The city has admitted that a R6 million contract it awarded to a Johannesburg-based consultant to set up a multimillion-rand "African Jewellery City" was never put out to tender.
This is in contravention of the Municipal Finance Management Act, which states that municipalities must use a competitive bidding or tender process when appointing consultants for contracts worth more than R200 000.
The act came into effect in July - the same month the city signed the contract with Thabo Mokwena Consulting (TMC), owned by former SA Local Government Association (Salga) chief executive Thabo Owen Mokwena.
Mokwena's company was awarded the contract five days after he made a presentation to senior city officials in his capacity as a paid adviser to the Department of Minerals and Energy.
But in June Mokwena's company had already invoiced the city for R2.5m of an amount of R4m the city has so far spent on the project. His fee, as project director, is R144 000 a month.