Report: Mellon Trust ‘may deprive locals of work’

By Catherine Shanahan

Saturday, February 06, 2010

A REPORT by Government officials into the work of the Niall Mellon Township Trust (NMTT) raised concerns that the house-building charity may be depriving local contractors of work in South Africa.

The trust, feted as the largest charity provider of low-cost housing in South Africa, was also criticised for "limited progress" in developing a "specific and sustainable" housing model that could be replicated using South African government subsidies.

The report by Irish Aid, the overseas development arm of the Department of Foreign Affairs, flagged a number of other concerns including:

- A "potential conflict of interest" identified by local government officials because of NMTT’s dual role of private supplier of houses and supporter of community development among its beneficiaries.

- The collapse of a timber frame housing factory initiative at a cost of €1 million due to the lack of available serviced sites to meet the envisaged output.

- A threat to the viability of the entire NMTT operation because of a €9 million payment outstanding from the Gauteng government.

- Concerns raised by local government officials that there was insufficient joint planning particularly of the NMTT Irish volunteer blitz projects "especially in discussing site allocation and land availability".

- Little or no gender analysis "whereby NMTT is contributing to, rather than challenging gender stereotyping". For example trainees in construction skills are all male.

- No strategy to target unemployed youth in communities where housing construction takes place.

Irish Aid criticised NMTT for responding "largely to government requirements for tender and construction purposes" rather than promoting a specific NMTT housing model, the premise upon which Irish Aid granted €5m funding. It also said there was concern local contractors and South African construction companies were being "crowded out" by the Irish charity.

Irish Aid concluded NMTT would not require future assistance from the Irish Government towards its house-building because it "has the potential to be self-financing as it has secured several South African government contracts".

However, NMTT rejected this, arguing that its preferred model could not be built within the current government subsidy and that the subsidy did not allow for the development of communal facilities or true community building programmes.

NMTT rejected Irish Aid’s concern that it was "crowding out" local contractors, arguing that it provided them with "an opportunity to formalise their experience and skills in recognised qualifications" which "underpins the fact that we are promoting that more sub-contractors enter the market competitively".

In relation to a potential conflict of interest, NMTT said it saw itself as a facilitator/provider of community house building rather than a private supplier/supporter of community development. It said NMTT believed it offered the best model of community house building, and this belief had been endorsed by the South African government by appointing NMTT the first Community Resource Organisation.

In relation to the €9m outstanding debt, NMTT said: "The trust was owed €9m in housing subsidies by the department of housing in Johannesburg. We have received significant payments from the department of housing in Gauteng last year and it is no longer an issue."

NMTT also said:

- Its strategic planning process was under way and "consultation with various government departments and other stakeholders form a part".

- It had submitted a full report on the collapse of the timber factory to Irish Aid.

- Skills development was "one of the key elements of the Mellon Housing Initiative community development model" and its housing project had worked to improve the rights and position of women in townships, including providing a constant supply of clean water, relieving women of the burden of fetching and carrying.

The report by Irish Aid, obtained by the Irish Examiner following a Freedom of Information request, followed a monitoring visit by three of its officials last May – Fionnuala Gilsenan (director of civil society section), Frank Flood (volunteering unit) and Sherry McLean (civil society fund South Africa consultant).

The relationship between Irish Aid and the NMTT subsequently deteriorated towards the end of last year when Irish Aid accused the charity of failing to supply detailed financial accounts of how it had spent the €5m in aid donated by the Irish Government.

Documents seen by the Irish Examiner show repeated requests from Irish Aid to NMTT in the latter half of last year to supply the "financial report and narrative" on the €5m funding. NMTT supplied a project evaluation report in September, but this did not satisfy Irish Aid’s financial reporting requirements.

A spokesperson for Irish Aid said yesterday that following a meeting in December, Irish Aid examined the financial reports in consultation with the trust, and is "satisfied that all funding is accounted for".

She also confirmed the trust has submitted an application for further funding. But documents obtained by the Irish Examiner show NMTT missed the 2009 October 1 deadline to apply. The Irish Aid spokesperson declined to say whether it will continue to contribute towards NMTT house building.

Meanwhile, a statement from NMTT said Irish Aid had reviewed the financial reports "and as everyone expected all the €5 million was properly accounted for". It said NMTT’s audited financial accounts are available online at www.nmtownshiptrust.com. The statement also said an application for further funding was made in 2009 "and is being processed in the normal way".

"We are appreciative of the support we are getting from Irish Aid and look forward to working with them in the future," the statement said.

It pointed out that the provincial and municipal governments "have demonstrated their long-standing support for our work in 2009 by awarding the charity with the Capetown Mayor’s Medal at a full sitting of council members in 2009". The charity was also selected as winner of the Govan Mbeki Award as Gauteng’s Subsidised Builder of the Year 2009.

The charity has built 13,500 houses since 2002, with more than 10,000 volunteers working on its projects.

Niall Mellon was recently selected as the recipient of the 2010 Meteor Humanitarian Award which comes with a cheque for €100,000 for the Trust. It also emerged that Niall Mellon has never taken a salary for his role as chief executive of the trust in the eight years since he founded it.

This story appeared in the printed version of the Irish Examiner Saturday, February 06, 2010