Durban - Zululand District Municipality has demanded that Absa pay back R15 million it claims the bank defrauded it out of, allegedly in collusion with a municipal official.
The municipality wrote to the bank’s top regional official demanding the money be paid back, threatening court action if this is not done.
In a letter of demand – seen by the Daily News – addressed to Keketso Motsoene, the regional head of the bank on Friday, the municipality said it conducted a forensic investigation to establish whether allegations regarding the inflation of claims and submission of fraudulent claims for vehicle repairs under the existing agreement between the municipality and Absa Vehicle Management Solutions (AVMS) were founded.
“In terms of the above described contractual agreement, all maintenance and service repairs are managed by AVMS. The municipality commissioned this investigation following several exorbitant payments identified by the finance department on its monthly statements and vehicles breaking down shortly after repairs were claimed to have been carried out,” read the letter.
It further said AVMS paid for panel-beating repairs to accident-damaged vehicles whereas such repairs were supposed to have been done by the municipality’s insurance. The letter added that there was evidence of inflated and fraudulent repair claims on the municipality vehicles and AVMS failed to detect inflated quotations and invoices.
The municipality even claimed that the AVMS contract was invalid since it had discovered that its appointment did not comply with section 217 of the Constitution and relevant regulations.
“Therefore the municipality demands the entire R15 525 238.02 it has to date paid to the AVMS,” concludes the letter.
The municipality further warned Absa that it reserves the right to institute civil and criminal proceedings in this matter. Mayor Thulasizwe Buthelezi confirmed that the municipality was demanding R15m which he said was paid to the bank fraudulently. He said the bank was allegedly working with some officials in the fleet management department, adding the council took a resolution to implement the findings and recommendations of the forensic report it had conducted.
The mayor said the council resolved to lay criminal charges with police and take disciplinary action against the officials involved.
“It must also lay fraud and theft charges and further implement legal proceedings against Absa to recover the amount of R15m which was debited from the municipality.”
Absa spokesperson Khulani Qoma confirmed that the bank recently received a report from Zululand District Municipality alleging among other things that Absa enabled certain irregular activities to occur in respect of a contractual arrangement between the bank and the municipality. He said the bank took allegations of this nature extremely seriously, and has initiated a forensic investigation into the matter.
“We have alerted the municipality about our internal investigation. Once the investigation is complete, we will …address the outcomes with Zululand District Municipality, and through our internal processes,” said Qoma.