Auditor-General Kimi Makwetu has raised concerns about auditors being intimidated and threatened by government officials while performing their duties. Picture: GCIS
Johannesburg - The embattled Emfuleni Local Municipality in Gauteng, which has been placed under administration due to poor service delivery, must recover R60 million from a service provider which benefited from an irregular contract extension which it granted.

This is according to a leaked forensic report into allegations of wasteful expenditure at the municipality, which is among the poorest in the country, during the 2017/2018 financial year.

The report, compiled by forensic company Comperio Consulting and seen by Sunday Independent, shows that the money to be recouped from Mafoko Security includes R1.8 million in duplicate payments, overcharges for vehicles and increased monthly fees.

Emfuleni Municipality is one of the worst performing in the country. In his 2017-2018 municipal audit report, Auditor-General Kimi Makwetu revealed that Emfuleni's books were not audited following the shooting of one of the auditors in the leg.

Emfuleni, which has experienced massive service delivery challenges to a point it could not even pay utility bills and collect rubbish, was then placed under administration last year due to financial mismanagement and lack of service delivery.

At the time, Gauteng Premier David Makhura said the municipality was not able to guarantee the provision of a minimum standard of services to communities without intervention from the national or provincial government.

Despite its many challenges, the report showed that Mafoko scored a payment bonanza of over R165 million after its initial transversal contract was extended without following prescripts of the Municipal Finance Management Act (MFMA).

While the report does not specify what action should be taken against people who irregularly awarded the contract, it says the following officials must be held accountable:

Former municipal manager Sam Shabalala who signed a three-year contract despite being allowed to conclude a maximum two-year deal, resulting in R54 931 666.11 worth of irregular expenditure.

Acting municipal manager Oupa Nkoane who extended the contract during February 2018 without following due process, resulting in irregular expenditure totalling R38718937.77.

Former deputy municipal manager for public safety and community development John Mokoena, for instructing public safety manager Nnete Makhubo to enter into a contract with Mfoko, resulting in the conclusion of the three-year contract and irregular expenditure to the amount of R54 931 666.11.

Public safety manager Makhubo for not managing the contract in terms of the monthly fixed fee, resulting in an overcharge to the amount of R57435404.80.

According to the report, the municipality needs to recover the following amounts from Mafoko;

R57 435 404.80 in increased monthly fee

R911 500.00 for overcharged vehicles

R407 828.15 in overcharges

R349 162.53 in duplicate payments

The wasteful expenditure that ultimately led to the crippling of the municipality started on February 2, 2015, when the officials signed a 36 months agreement with Mafoko for the provision of security.

Emfuleni piggybacked on an existing contract between Mafoko Security and Sedibeng District Municipality, which was effective from April 15, 2014, to April 15, 2017.

The forensic firm found that when the Emfuleni contract ended in January 2018, the municipality had paid Mafoko R54.9 million. That was before the officials unlawfully extended it without following due processes, costing the municipality a further R38.8m.

The report was very scathing on the officials.

“Mr Sam Shabalala did not lawfully execute the policies of the municipal council. The municipality incurred irregular expenditure as the contract was transferred to a separate legal entity, which did not participate in the initial bidding process. He did not take all reasonable steps to ensure that full and proper records of the financial affairs of the Municipality are kept in accordance with the prescribed norms and standards,” reads part of the report.

It said Mokoena should account for forcing Makhubo to enter into the contract. Makhubo must be held responsible for not ensuring that reasonable steps were taken to ensure the financial management and internal controls established were carried out diligently.

“The irregular expenditure was incurred and due process was not followed in the extension of the contracts. The contract was extended beyond 15% of the contract value.”

Emfuleni spokesperson Lebo Mofokeng says the forensic investigation was triggered by the AG’s report which highlighted areas of weakness leading to the loss of R872 million in unauthorised, irregular, fruitless and wasteful expenditure.

The municipality has continued to be in the spotlight in recent years for deteriorating service delivery and alleged corruption.

In March, Shabalala and head of supply chain management, Jason Mkhwane, were suspended for an alleged cover-up of forensic reports and internal investigations, conducted over the past few years, which were meant to expose crippling corruption within the municipality’s procurement division and management.

Another official, Potso Mohojane, head of customer care in the revenue management agency, was also suspended in connection with corruption.

The DA’s Emfuleni constituency head, Kingsol Chabalala, has called on Makhura to intervene and hold those involved accountable.

“We also call on Makhura to open a criminal case for those implicated in the report and place Emfuleni under administration so that things can change,” he said.

Mofokeng, speaking on behalf of Emfuleni mayor Gift Moerane, says he has started acting on the matter after receiving final reports commissioned by former mayor Jacob Khawe.

“The final forensic audit reports by Comperio have now been submitted to the executive mayor and will be tabled as required by the legislative imperatives,” he said.

Sunday Independent