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How officials wasted more than R300m

2018-04-15 22:53

A forensic report reveals a litany of mismanagement and fraud in Thaba Chweu, including millions spent on services not rendered and RDP houses for friends – and nothing has been done to stop it

Corrupt officials in a Mpumalanga municipality have allegedly milked more than R300 million by stealing and selling its land, paying for services that weren’t delivered and paying to build at least one road that does not exist.

The looting of the Thaba Chweu Local Municipality has left it struggling to pay off its R400 million debt to Eskom, engulfed it in service delivery protests and resulted in disclaimer audit opinions from the Auditor-General for the past eight years.

The municipality’s head office is in Mashishing (formerly Lydenburg).

A section of the forensic report relating to the waste indicates that the municipality lost R201.2 million – which cannot be recovered.

However, it can still try to recoup R84.4 million in fruitless expenditure.

The municipal council has declined to release the full forensic report, compiled by Audit and Risk Management Solutions, which covers five financial years, to the public and opposition parties.

The Economic Freedom Fighters (EFF) in the town claims this is intended to protect implicated ANC politicians.

The municipality has only released the implementation plan contained in the report.

Thaba Chweu municipal manager Patrick Kgoale insisted this week that the forensic audit report would be kept confidential. He accused councillors of ignoring warnings not to release it.

“I guess some opposition councillors are trying to use this report for political gain. The implementation plan was released as this forensic report was dealt with as a confidential item and council judiciously resolved that the [municipal manager] must treat such report as confidential while the implicated officials were consulted,” said Kgoale.

EFF councillor Exodus Maloka said the implicated politicians included Mayor Selina Mashigo-Sekgobela.

Irregular acting allowance payments of R1 million were allegedly authorised and RDP houses allocated to senior municipal officials, their relatives and friends.

None of them qualified for these houses.

City Press has seen the full RDP beneficiary list and it backs this claim.

“They are protecting politicians and targeting officials alone. That’s the only reason they’re not releasing the full report. They have a lot to hide,” Maloka said.

While much of the corruption mentioned in the forensic audit report could not have been revealed in the implementation plan, the plan still paints a poor picture of the municipality’s administration.

It shows how public money was squandered and lost in ways including:

. Supply chain processes were not followed in transactions worth R176.2 million. The authors of the forensic report recommend that irregular expenditure worth R95.1 million be written off because documents to back it up could not be traced;

. A total of 96 residential stands worth R6 million were transferred to private individuals, without any money being paid into the municipality’s bank account. Also, land worth R8.8 million was sold, but the conveyancer did not transfer the money to the municipality;

. Officials paid undisclosed amounts of money to companies to compile an asset register and generate revenue from traffic fines, but no services were delivered. An amount of R840 000 was paid to a company to investigate cable theft, but there was no evidence the job was ever done. Another R47 000 was paid for maintenance work at a substation, but this was not done;

. The municipality incurred a R10.2 million debt in building a hydropower station that remains unused;

. Officials paid R3.5 million to law firms, despite having a contract with another firm, which was paid a monthly retainer of R120 000. They paid an additional R286 000 to this firm, despite it being on a retainer;

. Senior managers were irregularly paid R1 million in acting allowances they did not deserve. A retired official was paid R16 000;

. A sum of R14.2 million was paid for shoddily constructed and refurbished roads and R5.6 million was paid to construct a road that does not exist; and

. Security companies were fraudulently appointed without valid reasons and paid R42.2 million.

City Press reported three years ago how the municipality paid R5 million a month to a security company to guard an electricity transformer.

While the Mpumalanga provincial cabinet has placed many dysfunctional municipalities under administration, Thaba Chweu has remained untouched.

Insiders allege this is because the municipality is a cash cow for senior ANC politicians, their relatives and cronies in Mpumalanga’s Bohlabela region.

Questions over substation

Despite owing Eskom about R400 million, the Thaba Chweu Municipality is going to double its electricity bill by building a new substation for the same price.

Thaba Chweu has appointed a Chinese company, CSEEK South Africa (Pty) Ltd, to build it.

A South African company bid to build the substation for R121 million in 2014, but was turned down.

This is a turnkey project, which means CSEEK sourced the R400 million funding to finish the 40 mega volt amp (MVA) substation, and will recoup its money from the municipality.

CSEEK will operate the substation for 15 years after construction before handing it over to the municipality.

EFF councillor Exodus Maloka said the substation was overpriced, would deepen the municipality’s financial woes, and was not a priority.

About 18 months ago, the City of Johannesburg built a bigger 125MVA substation for R260 million.

“We don’t need the substation. A technical report says that the municipality should just upgrade the existing infrastructure to meet its electricity demand and that can be done at lesser cost,” Maloka said.

Thaba Chweu municipal manager Patrick Kgoale defended the high cost of the project.

“There has been an escalation on the project cost due to amendments to the scope of work, which came about as a means to enhance revenue for the municipality,” he said.

The authors of the forensic report recommended that the municipality avoid turnkey projects because the companies involved inflated prices and produced work of a poor quality.

Maloka said the municipality’s politicians and officials went on a trip to CSEEK headquarters in China in March last year without the approval and knowledge of the department of international relations or the presidency.

“They bypassed protocol. Something is fishy about that,” he said.

Asked whether approval for the trip was sought, Kgoale replied tersely: “Not to our knowledge.”

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April 22 2018