Durban - A confidential report has revealed how R36.1 million was flushed down the drain after two senior officials at eThekwini Municipality allegedly authorised prepayment to four companies that failed to supply toilet facilities to impoverished communities.
According to the report by the city’s Integrity and Investigative Unit (CIIU), 2 200 Urine-Diversion (UD) toilets were to be supplied to communities and schools in 31 rural and semi-urban municipal wards, including KwaXimba, Cato Ridge and KwaNyuswa.
The expected start date of the project was December.
However, the report, which was seen by the Sunday Tribune, revealed no toilets had been built. It also delved into other procurement flaws.
But the implicated companies, Magubane Plant and Contractors, Uhlanga Trading Enterprise, Soundrite Sound and Temblos SA collectively refuted the allegations.
Three companies each received a share of R2.5m, while Temblos SA, which later became a part of the deal, after signing a cession agreement, pocketed R28.3m.
Payment was made in December before work was done, the report read.
The companies agreed to supply each toilet at R18 300.
However, according to the report, investigators established that the price charged for the toilets had nearly doubled. UD toilets charged R9 300 in August 2016.
The investigation was prompted after the city received an anonymous call in December.
The report slammed Vusumuzi Mkhwanazi, senior manager of special programmes in the water and sanitation unit, and Sibusiso Vilane, deputy head of sanitation and operations, for using existing panel service providers instead of opening up the bid process.
The CIIU recommended:
That Mkhwanazi, and Vilane be subjected to disciplinary proceedings for incurring irregular expenditure of R36m and for contravening Section 78 of the Municipal Financial Management Act, Section 171(3) of the MFMA and schedule 2 of the Municipal Systems Act.
That the head of Water and Sanitation bring an application to the Blacklisting Committee for the blacklisting of Magubane Plant and Contractors, Uhlanga Trading Enterprise and Soundrite Sound on the grounds of having committed irregular practice.
That the CIIU registered a case of fraud and uttering with SAPS.
That the head of expenditure review the adequacy of processes regarding the processing of invoice payments.
The Bid Adjudication Committee (BAC) and Executive Acquisition Committee (EAC) supported the appointment of these companies, according to the report.
However, the report indicated that investigators received no explanation from the BAC and EAC on how the four service providers were selected.
The investigators believed procurement procedures were flouted when the contract was awarded.
In the report, Mkhwanazi said the reason the toilets were not delivered was because ward councillors were on leave at the time, and sites for building toilets could not be established.
Vilane told investigators he was aware of the legislative requirements that needed to be met before approving payments. However, in certain instances, he and his department came under political pressure to deliver on certain projects prior to complying with the legislation, it read.
The city’s principal clerk in its accounts payable department captured the payments to three suppliers, and a senior clerk approved payment before they had completed the required work.
Payments were processed after city manager Sipho Nzuza had signed the company’s appointment letters in December.
The report was equally scathing about the city’s finance department for relying solely on information from Mkhwanazi.
Representatives from the four affected companies, who asked not to be named, said in an interview that they had done nothing wrong.
They confirmed they received payment as indicated in the report but it was a prepayment for site establishment costs, which was standard practice.
The representatives collectively challenged municipal officials to visit their respective sites “because work is continuing on the ground”.
eThekwini head of communications Tozi Mthethwa, said: “The city manager Sipho Nzuza will study the report and implement its recommendations.”