Focus on ‘irregular’ spending on eThekwini’s revenue management system, Mpac recommends criminal charges

The Durban City Hall building. Spending on a revenue management system has come under scrutiny. File Picture: eThekwini Municipality.

The Durban City Hall building. Spending on a revenue management system has come under scrutiny. File Picture: eThekwini Municipality.

Published Aug 7, 2023


Durban - The Municipal Public Accounts Committee (Mpac) in the eThekwini Municipality has recommended that criminal charges be laid against officials who were involved in any wrongdoing relating to the procurement of the controversial billing system, the Revenue Management System (RMS).

This is according to Mpac chairperson Thami Xuma, who said that of particular concern to the committee was R220 million spent on the system, allegedly by city officials, without a contract being in place.

According to minutes of an Mpac meeting recently, that was seen by The Mercury, the issues with the spending on the RMS had prompted investigations by the City Integrity and Investigations Unit (CIIU), by the internal audit unit and a private IT company.

In addition, a fourth independent company was hired to do an overall investigation into the matter, including looking at what the three other investigations had found.

This came about after the auditor-general identified fruitless and wasteful expenditure in respect of spending on the system.

The minutes document, which outlines a presentation made on the CIIU investigation, alleges that between 2004 and 2008, there was no contract between the City and the software company involved in the process.

It further alleges that City officials had misled or intended to mislead the council in 2006 when they tried to regularise the appointment of the company, stating that it had been previously contracted to another municipal-linked entity. However, this was not the case.

It names former city manager Mike Sutcliffe as well as former chief financial officer Krish Kumar and two other officials as among those who had allegedly “misled or intended to mislead the council” in a letter in 2006.

The other officials, whose names are known to The Mercury, have not been named as they could not be reached for comment.

“The contract was signed (only) in 2008 on behalf of the City, and the officials claimed that the signing of the contract was a replacement of an oral agreement that was concluded in April 2004,” read the report.

This week, Sutcliffe and Kumar questioned the timing of the emergence of this report, and rubbished claims of wrongdoing, saying the allegations in the report were tantamount to a smear campaign.

Xuma said that a recommendation for criminal charges had been made in the CIIU reports that investigated the matter, and would be directed to the officials who were part of the programme at its inception, those that authorised the payments and those that paid.

“The investigations by the CIIU had recommended that criminal charges be opened against people involved in these payments that have now been deemed irregular. These payments went on for a year or more, and the total value amounted to R220m between 2004 and 2008.

“The officials claimed that there was a verbal agreement with the companies concerned. There is no such a thing if a contract is in place, it means the contract is in place. What we are now waiting for as a committee is a progress report from the CIIU as to the opening of the criminal cases,” said Xuma.

Sutcliffe rubbished the claims of the report, pointing out that as then city manager he did not handle contracts.

“As a city manager, do you think I sat there and handled contracts? I took reports to council after six or seven people had signed them.”

He added that he found the report offensive in that it could mention people by name and not give them the courtesy of clarifying with them the claims made.

He added that the report also had the facts of the matter wrong, adding that he would be speaking to the city manager about the issue.

He said it would be improper to respond to such baseless accusations as they apparently intended to smear his name.

Kumar said that while it was difficult to comment on a matter that occurred 20 years ago and years after he retired from the City, he was at ease with the procurement process around the RMS system. He said every legal requirement was followed and there were no allegations of wrongdoing against him.

He said that at the time the City was dealing with this procurement process, financial instruments like the Municipal Finance Management Act and supply chain processes were being developed, “but any decision on this matter would have been approved by the executive committee and then by the council”.

ActionSA councillor Alan Beesley said: “We are in full support of criminal charges being laid against any municipal official who has acted criminally in the RMS debacle. Individuals who have acted criminally must not be protected due to their seniority (past or present), or due to their political affiliation,” said Beesley.

The Mercury has reported recently that the controversial billing system, which was installed at a cost of more than R1 billion, is facing the chop as it is not compatible with some of the “financial control tools” that are to be implemented by the City.

RMS, which was implemented in 2016, was a source of endless problems for ratepayers who complained of inflated bills.