Durban - Ithala Development Finance Corporation chief executive Sipho Shabalala has been suspended following reports of a criminal investigation against him.
The board has decided to suspend Shabalala on a precautionary basis pending the developments of the proposed criminal nvestigations,” KwaZulu-Natal economic development MEC Mike Mabuyakhulu told a press briefing in Durban on Friday.
Shabalala's assets including the City Royal Hotel in Pietermaritzburg, his Othandweni farm, Range Rover and Mercedes-Benz were seized during a R200m tender fraud crackdown by the Hawks and the Asset Forfeiture Unit on Wednesday.
Eight people were arrested during the raids, but Shabalala was not.
Mabuyakhulu said Ithala's board and the provincial government were concerned about the effects the allegations might have on the financial services and property development company, which is owned by the KwaZulu-Natal government.
Acting board chairperson Nomcebo Zondi was appointed Ithala chief executive. The acting chief executive would be appointed no later
next Wednesday.
Mabuyakhulu said the board would set up a task team to monitor the investigation, and that it would advise the board in three months.
Shabalala was head of the KwaZulu-Natal treasury when the R200m tender fraud in the provincial health department allegedly took place.
Three people were arrested in KwaZulu-Natal and five in Cape Town during the raids on Wednesday. They included former KwaZulu-Natal health department head Dr Busi Nyembezi, the department's former procurement officer Mdu Ntshangase and the provincial legislature's current chief financial officer Sipho Buthelezi.
The crimes relate to alleged attempts to defraud the provincial health department by inflating the prices of water purification
equipment for hospitals. One purification plant valued at R420 000 was allegedly sold to the department for R4m.
The eight face fraud, corruption and money laundering charges and charges under the Public Finance Management Act.
Mabuyakhulu said suspending Shabalala did not mean he was guilty.
Shabalala was recently given a warning from Mabuyakhulu after a task team earlier this year found he had awarded a multi-million-rand tender to Bombe Chithey Consulting Projects without following proper procedures.