This story is the last in a three part series by Star senior journalist Baldwin Ndaba investigating graft, tender-rigging and mismanagement of ratepayers’ money running into millions of rand in the Dr Ruth Segomotsi Mompati District Municipality in Vryburg.
North West - The Dr Ruth Segomotsi Mompati District Municipality has written off debt of more than R200 000 owed to it by the Development Bank of South Africa.
The bank owed the municipality R234 210.53.
The reason was the DBSA debt was more than five years old and details about the debt could not be found.
The same reasons were given for the R58 361.40 owed by the North West provincial government’s revenue account.
This was the memorandum submitted to the full council meeting on August 27, in which municipal manager Zebo Tshetlho asked the municipality to write off debts of R774 890.95.
Other debts include those of the local government Seta of R441 500; bursaries recovered outstanding R17 075.48; F Mutamba incorrect payment amounting to R18 168; Molopo Local Municipality R437 and Kelaotswe LV, remuneration overpaid R5 138.54.
Tshetlho’s request came after the municipality had agreed to write off debt of R20 million in June.
Detailing his latest request, Tshetlho said: “During the audit of 2013/14, it was confirmed that there was no evidence to confirm these debtors by the organisations and individuals that owe the municipality. This debtors list is one of the disclaimer items which were raised by the auditor-general in his report 2012/13 and of 2013/14.
“Reasonable steps have been taken to get confirmation and the necessary recovery initiatives have been done but the efforts did not bear any fruit,” Tshetlho said.
Lack of supporting information on the debts had contributed to a qualification finding on debtors during 2012/13 and disclaimer last year.
“Keeping these accounts in the municipality’s statement of financial position will contribute to a further negative outcome on the debtors of the municipality during the 2014/15 financial year.”
The auditor-general has found that there were no proper financial systems in place at the municipality and, therefore, fraud and other financial misconduct was likely to take place.
But insiders told The Star that writing off the debt was aimed at covering the debt of politically connected individuals who owed the council millions, over shoddy construction work.
The insiders said the council was reneging on a recommendation by a forensic report to recover more than R8m from Khotso Khasu, owner of Khasu Engineering.
Khasu’s firm was appointed as a consulting engineer and had been responsible for the appointment of two companies to implement sewer network infrastructure in Christiana.
The companies failed to do the job properly and the council lost millions.
It was later discovered that Khasu was the sole director of the company, which had no qualified engineers in its employ.
When this came to light, it was recommended that the council recover R8m from the company.
But sources said no recovery measures were taken and instead the council had been asked to write off some of Khasu Engineering’s debts.
Most of the debt belonged to contractors doing business with the municipality, including firms belonging to Wandile Bozwana, who was killed in a drive-by shooting recently.
Tshetlho dismissed the claims: “The municipality’s credit policy does allow for writing off of debts beyond a certain period of time, which the municipality is unable to recover.
“There is, however, no debt belonging to the companies mentioned or individuals that have been written off.
“Instead, the municipality is suing Khasu Engineering for shoddy work on a certain project emanating from the outcome of the Gobodo investigations,” Tshetlho said.
Municipal boss’ lease cover up
Zebo Tshetlho, the municipal manager of the Dr Ruth Segomotsi Mompati District Municipality in Vryburg, North West, has personally authorised a R10 million deal to lease a private building to be used by the municipality.
The Star reveals that Tshetlho was not authorised by any piece of government legislation or the supply chain management policy to sign that multimillion-rand lease while council has its own existing building.
The Star further reveals that he flagrantly ignored government regulations allowing him to put out a tender and asking service providers to supply accommodation.
Instead, The Star has seen a copy of a lease contract between Tshetlho and Markok Investment, which is owned by Haroon Ghoor.
The lease agreement was signed on February 26 this year and is twofold. First, acceptance of a three-month lease from March 1 to May 31, and second, an option to renew for a minimum of three years.
On page 2 of the deed of lease, Tshetlho was given an option to sign the extension for a minimum of three years on May 1, but he chose to do everything on February 26.
He therefore committed the municipality to a three-year deal costing more than R10m.
Tshetlho failed to disclose to the council that he had signed the lease, and used a staff newsletter to cover his tracks. In his first bid, he told the staff that the emergency evacuation from the government building was due to a fire that broke out there, raising a new concern about their safety and property.
He also told them the lease agreement was a temporary measure for three months after consulting with the Auditor-General’s office.
He said in the newsletter: “An advert for a longer lease term of three years was subsequently placed in the newspapers in terms of the normal procurement process of the municipality. It is expected that this matter will be finalised by the end of May 2015.”
Investigations by The Star showed Tshetlho acted with determination to relocate the municipality to a business owned by a private individual.
He signed the extended three-year lease in February and wasted municipal funds by placing an advert in March, asking for property owners to provide the municipality with office accommodation. Last year, the same municipality commissioned a structural and engineering report by LRX Consult into water leaks and cracks. The report found that the old building was in a position to be refurbished.
AP le Roux, LRX’s principal engineer, said: “The overall maintenance of the building is in a bad state. “In particular, the waterproofing of the courtyard needs urgent attention.”
Le Roux, however, concluded that the “cracks in the walls are few and spaced far apart and are not an indication of any structural instability”.
Despite Le Roux’s report, Tshetlho then obtained another one from Kimberley engineer Thabo Mathibeli, who found that the level of cracking in the building indicated “serious structural hazards that could jeopardise the occupants”.
Mathibeli said it would cost the municipality R17m to fix the building. He advised the district council to sell.
According to the evaluation, the building was worth R6.6m.
Tshetlho wanted that amount to be used to buy another building.
However, various senior officials and other people to whom The Star spoke said Tshetlho was covering up his decision to sign the three-year lease contract.
The sources also revealed that senior municipal fireman Wesley Majola went to report the fire to the police only on July 7 – exactly five months after the fire happened.
The sources said Majola had to make the report on July 7 because Tshetlho was due to present his motivation to a full council meeting on July 10.
In his motivation, he told the council that Markok Investment was properly appointed to provide office accommodation to the district council.
He claimed Markok Investment was the only company to bid for the tender.
Despite failing to produce evidence that the Auditor-General had granted him permission to sign the lease, Tshetlho said his “gut feeling” told him he had obtained permission.
When asked about the irregularities, Tshetlho maintained that all supply chain measures were followed and Markok was the only company that submitted its bid.
Officials in the council said “illegal operations” like those were normal in the district municipality despite the Municipal Finance Management Act (MFMA) warning against it. Under the MFMA, any official, including Tshetlho, should be summoned before a disciplinary committee and charges of misconduct brought against him.
However, his illegal signing of the lease was never the subject of an investigation, and his juniors believe councillors should be blamed for it.
Businessman alerted the Hawks
Veteran freedom fighter and former businessman Nick Mothusi is on a mission to deal with “corrupt and fraudulent” councillors and senior officials of the Dr Ruth Segomotsi Mompati District Municipality.
Mothusi’s mission gained momentum in June after he discovered his district municipality had failed to provide the attorney-general’s (AG) office in North West with proof of how it had spent its budget, including the safeguarding of its assets to the value of billions of rand.
In an exclusive interview, Mothusi told The Star that it was the AG’s report that stated that millions of rand were given to contractors without following tender procedures that prompted him to open a criminal case with the Hawks.
The case was opened in June.
“I read our auditor-general’s 2013/14 report. I came to the conclusion that the payments made to these companies and contractors were fictitious, especially the rehabili- tation of Dr Nelson Mandela Drive in Huhudi township in Vryburg. In documents before the council, it was reported that a Limpopo contractor was awarded the tender to do the job for R9m but the AG found that the figure was actually R23m,” Mothusi said.
The AG also found “various other fictitious transactions”, he added.
“In one of them, a contractor was given a R1.8m contract just to do road marking on a 300m road. The AG said there was no document to prove that there was an evaluation of the contract. It became clear to me that there was possible collusion between senior officials, possibly councillors with these contractors,” Mothusi said.
Due to his discoveries, Mothusi compiled a dossier he named: Ko Go Mma Pereko – (A place where everybody does as they please – A free for all municipality).
In this dossier, he listed more than 30 questionable contracts and he used it to open a case with the Hawks.
Other companies named in the alleged fraudulent contracts include Tsoga Developers, owned by Wandile Bozwana, a bitter rival of North West Premier Supra Mahumapelo, and a Kimberley company, Izwelethu Cemforce.
The country’s intellectual data for companies says IzwelethuCemforce is 100 percent white-owned, while in the district council’s register it has a BEE component. IzwelethuCemforce is owned by Lodewickus Diederichs.
IzwelethuCemforce was given more than R250m since 2011 to build pit latrines in all the villages falling within the Dr Ruth Segomotsi Mompati District Municipality.
In most instances, according to the AG’s report, the Municipality Infrastructure Grants from national government were used to pay Cemforce. “Is it fair to give one company a contract of more than R250m to build prefab pit latrine toilets? They manufacture the precast and then dig the pits. It is also the same (company) that constructs the toilet. There was clear collusion. This can be seen through an ordinary person’s naked eye,” he insisted.
Mothusi has also listed a number of other companies which were given contracts to do bulk water-supply to the villages.
“The common trend is that legal measures were not followed to grant these contractors business,” Mothusi said.
He said he gave his dossier to Mahumapelo and North West chairman of the standing committee on public accounts Mahlakeng Mahlakeng for their investigation.
The Hawks were given a list of alleged fraudulent deals. Mothusi said he would not rest until an investigation was conducted to prove his allegations.
Radio station was started with municipal funds
Elvis Tladinyane – the executive mayor of Dr Ruth Segomotsi Mompati District Municipality – owns a radio station that was set up using municipal funds.
The auditor-general found that the district municipality paid R243 000 to Bophirima FM but the documents regarding that transaction could not be found.
He has failed to disclose it in the declaration of interest of municipal councillors and officials.
The Star can confirm that the only declaration Tladinyane made in the disclosures of financial interests was the 30 percent share in Tauteng Agric Co-operative and 6 percent shares in Balibo (Pty) Ltd.
He also declared he was a member of the interim board of the Ruth Mompati Foundation.
Tladinyane, according to the deed of trust of Mmetla-Kgola Media Dynamic Trust, which was seen by The Star, is one of the income and capital beneficiaries of the trust. The other beneficiaries are Kagiso Eugene Mekgwe and Gift Monei Mahene.
Mekgwe is also listed in the deed of trust as a founder while the trustees are Disang Abraham Sennanye, Gobusaone Octavious Makodi and Motoloki David Modise.
Mekgwe and the trustees are responsible for the operational activities of Bophirima Regional Community Radio.
Tladinyane has denied his shareholding, saying he only helped set up the radio station.
He said he was approached in his capacity as mayor.
The municipal manager Zebo Tshetlho onfirmed his version, saying Tladinyane “was involved in this project as a community leader to support the registration and processes of the station and not as a shareholder”.
“Bophirima FM, which is a registered trust, is a community radio station supported from inception by the district municipality itself. We are not aware of any shareholding herein by the mayor,” Tshetlho said.
In March, Tshetlho, as municipal manager, gave the radio station R550 000.
This memorandum of understanding was written such that the municipality was making its first contribution towards the radio station.
According to the preamble, the district council stated that in terms of its constitutional mandate, it initiated a local economic development grant to provide financial and technical support to the radio station.
In its agreement, the council was to pay R550 000 to the radio station for it to buy equipment and pay Sentech fees.
Bophirima FM wanted equipment worth R340 596.50 and Sentech fees were R42 280.32, including VAT.
This was for installation costs, Telkom Diginet installation, planning fees in Christiana and similar installations in Pomfret.
The council paid an initial amount of R250 000 into the station’s bank account on March 15.
While payments to Bophirima were made this year, the auditor-general’s office in North West found that district councillors and officials had interests in contracts awarded by the municipality.
The auditor-general’s office found that in its 2013 and 2014 audit report tabled in November last year, close family members of 10 officials and councillors have an interest in awards amounting to R487 334.96.
“Ten of these officials and/or councillors did not declare their interest and none of them was involved in the procurement process for the award; 100 percent of the awards to close family members, amounting to R487 334.96, were not disclosed in the financial statements,” the auditor-general found.
The auditor-general further found that four service providers in which family members had an interest did not submit their declaration of interest and two providers submitted the declaration, but didn’t declare the interest.
‘I earn R1.3m and can afford luxuries’
Elvis Tladinyane has dismissed allegations that contractors doing business with the municipality are financing the “lavish lifestyles” of Dr Ruth Segomotsi District Municipality officials.
Tladinyane, the municipality’s executive mayor, was reacting to allegations from several residents of Vryburg and council officials that councillors and senior officials of the municipality were allegedly bribed with houses and top-of-the-range cars.
In the village of Morokweng in the district of Vryburg where Tladinyane lives, local residents are calling his plum home “little Nkandla”.
The house is one of the few modern houses in the area and is surrounded by a number of old, dilapidated homes.
Other structures have completely collapsed, while some residents have to walk distances to fetch water.
Those who are lucky have boreholes in their yards.
They relieve themselves in their self-built pit latrines.
The mayor, however, has a flush toilet.
Council officials who did not want to be named for fear of reprisals told The Star that Tladinyane’s house was part of a big package from contractors.
They also made similar allegations against other councillors and senior officials who were reportedly flaunting their wealth by going to work driving expensive vehicles.
“Every time a big tender is issued, we would see these officials coming to work in new cars,” one of the sources said. This was the common view held by various residents including council officials.
But Tladinyane has denied all these allegations, saying he took out a bond for the house which he built on his own.
Tladinyane said his wife was assisting him towards the expenses they incurred while building the house.
“I am also a farmer.
“If I make any profit from the sale of my cattle, I use that money to pay towards my house expenses. I do not drive a top-of-the-range (vehicle).
“I only own a 320 BMW and a Toyota Hilux.
“Maybe those people are talking about the council vehicle. I do not own it,” he said.
He confirmed that he had another house in the Vryburg CBD.
Municipal manager Zebo Tshetlho has also dismissed the claims.
“I have never obtained any personal benefit from companies.
“I do not know of anyone who has benefited from these companies, but it would surely be interesting and warrant criminal investigation if there is any such person,” Tshetlho said.
He said he was earning a competitive salary of R1.3 million, “which makes me to afford several luxuries, but this is not a secret”.
“I am also involved in various businesses that are completely unrelated to the municipality, and these have been fully declared to the council,” Tshetlho said.
The Star