithstanding that he
must have known of the crucial importance of these payments to the
core objectives of the appellant.
Respondent made critical
mistakes regarding the payment of monies owing to CEPD, mistakes
which, but for the intervention of Deloittes,
would have cost the
appellant more than R 3 million.   He failed to cooperate
with Deloittes in trying to find a solution
to finalise the correct
opening balances which resulted in the delay of appellant’s
financial statements.   There
was a consistent failure to
attend interviews, telephone conferences and meetings including
meetings with Deloittes, and a clear
lack of cooperation with
Deloittes which had signed a contract, not with the appellant but
with the DHET.
[45]
These examples of respondent’s inability to perform his job as
required, justified
the decision of the CEO to contemplate suspension
by appellant on 11 August 2015, a week before respondent’s
purported disclosure,
when the CEO consulted Mr Roskam.
[46]
The available evidence suggests that there had been an irretrievable
breakdown in the relationship
between respondent and CEO, that he had
failed to substantiate allegations of impropriety against her, had
impugned her character
and professional standing and authority as
CEO, had made unfounded allegations which, on any reasonable
inference, appear to be
in retaliation for the difficulties in which
he found himself as a result of his own incompetence or lack of
performance, and had
undermined the decisions of the Board and the
CEO in authorising payments to universities, which were central to
the functions
of appellant, thereby exposing it to potential
reputational and organisational risk.
[47]
In short, the available evidence compellingly supports the
conclusions contained in the
report generated by Mr Nupen.
Two further aspects require comment.   In the first place,
respondent sought
to attack the integrity, competence and good faith
of Mr Nupen.   A careful reading of the transcript of the
one interview
that Mr Nupen was able to conduct with respondent
reveals, contrary to the allegations made by respondent, that Mr
Nupen carefully
and patiently sought to probe the meaning of
allegations such as “questionable relationship” and the
justifications
for respondent making these very serious
allegations.   In addition, the report reveals, contrary to
respondent’s
contentions, that Mr Nupen dealt both with the
allegations made by the CEO relating to the competence of respondent
as well as
the disclosures he had made, and evaluated them on a basis
of a careful examination of the available evidence.
[48]
The reaction of the respondent to the Nupen report is equally
instructive.
As I have documented in this judgment, the
Board acted upon Mr Nupen’s recommendations and invited the
respondent to provide
a detailed response to Mr Nupen’s report
and his recommendations.   As the evidence shows, the
respondent consistently
refused to do so, raising a veritable range
of tendentious excuses for non-compliance with this request, and
which inevitably culminated
in the Board having to make a decision in
the absence of any reasonable cooperation from respondent.
Conclusion
[49]
The PDA is an important piece of legislation and is part of the
overall framework which
ensures that the exercise of both public and
private power should be conducted in a transparent and accountable
way.
It seeks to create a climate in which employees,
whether in the private and the public sector, are able to disclose
information
regarding unlawful and irregular conduct by employers or
other employees in the employ of the employer in a manner which will
not
result in any occupational detriment to a person who commendably
considers that the organisation, in which he or she works, should

operate legally and in a meticulously regular fashion.
However, the PDA was not enacted to encourage employees, whose
own
conduct renders them liable to dismissal, to exploit this legislation
in a desperate attempt to fend of the inevitable consequences
of
their own actions or performance.   That the PDA should be
interpreted generously in order to vindicate its purpose
is one
thing, but in a case such as the present, where the facts are
overwhelmingly in support of the conclusion that its provisions
were
abused, the court should have no truck with an attempt to invoke its
protection.
[50]
For all of these reasons the following order is made:
1. The appeal is upheld
with costs.
2. The order of the
Labour Court is substituted as follows.
‘
The application is
dismissed with costs.’
_____________________
Davis
JA
COPPIN
and KATHREE-SETILOANE JJA concurred
Appearances:
FOR
THE APPELLANT:

Adv p Kennedy SC
Instructed
by Roksam Savage Attorneys
FOR
THE RESPONDENTS

Adv HVR Woudstra SC
Instructed
by Maphalla Mokate Conradie Attorneys