DURBAN ETHEKWINI CITY MANAGER, DR MIKE SUTCLIFFE PICTURE: KHAYA NGWENYA

Former eThekwini municipal manager Michael Sutcliffe will be reported to the police and the council will take steps to recover from him R1.1 million that the city lost, it announced yesterday.

Other high-ranking city officials implicated in the damning report compiled by forensic auditors Manase and Associates will be charged with misconduct and could be suspended pending the outcome of investigations.

The council’s recommendations come after a summary of the report was released last month following a lengthy probe into allegations of fraud, corruption and maladministration at eThekwini, instituted by Co-operative Governance MEC Nomusa Dube.

City manager Sibusiso Sithole said Sutcliffe would be reported to the police for failing to report fraud and corruption in the municipality to law enforcement agencies and for not taking “reasonable” steps to prevent irregular expenditure.

Mayor James Nxumalo said if Sutcliffe had been aware of certain fraudulent and corrupt activities which resulted in irregular expenditure, he should have reported the matter to the mayor, the auditor-general and the co-operative governance MEC.

However, Sutcliffe only reported the activities two years after the events.

“Since the municipal manager (Sutcliffe) did not report the matter timeously, the city lost R1.1m,” he said.

The full 700-page report has not been released and the names of the companies and individuals implicated in the fraud have not been disclosed.

Nxumalo would not say when the full report would be released, but said officials implicated would be given copies first so they could respond to the allegations.

“It must not be seen that we do not want to release the report, but it must be clear that nobody has been found guilty. We want to respect the rights of the individuals implicated in the report before we release it,” he said.

The Manase investigation zoomed in on contracts where irregular expenditure was incurred. These included:

l The Burbreeze Housing Project, where costs escalated to R57m from R18m, the contractor appointed was not registered with the National Home Builders Registration Council, and poor workmanship was identified on the project.

l The Hammond’s Farm development, where the cost escalated from an estimated R68m to R351m, and poor workmanship was identified, resulting in 22 units being demolished.

l The Westrich housing rehabilitation programme, where three contracts worth about R25m were awarded under Section 36, although no explanation was given for the use of Section 36, and the contractors were given appointment letters before they submitted tender documents and other forms.

Nxumalo said the officials implicated in the report for the Burbreeze, Hammond’s Farm and Westrich projects included housing head Cogi Pather. They would be charged with misconduct.

“Legal opinion will be obtained on how to deal with the contractors still on site, including, but not limited to, suspension of the contracts,” Nxumalo said.

Sithole would investigate more contracts that were awarded after the commencement of the Manase investigation.

The Manase probe also revealed that the municipality’s handling of the controversial Revenue Management System was flawed for not adhering to supply chain management processes.The cost had ballooned from an estimated R90m to R150m at inception in 2003, to its current R474m.

Nxumalo said the matter should be investigated by a body with powers to subpoena, and Sithole should investigate what could be salvaged from the project. He would also investigate the maintenance contract for which advance payments were made.

The report also recommended that disciplinary action be taken against:

l Geographic information and policy unit head Jacquie Subban, for irregularly awarding two contracts and for negligence which resulted in a service provider being paid R2.6m twice.

l City treasurer Krish Kumar, for failing to take reasonable steps to prevent irregular expenditure.

l Deputy city manager of infrastructure Derek Naidoo, for failure to comply with supply chain management policies and failure to exercise due care and diligence in dealing with matters before the bid adjudication committee.

Premier Zweli Mkhize would also be asked to set up a commission of inquiry into allegations identified in the report.

The Manase investigators also found that former mayor Obed Mlaba had irregularly and unlawfully influenced the awarding of a multibillion-rand landfill tender, but Nxumalo said this matter would be referred to Speaker Logie Naidoo.

“The contract was not awarded, so the process will start afresh. The council has no jurisdiction over the former mayor… Mlaba has written to us, requesting an opportunity to engage with us. Therefore by meeting with the Speaker he will be given that opportunity,” Nxumalo said.

The report also found that 30 trainee metro police constables had bought their driving licences after heeding the advice of metro police college instructors, who had directed them to illegal driving schools.

Also, 14 metro officers were taxi owners, in contravention of metro police policies and national legislation.

Sithole would review the employment of the constables implicated.

Naidoo said he was “surprised” that misconduct charges would be brought against officials implicated.

“I have not seen any report, (although) the council and the media have been privy to the report… I will be happy to follow due process and co-operate, like I co-operated with the Manase investigators,” he said.

Sithole said that an independent investigator would be appointed to discipline senior managers implicated and report to the council within 30 days on charges they could face.

He could suspend the officials “as a precautionary measure” if he believed the investigation would be compromised.

Numerous attempts to reach Pather, Subban, Sutcliffe and Kumar for comment were unsuccessful.

However, Sutcliffe previously told The Mercury that he had discussed the report with Dube and had had valid explanations for his actions.

Sutcliffe told Dube the investigation was “clearly targeting certain individuals and warned her against opening up a Pandora's box”.