Durban - FORMER senior Msunduzi Municipality officials and a local businessman have been implicated in a R290 million tender fraud scandal in a damning forensic report into Pietermaritzburg’s dealings on major electricity infrastructure projects.
The 170-page forensic report probed several allegations involving the municipality’s spend of a total of R290m on emergency electricity projects. It found that work had allegedly been irregularly awarded, bypassing the supply chain management tender process. It said that the project had involved the Independent Development Trust (IDT) which had hired a private company to carry out the work.
The IDT is responsible for delivering social infrastructure and social development programme management services on behalf of government. The report recommended that criminal investigations be instituted against former municipal manager Mxolisi Nkosi, former mayor Chris Juba Ndlela, businessman Misizwe Zulu and others.
It is alleged that Ndlela and Nkosi violated provisions in the Municipal Finance Management Act in awarding the contract for emergency work without following the tender process. The report also found that after payment had been made, none of the listed projects had been completed and a sum of R82m, included in the total, had been paid without any invoices for work done.
At an emergency committee meeting conducted under section 36 (1) (a) (i) of the Municipality’s Supply Chain Management Policy on December 30, 2011 it was decided that the IDT would be engaged to undertake the work.
Nkosi, Ndlela and Zulu were present at the meeting and, according to the forensic report, Nkosi had also previously met Zulu. However, according to the report, evidence allegedly confirmed that the appointment of the IDT had already taken place before the meeting.
“A letter dated 29 December 2011 on the letterhead of the IDT and signed by Mr Zulu as a representative of TNT was addressed to Mr Ndlela and included the following This correspondence serves to confirm our discussion regarding the appointment of the IDT as implementing agent for various projects on behalf of the Msunduzi Municipality.”
The IDT then appointed TNT Energy Projects CC to undertake work in terms of its engagement with the municipality.
Said the report, “the allegation of the irregular appointment of Mr Misizwe Zulu, representing an entity known as TNT Energy Projects CC is substantiated”.
“Whilst TNT Energy Projects CC is not the enterprise that was appointed by the municipality, it was Mr Zulu who undertook negotiations with Mr Ndlela and Mr Nkosi, where such negotiations resulted in the appointment of the IDT. The IDT was thereafter used as a vehicle to channel funds to TNT Energy Projects CC, a corporation which was controlled by Mr Zulu.”
The report found that in appointing the IDT the municipality’s procurement procedures were bypassed, the projects did not constitute an emergency in terms of municipal policy and that the projects had not been completed. It said that the investigation revealed that Zulu formed part of a syndicate that allegedly defrauded the municipality of R82m, “whereby funds transferred to the IDT for infrastructure projects were channelled to the syndicate via TNT”.
According to the report, “large sums of cash were allegedly deposited in the bank accounts of Mr Nkosi and Mr Ndlela during the period when Mr Misizwe Zulu and the IDT were present at the municipality.”
“Due to the nature of cash transactions, we could not establish who received the cash after the withdrawals,” the report said.
However, it was alleged that a total of R1.5m in deposits was made into Ndlela’s account and a total of R1.6m was made into Nkosi’s bank accounts. Nkosi reportedly accounted for the cash by telling investigators that he had other sources of income but he did not provide documentary evidence at the time.
The report recommended that in accordance with the Prevention of Combating Corrupt Activities Act of 2004, a case of fraud and corruption should be lodged with the police against Nkosi and Ndlela to facilitate a criminal investigation into the source of cash deposits.
SA Revenue Service should also investigate TNT and the companies within its syndicate, it recommended.
The report said Nkosi told investigators he would challenge the findings as the investigation was based on political agendas, rather than allegations of fraud and corruption. Responding to the allegations of his involvement, Zulu denied any wrongdoing. He told The Mercury he had been employed by TNT which had no relationship with the municipality as it was contracted via the IDT. Nor had it ever handled municipal funds.
“This is a long ongoing matter where I have stated before that in a nutshell there was political interference in the project and these are the whole reasons why the projects could not be finished.”
He said the municipality had terminated the contract before work could be completed, and that TNT had to be liquidated after the municipality failed to pay invoices.
“All these years this thing has been rumoured. I have never seen the forensic report. I have always been available because I have nothing to hide. The forensic auditors have not called me once to say ‘what is your side of the story?’ But we are aware these firms are being used for political games.
“When they are trying to steal some money they just do a stupid forensic audit.”
Asked about the tender fraud allegations in the report and the recommendation to institute criminal charges, both Nkosi and Ndlela declined to comment.
“I will have to get the permission from my lawyer because I am not in the position to comment regarding that matter.” It was a long document, “so there are other things,” Ndlela said.
Nkosi said he had commented to forensic investigators but he had not seen the final report and could not comment further.
“If the council decides that (criminal charges should be filed) I will have to subject myself to the investigation and will have to repeat what I shared with the investigators,” Nkosi said.
A person listed as a member of TNT could not be reached for comment. The IDT had not responded to a request for comment at the time of publication.
KZN MEC for Co-operative Governance and Traditional Affairs Sipho Hlomuka said senior officials had been assigned to table reports before the Msunduzi and Ugu councils on investigations into allegations of fraud, corruption, maladministration and statutory non-compliance at these municipalities.
Msunduzi Municipality spokesperson Thobeka Mafumbatha said management and council were studying the report.
The Mercury